Wednesday, March 30, 2011

Unemployment Benefits Benefit Everyone


By Emily Eisenhauer

Several bills before the Florida Legislature seek to make it harder for those who are out of work through no fault of their own to get unemployment compensation. Community service requirements, mandatory drug testing, and limiting the number of weeks all seem to be based on the idea that people who are getting benefits don’t deserve them or are not looking hard enough for a job. But in this economy, that doesn’t make sense, and these proposals will make it harder for the system to do its job.

Florida lost almost a million jobs in the recession that began in late 2007, and over 1.1. million people remain unemployed in the state. Last year, 2010, was better, in that the state added 43,500 jobs. But that just means for every job added, there were still 25 people looking for work. Right now almost half of the people out of work have been looking for a job for over 6 months, and over one-third have been looking for more than a year. In recent weeks the media have covered many stories of people who have been applying for any job they can find, and still coming up empty.

Florida already has one of the strictest unemployment compensation systems in the country. In any given week between 15 and 20% of people who submit claims are rejected by the state for not providing sufficient proof of work search or other eligibility reasons. Florida has the fourth lowest maximum weekly benefit in the country - $275 – with an average weekly payment of $230. That means that on average unemployment benefits replace about 38% of a worker’s previous salary. It’s hard to imagine that people surviving on 38% of their salary wouldn’t be out doing everything they can to get a new job.

Unemployment compensation exists for two reasons: 1) to provide support for people who are out of work through no fault of their own, and 2) to stabilize the economy during a downturn. UC functions like an insurance program, and in fact in other states it is referred to as unemployment insurance (UI). Money is paid by employers for each of their employees into a fund so that should a worker lose a job there’s a cushion until he or she finds another. It isn’t welfare, it is money that workers have already earned. Applicants must show they have worked a certain amount in order to draw benefits, and the amount of benefits anyone can is capped.

This insurance program not only benefits laid-off workers, it benefits the whole economy. When thousands lose their jobs within a short time period businesses get hurt too because demand for goods and services declines. UC replaces some of the money that otherwise would have been lost to the economy and puts it into the pockets of people who will immediately spend it on basic necessities. As for the numbers: The

Congressional Budget Office estimated that extending UI benefits would bring a return of investment of as much as $1.90 in increased gross domestic product for every dollar spent, compared with extending the Bush era tax cuts, which brings a return of only 40 cents on the dollar.

This is why it makes so much sense to make sure that everyone who has earned benefits is getting them. Even before the recession the system wasn’t perfect and many people who had earned enough to qualify were excluded because Florida still uses a pre-computer-era system for deciding eligibility. This unfairly denies benefits to many workers because it doesn’t count their last six months on the job, and it hits low-wage and seasonal workers especially hard.

Florida also has refused to modernize eligibility rules to provide insurance for workers who are victims of domestic violence or have to leave work to care for a sick family member. Thirty-two other states allow these workers to qualify.

For these reasons and others, Florida has one of the lowest recipiency rates in the country. A 2004 study by the Institute for Women’s Policy Research and the National Employment Law Project found that only 33 percent of unemployed workers in Florida were receiving unemployment benefits, compared with the national average of 44 percent. Some states, like Connecticut, had rates exceeding 80 percent.

If Florida modernized its system tens of thousands more workers would be able to get the benefits they have earned, and the whole state would reap the economic benefit. Not to mention the $444 million that Florida could receive under the American Recovery and Reinvestment Act if it made these changes, and which would more than pay for the additional benefits.

Instead of making the unemployment compensation system even more difficult for workers, now is the time when we should be making sure that everyone who is eligible is participating. Unemployment benefits keep the economy moving, which is exactly what we need right now.
Eisenhauer is a research associate at the Research Institute for Social and Economic Policy at the Center for Labor Research and Studies at Florida International University.
Copyright (C) 2011 by the Florida Forum. 3/11