For those unfortunate Americans who have lost their jobs due to the economic recession we are currently experiencing, unemployment checks, while paltry, are the difference between being on the streets and having a place to live. Eating or starvation.
Sometimes it fails to do even that much.
Face it, no one is getting rich on $400 a week, some a bit more, some less. While it is better than nothing, most simply want a job, not a government check.
But not just any job. If you still have eligibility, can you afford to take a job making minimum wage, or even anything close?
The answer is no. At $400 per week, you are making the equivalent of $10 per hour for a 40 hour week. If you were to take a job paying minimum wage, you would be taking a $2.75 per hour pay cut based on the minimum wage at $7.25 per hour. Who can afford to do that?
The rules on collecting unemployment benefits are very confusing. In most instances one can earn one third of the benefit total without effecting the weekly check. But earning over that amount results in a dollar for dollar reduction in benefits (although using the word benefit is a bit awkward in this case).
For example, a person receiving $400 per week can earn $133 per week and still keep the $400 weekly unemployment coming. At minimum wage, that works out to a bit over 18 hours per week. Anything over that and it comes off the top of the unemployment check. So, you are basically working for free – or at least for no additional money over just sitting at home. And what of the travel expenses to the job? All things considered, it does not make economic sense to work more than 18 hours in this example.
Isn’t that a bit counterproductive to the goal of getting people back to work?
And the rules change if you are on the extended benefit portion of unemployment. Work too much and you can lose the benefit entirely, and perhaps end up being forced to re-qualify at a lower pay, lowering the $400 per week, possible considerably lower.
In many cases, the safe thing to do is simply keep the unemployment benefits until they are exhausted rather than face being placed in a potentially worse situation.
Statistics show that approximately one third of unemployment recipients find work within 30 days of receiving their last unemployment check. So, are these people just lazy, content to ride the government and taxpayers to the end of the line, or simply forced to take the lesser of two evils to continue the most income possible?
Most likely, both are true.
In many cases, the minimum wage job will turn into a higher paying position, perhaps management, for an experienced person who happens to be unemployed.
In normal recessions (and yes, ups and downs are normal), these glaring problems come and go in a relatively short time. But in an extended recession with 10% unemployment (which is actually much higher), the problem becomes like a snowball rolling down hill.
Employers need good people to make a business competitive in a down market. We have millions of unemployed people that could more than earn their keep for a potential employer, but fear being worse off if they take the leap to accepting a lesser job. And in this market, the only people willing to work for lower than unemployment “wages” are those unable to draw unemployment checks. While the most capable workers are forced to look for jobs paying far more than $400 per week and remain at the government trough until they find such a job or run out of benefits.
We must find a better solution that encourages people to find jobs. Solutions that offer an incentive to work, rather than a reduction in benefits. Perhaps instead of a dollar for dollar reduction after 1/3 of the benefit has been reached, make it a 50% reduction. The government saves on the benefits, the recipient makes more money and the employer gets an experienced worker at a great price. A win all around.
Allow the “deal” to continue until the benefits would have run out had the employee sat at home, and if the job is terminated, return the person to the original benefit amount.
And provide the employer with a tax break if he boosts the pay for the employee to make up what the government is paying in unemployment. Perhaps a percentage of what the government will save.
Waivers for ObamaCare and other incentives for the employer could be part of the deal.
It is time to think outside of the box.