Unemployment Insurance
Unemployment insurance (UI) is an essential part of the American social safety net. UI gives laid-off workers time to find or retrain for a new job while ensuring their purchasing power (this is especially important during economic downturns). The federal government first established nation wide coverage with the Social Security Act of 1935. Under this system states play a crucial role, jointly financing and administering the program with the federal government. Generally, benefits last a total of 26 weeks. During recessions extensions are typically issued, although conservatives often attempt to block the legislation.
Commentary
Cry Wolf Quotes
…we cannot consider this bill in a vacuum. Industry today is facing a number of bills here on the Hill, all of which are of the same sort, and we have a right to look at them as a whole; because none of them is going to be destructive of industry in itself, but, taken as a whole, they are going to impose a very serious burden on the industries of the United States, which are now trying to come out of the depression.
It would undermine the fabric of our economic and social life by destroying initiative, discouraging thrift, and stifling individual responsibility.
[The bill] tends to retard the increase of pay rolls, because of the absorption of this amount of money for taxation purposes; it retards the increase of employment also. It is a permanent tax, with no limit, regardless of economic conditions in general or of the individual company. In other words, it may be the last straw, as I said before, that puts this company over the line into bankruptcy.
We have just come from another hearing, of the Wagner Labor Board. Now, if you keep piling these things upon industry, where are the reserves going to come from to protect these things? You are going to stop the very recovery necessary to produce this reserve.
Related Laws and Rules
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.
Resources
Center for Economic and Policy Research (CEPR) is a progressive think tank that concentrates on social and economic policy, both domestic and international.
The National Employment Law Project is an organization that promotes economically just public policy in the face of the prevailing trends of the law several decades.
