Unemployment Insurance
Unemployment insurance was a critical part of President Franklin Delano Roosevelt’s New Deal, a lifesaver during a period defined by economic volatility, depressed wages, and record unemployment. Beginning in 1935 with the Social Security Act, short-term relief was provided for the unemployed to provide for their basic subsistence and maintain their purchasing power. Unemployment insurance generally lasts up to 26 weeks, although in the wake of the Great Recession the Obama Administation extended benefits to 99 weeks.
Cry Wolf Quotes
…we are going on the theory that it will create jobs. It will not. We shall create jobs only by giving confidence to people who are in a position to hire other people.
New York State’s past independent pioneering activities in social legislation, while commendable in many respects…have already produced discriminatory differentials between the cost of doing business in New York and such costs in neighboring States [sic]. We can see no justification for deliberately increasing those differentials at this time by continuance of such pioneering.
Employers pay men, not machines. Can there be any question but that this and similar legislation will drive industry faster and faster toward mechanization? Can there be any question but that its normal tendency will be to depress wages, since the higher the total pay roll, the greater the taxes? Can there be any question but that it will retard reemployment of men and intensify the development of machinery and its substitution for men?
This bill will cause further migration from the farm areas to the industrial areas and will invite the transfer of workers from the class of those not gainfully employed in order to share in the unemployment benefits…Unemployment insurance, which in many instances places a premium on indolence, would unquestionably defeat this proposed plan of the administration to place workers in the areas of lower living costs and keep them gainfully employed.
Evidence
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San Francisco Fed Finds Unemployment Insurance Doesn't Significantly Contribute to Unemployment Levels
Unemployment insurance doesn't encourage people to stay jobless.
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Moody’s Analytics Advocates Unemployment Insurance as Stimulus
For every $1 spent on unemployment benefits, GDP increases by $1.61.
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Congressional Budget Office Says Unemployment Benefits Have Strongest Stimulative Effect
Unemployment benefits make macroeconomic sense during a recession.
Backgrounders & Briefs
Unemployment Policy Brief: Shermer
By Elizabeth Tandy Shermer, PhD, February 2010
Unemployment insurance benefits – including their length, eligibility, and expense – are again in the spotlight. The arguments are hardly new.
