Is this a bad thing?

Congress fails to pass another extension of unemployment benefits. I’ve been self-employed for most of my adult life and thus ineligible for unemployment benefits. That status has certainly caused me great consternation from time to time over the years but it also kept me employed or looking for employment all that time.

On the other hand, I knew folks who built their lives around unemployment. Construction workers, for example, who worked nine months a year and vacation in Florida on unemployment checks during the winter when they were “laid off”. Some of these folks were my friends, but I resented their laziness, even if it was paid for by their employer and, through reduced wages, themselves.

But why do we have such a bifurcated system? Why do we self-employed pay full freight on social security, Medicaid, etc. and have no unemployment insurance while salaried employees don’t? If we can make do without those benefits, why can’t they, and vice versa?

It seems to me that this is a good time to revisit the whole employment benefit package and eliminate a number of programs that serve only to encourage slothfulness and greed. We should be prodding people back to work, not prolonging their idleness.

18 Comments

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18 responses to “Is this a bad thing?

  1. Retired IB'er

    I assume, though I don’t know, that if you are self employed, you do not pay into state unemployment funds and so therefore aren’t eligible. I assume you could incorporate, pay into unemployment insurance fund, and then collect if you meet the requirements.

  2. Peg

    Clearly unemployment should be far more “temporary.” And we should allow people to work without restrictions on the compensation they can receive. Many people would be happy to be able to get their foot in the door at a tiny wage, knowing that down the road, their experience and knowledge gained would mean much higher compensation.

    The nanny state continues to ruin so much of both our economy and our values.

  3. Anonymous

    Generally, attempts at price controls; welfare or tax subsidies or taxpayer bailouts for individuals or corporations or nonprofits; all-you-can-eat, “free” healthcare or food or Internet or “education”; union pay/pensions, etc etc lead to shortages of decent quality goods or services, commie-style economies and abysmal standards-of-living

    Ask the Soviets
    Our EU welfare state pals are only now realizing the welfare Ponzi scheme of everyone working for govt, tourism or tax-evading “family” businesses only lasts for a few decades before bond vigilantes call bs

  4. Towny

    let me get out the worlds smallest violin…

  5. Towny

    sometimes your limited grasp is amazing

  6. Like you, I’ve been self-employed my whole life. IMO, the entire UE system should be dismantled. It does nothing but subsidize laziness and is as corrupt as any other system ever cooked up by our fraudulent, corrupt gubmint.

  7. shoeless

    FWIW….

    RLog (Press Release) – Jun 22, 2010 – EATONTOWN, NJ – With unemployment hovering around the 10% mark, employers instinctively think it should be easy to find quality candidates to hire. Additionally, hiring managers believe they can offer lower pay because so many people are competing for positions. Snelling Staffing – The Wyckoff Group (TWG) is reporting the opposite effect is taking place: many displaced workers are receiving better compensation through Unemployment Benefits and are choosing to remain unemployed as a result.
    “I’m not exaggerating when I say that 50% of the people I offer opportunities to choose unemployment,” expresses Heather Araneo, a Branch Manager for Snelling Staffing – TWG who interviews and places candidates in available positions every day. “Between unemployment benefits and the long length until their expiration, a lot of people profit more by refusing work.”
    According to Congressional Law and the New Jersey Department of Labor and Workforce Development, individuals can now receive unemployment benefits for 99 weeks (almost two years), as well as extra money for dependents and partial funds for COBRA benefits. Additionally, workers with children save money on childcare because they’re unemployed and can watch their children themselves.
    Consider the following scenario: a woman with two young children, earning $40,000 annually is laid off. She has elected to COBRA her health benefits (an estimated standard family plan of $1300 / month). Using an average of 4.3 weeks / month:
    o If our candidate remains unemployed, her Weekly Benefit Rate (WBR) is 60% of her salary before termination plus 7% for her first dependent and 4% for her second dependent of her WBR: $2,203 / month for herself and two children. The government pays 65% of her COBRA reducing her monthly payment to $455. Her total net monthly income is $1748.
    o If our candidate returns to work as a temporary employee receiving $19.23 / hour (equivalent to her $40,000 annual salary) and works 40 hours / week, she is paid $3308 for the month. She must now pay 100% of her COBRA costing her $1300. Added to the estimated cost of childcare of $860 / month, her net monthly income is $1148.
    Therefore, if our candidate decides to leave her unemployment benefits to go back to work, she would actually earn $600 less every month. The results make many people question why they would return to employment in order to make less.
    “Hiring all-star employees is important for businesses during a recovering economy,” says Araneo. “If employers want quality candidates during this crucial time period, they should review the wages they’re offering.”

