Unemployment insurance only for grads?
Off the charts blog via Mark Thoma
For legislation to extend the payroll tax cut through the end of 2012, House Republicans are expected to push for a provision on unemployment insurance (UI) that is appalling even by current Washington standards. Neither President Obama nor Congress should accept any payroll-tax legislation that includes it. Here’s why:
The provision, part of a full-year payroll-tax bill that the House passed in December, would deny UI benefits to any worker who lacks a high school diploma or GED and is not enrolled in classes to get one or the other — regardless of how long the person worked or whether he or she has access to adult education, which itself has been subject to significant budget cuts in the past few years and is heavily oversubscribed.
Actually I see some potential merit to such a provision if it exempts persons born before January 1996. It might serve to encourage teenagers to recognize that their economic future really is tied to staying in school. I do not think that is a bad thing. At some point I do not think it is wrong to use a bit of carrot to get people–including teenagers–to do what is good for themselves. You want another reason to get up and go to class–how about if you graduate you will be able to get unemployment if you need it in the future?
It is kinda amusing to see liberals (see Thoma’s comment section ) go absolutely ape poop wild about tieing education to benefits. Suddenly education is not such a valuable commodity (?).
Another unfunded mandate! {sigh} Not such a bad idea if the gov’t pays for the classes.
Thoma’s objection comes from making the underclass pay for the excesses and mistakes of the overclass, I expect.
“Suddenly education is not such a valuable commodity (?).”
What part of “access to adult education, which itself has been subject to significant budget cuts in the past few years and is heavily oversubscribed” don’t you understand?
Come on rusty, in this case education isn’t being presented as a benefit, but as an excuse to penalize those who have not experienced the benefit. Unemployment insurance is a benefit one earns by having worked, with or without the “benefit” of an educational attainment level.
Having rasied kids, I’m still trying to imagine this measure having an affect on a teenager’s decision. Regardless, where does the item fall on a list of the top-100 ideas to encourage education? Are there other things we can deny to people to make it even worse for them to drop out?
The idea apparently does, however, rank relatively high today on the list of ways to cut government spending on unemployed people. The proposal simply is an attempt to deny working people the insurance that they are owed. Not an entirely novel idea. Politically, the proposal plays well primarily with GOP voters and it doesn’t threaten as many GOP voters as other groups (non-voters, Dem voters, low-income voters, minority voters).
word.
PjR: word.
So would those not entitled to unemployment benefits get a refund of the money they paid in? If it is truely insurance then it should not be subject to abitrary denial. Nor should it be extended because it is politically expedient. People paid for 26 weeks of coverage, that’s what they should get.
Hmmmm:
flint:
Not that I disagree; but in Michigan, Unemployment was reduced from 26 to 20 weeks because of the cost to employers. So who pays?
run
as with SS “the employers share” comes out of the employees potential wages. as to whether the employee would ever see those wages without the government mandate…. well depends on the employer and the leverage of the employee. my guess is that most would not. but don’t worry too much about the employer: it’s a cost of doing business. sure he’d like to reduce his costs, but we outlawed child labor and slavery and it may take some time to bring them back.
coberly:
The state dooes what it does. Michigan blames labor. This cost is not direct labor and is a part of Overhead the larger of direct labor and Overhead expenses.
Coberly – “but don’t worry too much about the employer: it’s a cost of doing business.”
This strikes me as a cavalier attitude. For one thing, it is a cost of hiring Americans not of doing business in general, so it makes other options (offshoring, automation) more attractive. Like it or not our economy depends on businesses large and small, and if you impose too many costs on them, it hurts the economy.
heart:
So you would attack “direct labor” and shrink it even more when the productivity gains have been skewed away from labor to Capital or the 1 percenters who own it??? The attraction to off shoring is not the direct labor cost but the overhead in manufacturing in the US. What would you give up in rturn for achieving competitveness (it certainly is not what we pay labor)? How about pollution of our lakes, air, and land? How much can your body absorb of toxic chemicals, smog, and other heavy metals. A cup of cadimium laced water perhaps???
Choose, wat would you give up?
run
it is not always easy for me to see just where you draw the line. the cost of labor is what it costs to have labor, doesn’t matter whether that is direct pay, health care, SS, unemployment insurance, safety regulations..
flint
i don’t think that competing with organ donors is the best way to preserve the strength, much less the well being, of America… Americans.
When you go into business you count your costs, and you count your revenue. If you can’t make more money that you spend, you find another business. Whining about the cost of labor is the sign of a bad businessman.
and yes, i ran a business, and i paid for labor. i did not squeeze the last nickel out of the people who worked for me, and i think they worked better for that. i know that when i worked for someone else i did better work when i wasn’t being treated like a slave.
