How can someone receive assistance when they do nothing for themselves? Isn’t that just a handout? The extension of unemployment benefit does nothing more then cost money, prevent the job market recovery and encourage abuse of an already flawed system.
Currently, a person who loses their job could qualify for up to 99 weeks of unemployment benefits, 26 weeks are normally provided by the state and an additional 73 weeks under the extension. The average person receives 330 dollars per week and currently there are 14.1 million people receiving benefits. This comes to the staggering amount of 462 million per week or 55.4 billion dollars per year. Previous to the extension states budgeted for the standard 26 weeks which was depleted quicker the expected in many states due to the amount of claims. The Federal Government pays for 50 percent of extended benefits per week, an average of 165 dollars. The state is then required to pay the remaining amount. However, due to the number of claims many states borrowed money from the federal government to pay all the claims, which they will have to repay with interest. In turn states will raise the unemployment amount that employers pay in taxes or impose a special assessment to close the shortfall. The Federal Government is currently running at a deficit, which means they have to borrow money from other countries and pay interest in return, which further increase the deficit.
Extending benefits also leads to several unintentional consequences. In fact, the extension may detour a person from taking a job that is less than what they were making at their previous job or currently receiving from unemployment. The extension also causes companies to put a hold on hiring, the reason is profit. Companies pay money into the unemployment fund through taxes, as the benefits are extended and the states do not have enough funds to cover the cost the states raise taxes to make up for the shortfall. The higher taxes result in less profit for the company and less funds to hire additional employees. The extension also allows people to put off making a choice of finding a new job or starting their own business in order to provide for themselves. There are 30 corporations listed on the Dow and over half of these companies started during a recession or depression, when unemployment is normally high. Disney was started during a recession of 1923-1924, Hewlett-Packard opened in 1938 during the Great Depression, and Microsoft began in 1975 during a recession. However, due to the extended benefits individual are not pushed to provide for themselves. The next Microsoft or Disney could be sitting on a coach and not being developed because a free check is coming for almost the next two years.
In addition to the cost and being counter productive the issue is compounded by abuse and fraud. Michigan estimated from Oct 1, 2007 to September 20, 2010 it overpaid 72.5 million dollars due to fraud. This number may have been much lower had the extend benefit not allowed the fraud to continue beyond the standard 26 weeks. The 72.5 million dollars does not include the cost of tracking fraud, monitoring proper usage, and recovering the fraudulently paid funds. The purpose of unemployment is to temporary replace a portion of income. The recipients should make adjustments in life style to compensated for the change; many do not make adjustments such as getting rid of cell phone, premium cable, or extra cars instead the government offers another program, food stamps. As of April, 2011 food stamp usage hit 44.8 million an all time high, while the number of unemployed rose up to approximately 14.1 million people according to the June 2011 report from the Department of Labor, However, companies such as Apple are turning record profits, 6 billion for the during its fiscal 2011 first quarter which ended December 25, 2010. Apple sold 16.24 iPhone during that time. New cars sales have are also at there highest since 2008, 12.1 million units are expect to be sold this year. This is truly impressive when the use of government assistance programs is at an all time high. New vehicles and are Apple products are not a necessity in life, but both are thriving, how much of their income is coming from unemployment benefits? It is understandable that retirement savings are not required to be exhausted prior to collecting unemployment, however liquid saving does not have to be used before accepting benefits. A recipient who does make the necessary adjustment to their lifestyle and can live off the benefits for almost two years without spending a dime of their savings. Is there a difference between abusing money that a person qualifies for and taking money that a person does not need?
The extension of unemployment benefits in the United States was, in theory, a well meaning concept. However, due to poor planning to deter abuse and lack of foresight concerning negative consequences, has led to a program not working. The program has done little other than increase the debt, slow the creation of jobs, and encourage misuse of a system, thus turning government assistance to government handouts.