  8. Anonymous

    Prodding people back to work? You guys are far too quick to buy into the ridiculous notion that the bulk of people collecting unemployment insurance don’t want to work. Your unemployment insurance claim is 1/3 of your last wage. The median household income in the United States is $44,000. You’re telling me there are millions of employers out there offering millions of jobs to millions of people who are instead choosing to live royally on $14,665 a year? Give me a damn break!

    I suggest you take five minutes and read Annie Lowrey’s well-reported piece about the 99ers, the people who have exhausted their unemployment insurance but have not found a job.

    http://washingtonindependent.com/86700/as-long-term-unemployment-deepens-99ers-look-for-answers

    Oh, and CF? If you had incorporated, as many self-employed do, you would have paid into the system and would be eligible to collect out of it.

  9. Old School Grump

    I read the link and went cross-eyed trying to follow the three-card-monte tricks the Dems were trying to use to “offset” the cost of extending the benefits. I’m a Dem, but I’m a Dem in despair. But hey, here’s an idea! Let’s add a tax, starting right now, on the wages of that vast protected class of workers, federal employees. It seems only fair to me that workers who are immune from lay-offs should subsidize workers who are suffering because of them.

    Meanwhile, it looks like the financial reform
    package we’re finally going to get will do exactly nothing to address what got us into this mess: lax mortgage underwriting standards and the implicit guarantees of Fannie and Freddie.

    If it’s true we get the government we deserve, we are a sorry bunch of buffoons indeed.

  10. Anonymous

    The idea that Fannie and Freddie caused the housing crisis is, in a word, bullsh*t. Their portfolio was 2% subprime. Leave it to you guys to excuse Goldman, JP Morgan and Citi while pinning the blame on the gubment.

    Are Fannie and Freddie a massive problem? Certainly! They had an implicit guarantee of a taxpayer bailout (hmm, kind of like the banks) and the cost of bailing them out will far exceed the cost of bailing out the banks. But they did not cause the housing crisis, and neither did the Community Reinvestment Act, another favorite target of this crowd.

  11. Cos Cobber

    I have witnessed up close people on unemployment forgoing an employment opportunity that they perceive as being beneath them to remain on unemployment. Its true, the new job was going to require a substantial pay cut and reduction in responsibility, but the new pay was higher than what unemployment paid. The reasoning was simple however, why settle for this job when I have 9 more months of unemployment….I’ll roll the dice for something better.

    Its a tough call, because unemployment at some capacity smooths out the bumps for many. Without it, we’d have even more foreclosures…ya-yada.

    Maybe to get more people off the dole, we should call it what it is welfare. Many who dont mind being on unemployment for 18 months despise welfare.

  12. Chris

    The reason many of us despise welfare more than we despise unemployment is because we paid into unemployment and are “merely” getting our money back.

  13. Anonymous

    Old School Grump — what planet are you on?! A lot of the folks on this blog seem to be living in a real fantasy world. Calling public employees “immune from layoffs” just makes you sound immune from reality. Last month states and localities cut 22,000 jobs. That makes it more than 231,000 public employees laid off since 2008 — and more than 100,000 of those are in education.

    To say that state and local workers are living free of the fear of unemployment is totally, totally false.

  14. Retired IB'er

    Anonymous
    June 25, 2010 at 7:11 pm

    I’m not going to do the research because… well, I’m too lazy, but 231,000 jobs since 2008 is a DROP in the bucket compared to layoffs in the private sector.

    No question that order of magnitude Old School Grump has it right.

    Aw, heck, I did some research: since start of recession private sector has LOST 8,000,000 jobs while the public sector has GAINED 600,000 jobs according to this author:

    http://corner.nationalreview.com/post/?q=MDkwMzA0YzJlNTIzMWUxZmI4MTA4YmU0YmEwOWI0ZmI=

  15. pulled up in OG

    Stamford laid off 46 today.

  16. cos cobber

    To chris, no doubt that ‘getting our money back’ mentality is exactly the approach I hear from all my friends in construction.

  17. Old School Grump

    Anonymous at 7:11 on the 25th: Read my comment again and you’ll see I specified federal employees.