Guest post: U.S. has 18th best unemployment benefits in OECD
Guest post by Kenneth Thomas of Middle Class Political Economist
U.S. has 18th best unemployment benefits in OECD; also trails 13 non-OECD countries
Tim Vlandas at EU Welfare States flags some important recent International Monetary Fund data on the generosity of a number of countries’ unemployment benefits. The metric used is the gross replacement rate (GRR) the ratio of unemployment benefits to a worker’s previous wages.
The United States gives, on average, a miserly 27.5% of previous wages in unemployment benefits, behind 17 OECD members, though ahead of 11 others (no data was given for OECD members Iceland, Luxembourg, Mexico, Slovak Republic, and Slovenia). Not only that, the U.S. falls behind 13 non-OECD members, including Algeria, Taiwan, and Ukraine, all of which have at least double the replacement rate of the U.S.
Why is this important? As Vlandas points out,
A high replacement rate…ensures that the negative effects of rising unemployment on aggregate demand are mitigated. It also prevents workers from falling into poverty when they lose their jobs.
Furthermore, the generosity of unemployment insurance interacts with the state of other employment protections. As regular readers of this blog will recall, the United States has the absolute worst employment protections in the OECD, by a large margin compared to most other members. As commenter Norm Breyfogle rightly noted in response to that post, if your protection from both individual and mass firings are weak, you really need good unemployment insurance. As the data here show, however, U.S. workers are not well-protected with unemployment insurance.
I won’t reproduce Vlandas’ entire table, but I will highlight the leaders and some other significant countries.
To compare it in another way, according to an IMF working paper (Figure 1, p. 21), the average GRR for high-income countries in 2005 was about 38%, compared to the United States’ 27.5%. U.S. workers get relatively low unemployment benefits compared to other industrialized countries.
Moreover, as I showed in February, the length of unemployment is at its longest since record-keeping started in 1947. The following FRED graph gives both the mean and median length of unemployment, both of which hit double their previous record in the current jobs recession.
Thus, in a country where employment protections are weaker than in any comparable nation, and which is still just below postwar records for length of unemployment, we face the additional problem of low unemployment benefits, a factor which exerts an additional drag on growth.
How do you create a servant class?
i have a feeling they slipped one in on us at year end, when everyone was paying more attention to the payroll tax cut extension…
while writing about the unemployment report last saturday evening, and noting the number of people ‘not in the labor force’, now at an all time high of 87,897,000, was the reason for the headline percentage to decline to 8.2%, i connected a few dots back to the end of year extension of unemployment comp…under the new formula, the declining headline percentage has terminated Federal unemployment in 15 states…Federal extended rations will now be cut off in 15 states; Kansas, Kentucky, Massachusetts. Missouri, Ohio, Oregon, South Carolina, Tennessee and Wisconsin, as of April 7th; and in Indiana, Alabama, Delaware, Georgia, Maryland and Washington by April 21st…
Yes, but now we will see a reverse trend because all those unemployed are not going to be lazy anymore.
Figures it’s USA and England in the chart. Reagan and Thatcher, two peas in a pod.
The first three words of the Preamble to the Constitution are ‘We, the People’. It’s not ‘We, the Help.’
Needs to be remembered-reminded of occasionally…
I’ll add that the process of actually obtaining unemployment benefits for which one may be eligible, is insanely difficult, a fact which probably makes the above data understate the problem. After being laid off, a member of my extended family, age mid-40’s and having been employed continuously for over a quarter century, found it absolutely impossible to actually get through to anyone or file a claim at the unemployment office, in person, by phone or over the internet. Our state’s staffing of the Labor dep’t. is woefully short, and its IT systems a joke. He finally gave up trying anymore. And our state has a statewide unemployment rate slightly lower than the national average.
The worst mistake he could is to quick trying. I am not sure where you are; but, I would find out when the office would open up. I would be up 30 minutes before hand with a cup of coffee in hand. At 1 second past the opening time I would have a phone in hand with a redial capability and start calling and redial untill I finally was able to talk to someone andqualify or file for the past two weeks. The best time to reach them is early in the morniing. Sometimes you can also file online
It is a mistake to quick trying. I am not sure where you are; but, I would find out when the office would open up and get up 30 minutes before with a cup of coffee in hand. At 1 second past the opening time I would have a phone in hand with a redial capability and start calling and redial untill I finally was able to talk to someone and qualify or file for the past two weeks. The best time to reach them is early in the morniing. Sometimes you can also file online
It is a mistake to quit trying. I am not sure where you are; but, I would find out when the office would open up and get up 30 minutes before with a cup of coffee in hand. At 1 second past the opening time I would have a phone in hand with a redial capability and start calling and redial untill I finally was able to talk to someone and qualify or file for the past two weeks. The best time to reach them is early in the morniing. Sometimes you can also file online
You may want to read this: http://www.angrybearblog.com/2012/02/employment-situation.html#more
i always catch spencer’s employment posts, run…
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