The End of Unemployment Insurance?

posted on Jun 17 by Amanda in the Hiring Practices, Legal Compliance, Legislative Reform, Payroll Taxes category

Through the Social Security Act of 1935, the US federal government effectively encouraged individual states to adopt unemployment insurance plans. It was never intended to be a long-term fix, but when the economy faces the strains of recent years, a new problem surfaces: the government is running out of money.

With an average benefit of $270 per week, no one is getting rich off unemployment insurance, but even that amount has decreased. According to the laws of most states, once a person becomes unemployed, benefits last for at least 26 weeks. That time can be extended if one is still unable to find work, with a maximum extension of up to 99 weeks. During the economic recession, however, this duration was severely cut in many states. In 2010, roughly 1.4 million people had already used up their benefit period, and about 4 million are expected to end theirs by 2011.

In an average year, the states ask for about $80 million in federal grants to subsidize funding for the unemployed. Though the government hasn’t indulged the amount still available, it has declared that the benefit tenure will end in December 2011. At that point, those who have not exhausted their basic unemployment benefits will not be able to extend them.

Unfortunately this is not a new issue. Long-term unemployment situations have troubled the government fund for years. It is obviously not possible for the government to provide for the unemployed for an indefinite period of time, so the issue needs to be tackled in a different way. If the government is successful in creating new jobs, then more people will be able to support themselves and lessen the government burden. Another option is for the government to set up employment exchanges, where people will be judged on the basis of eligibility and ability to do work, and they will be assigned jobs accordingly.

What do you think? Has this information affected how you’re approaching employment issues in your office?

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