I have nothing against automation. just that ultimately the country has to find a way to feed the people. if that means shorter hours, well what else is “labor saving” machinery for?
coberly:
I do not dispute you on SS, you should not dispute me on this topic. It does matter as direct labor is the actual cost to make the product. The US still leads in that category. You should study the topic. Everyting else beside material cost is OVERHEAD. You and I are OVERHEAD to direct labor.
Are these the same Republicans who often proclaim the virtues of successful school dropouts like Bill Gates, and hate highly educated elites, and think school kids should be working as custodians? Q: At long last, have they left no sense of decency? A: not for a decade or more, and plummeting fast. Dear God, how do they do it?
A quick survey of a few random counties indicates all had some form of adult GED level education. I think it is there is anybody wants to look.
Aw come on, the employer pays the tax.
STR:
Not disagreeing and it is Overhead.
run
i don’t know that i am disputing you. i tried to make a point that the cost of labor is what it costs to have labor… including some of those things you choose to call overhead. there is a difference between unemployment insurance and the cost of pencils and light bulbs.
it is only a matter of convention (and maybe taxes) that we chose to have the employer pay the unemployment insurance instead of paying the worker so the worker can pay it.
i try not to be word bound. it helps me think about what “is”, not what it’s called.
I am saying that imposing costs on employers has consequences. You may determine that a particular benefit is worth the cost, but you should not disregard the cost because it is born by the “1%” or some other unsympathetic group. If the total cost of employing Americans increases, it decreases employment at the margins which is bad for employers but even worse for the ememployed especially if they aren’t receiving UI benefits because they are just entering the work force.
I am saying that imposing costs on employers has consequences. You may determine that a particular benefit is worth the cost, but you should not disregard the cost because it is born by the “1%” or some other unsympathetic group. If the total cost of employing Americans increases, it decreases employment at the margins which is bad for employers but even worse for the unemployed, especially if they aren’t receiving UI benefits because they are just entering the work force.
heart:
You have to chose. Either its a load of benzene running dow the Yellow River or being environmentally safe. What is your choice?
The Chinese and Asians are less efficent than the US in Labor. They are incurring $billions in future costs because they do not have the same controls we do. Will your 12 year old go to work in a factory for breakfast lunch and a snack at night plus a nurse on staff? Choose.
So do those who are employed who have no high school diploma/GED still pay unemployment insurance taxes?
I expect they do.
Add one more group who gets taxed with no benefits.
UI is a form of public insurance like SS and Medicare.Historically, periods of increased unemployment have been marked by decreased demand and business profitability leading to deflation. Ok, then having a way to keep GDP up through a public unemployment insurance syten is a way to keep the economy from imploding or experiencing as much deflation and damage as would otherwise occur. It’s net effect is generally beneficial for the economy as a whole.
UI provides support both to the unemployed and to a failing economy. If you want a program to reward graduating from high school, fine–go to it.Costs money to do that, though. Meanwhile, you need to keep society together during hard economic times. You also want to keep people from starving, ending up on the street, and losing their future employability. UI does that. From an administrative perspective, it’s a relatively inexpensive remedy compared to the alternative of catastrophic deflation and economic paralysis.
Think Russia after the collapse of the USSR. Now, think US at the same period (Bush I administration, IIRC) in a mild recession. The successor states of the former USSR had no system of taxation, tax collection, social insurance per se, and regulation over the economy. You know what happened to them. Our recession went away during the 90’s. Theirs still rolls on for a vast majority of its population whose life expectancy is falling every year.
I am suggest that UI is justifiable in purely practical terms. You don’t need to worry about coddling idlers when eligible individuals have already ponied up their UI contributions. In government program administration, the KISS principle applies. So, want a society that works? Pay your UI and hush up. NancyO
I think one point you both miss is that most businesses provide either services or products and most of the market is domestic. One of the things unemployment does is prop up demand in down cycles–sort of automatic Keynesian remedy. Businesses who are required to layoff employees benefit from unemployment being paid. Certainly, it is an element of overhead to the employer, but the employer benefits from it just like the employer benefits from an employee’s labor in return for wages.
Nancy
it occurs to me from time to time that our “rugged individualist” friends who worry so much about imposing costs on the employer can’t be honest about what they really believe because it would be so unpopular to actually say it:
they really believe they are “superior” to the “losers” who are unemployed or work for low wages, and if those losers would just die then they, the first raters, wouldn’t be burdened with having to take care of them.
subtleties such as you suggest…. the need for the first raters to have someone to do the actual work, not to mention the actual soldiering… are completely lost on them.
and it doesn’t matter how many times slave empires are beaten by more or less “free” cultures… the “rugged individualists” busy themselves going about creating a new slave culture… only they call it “pfreedom.”
fortunately for them most people would rather be slaves… as long as you call them free.
And if there were no tax, would the employer pocket the difference?