Congress has voted, once again, to extend unemployment benefits. Currently, one can receive unemployment benefits for up to 99 weeks, which is about two years. Realistically, voting to not extend unemployment benefits is probably political suicide for a congressman or senator. But refusing to extend this government benefit is also the right thing to do.
The continued extension of unemployment benefits may seem, at first glance, to be a compassionate outreach by our government to those who have been most affected by the dishonesty, corruption, and outright theft that have characterized both Wall Street and DC for so many years. years. In fact, it is hurting both the unemployed and the economy.
Unemployment insurance was designed for short-term job loss that was not the employee’s fault, such as being fired. Employers like me pay for it. When we let someone go, it can be “for cause” or “without cause.” If “not for cause,” unemployment begins to pay. If the person was fired for, say, insubordination, unemployment insurance was originally designed to pay less or nothing, since the job loss was considered the employee’s fault. If I let someone go without cause, my “insurance premium” (tax) rate may go up, especially if I let multiple people go.
I need to tell you that the system no longer works exactly this way. Employers who contest the unemployment claims of even the worst employee fired for cause are seen as cruel and ruthless. They, or their representatives, can spend costly hours and days preparing for and defending the unemployment claim dispute. They face a system biased against employers, yet many employers don’t even bother to contest the claim. They pay with a grin.
Now, there really is no such thing as a tax on a business. A company is not an individual. So taxes on businesses really end up as taxes on their customers. If I as a business get “soaked”, those costs have to be passed on to consumers or sooner or later I will go out of business. Economics 101, right? Well, unfortunately, it seems that those who inhabit the land of fairies called “Washington DC” never took Econ 101.
The more taxes I have to pay per employee, the fewer employees I am going to hire. The extension of unemployment insurance will sooner or later result in higher and higher rates. Someone has to pay for these extensions, and the current climate is not favorable for business. Therefore, I will be hesitant to hire more people because I have no idea how much my employer’s taxes are going to increase per employee. Many other business owners feel the same way. Therefore, unemployment tax extensions put a damper on hiring.
Extensions are also bad for workers…especially lower level workers. Many of the things that they are unemployed of are things that are fading away. For example, if you are an assembly line worker, your work is much more likely to be done by a robot rather than returned. Robots don’t get sick, they don’t need benefits, and they don’t join the number one killer of jobs in America: unions. So what these people need to do is use their brains and find something else to do. Many have Others check their mailboxes for unemployment checks.
By extending unemployment benefits, we are preventing the unemployed from finding multiple ways to earn income. Some, even many, of these forms would pay more than unemployment benefits. Many of us do this every day.
Extending unemployment benefits simply creates a class of people who buy the bare minimum, further hurting the economy. The unemployed do not usually buy cars, microwaves, televisions or computers. But those who have found a way to earn money for themselves often do.
Extending unemployment benefits is delaying the necessary shift from a 1950s America where everyone is employed by large corporations, to a 21st century America where small businesses, freelancers, and project-oriented jobs are the norm. Health insurance reform and other benefit programs to speed this up, if done with any intelligence (dare we expect anything from the dishonest and corrupt side of the aisle?), are excellent ways to help with this necessary transition.
Increasing unionization, waiting for jobs that will never come back, and relying on the government are just dumb and short-sighted ideas that need to end. The old way of doing business is to take a brave last breath. President Obama and Congress should go ahead and unplug and bring America into the 21st century.