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 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.
The imposition on industry at this time of the tax burden contemplated by this measure would render business recovery absolutely hopeless. Manufacturing industry is now engaged in a desperate struggle in an effort to continue operations and provide jobs. Most industries have been operating at a loss for several years. Industry is not prepared at this time to accept the added burden as contemplated by this bill.
There is probably no greater need at the present time than for opportunity of employment. Through a long period in our country both law and public opinion reflected the universal approval and the good will felt toward those capable of giving employment to men and women who needed jobs. Yet, the imposition of this tax would be a complete reversal of that attitude. It would indicate either that employment is held undesirable and should be discouraged, or else it could properly be considered as an attempt to penalize unemployment.
It would result in further and unnecessary intrusion of the Government into the domain of private enterprise, thus aggravating the hardships which have already been caused industry by extensive government regulations, restrictions, and competition.
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.
