If The American Economy Is Recovering Why Do We Need To Extend Unemployment Benefits?

I am not unsympathetic to people who have lost their jobs during the recession. I know that there are a lot of them. I don’t mind paying unemployment benefits to people while they look for jobs. I just don’t understand why unemployment benefits should be paid to people for almost two years. I don’t think that encourages people to look for jobs.

The Wall Street Journal posted an editorial today about the economic impact of extended unemployment benefits. The article reminds us that according to the current unemployment numbers, the unemployment rate is 7 percent–not 10 percent rate as it was when the extension of benefits was originally passed.

The article reports:

This also ignores that states and employers are already paying for this supposed free lunch in the form of higher job-killing payroll taxes under the Federal Unemployment Tax Act, or Futa. At least 24 states have been forced to raise this tax since 2010 and the Labor Department says it will rise again in 13 states to repay $20 billion in loans and interest they owe the feds for helping to finance state-funded benefits. This federal tax is applied to 0.6% of a worker’s first $7,000 of annual wages. The rate rises automatically by 0.3% for every year states fail to repay their unemployment insurance loans from Uncle Sam.

…Economist Martin Feldstein long ago proposed a better plan to create a self-insurance component of unemployment insurance with tax dollars going into an employee trust fund for each worker that could be drawn during a bout of unemployment. Workers could keep whatever money was left over at retirement, which would encourage workers to become re-employed more quickly after losing a job.

Instead the current system provides as much as two years of benefits for not working and raises payroll taxes on employers even as some 20 million Americans are still unemployed, underemployed or discouraged from looking for work. None of this will help the economy create more jobs, which is what the jobless need far more than another government check.

The American taxpayer cannot afford to pay people not to work for extended periods of time. We are in danger of losing our work ethic. There was a time in this country when a person would take any job available rather than take money from the government. Unfortunately, we have come a long way from that time. Unemployment benefits should be paid for a long enough time period to allow a person to find a job. Two years is simply too long to pay a person for not working.

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