The Ugly Truth
Let’s put the myth to rest…you do not pay anything into unemployment insurance in California. Your employer is the only one taxed for unemployment insurance.
Now wait a minute, before you all go whipping out your pay stubs and point to the ‘CA SUI/SDI Tax’ line…let me explain, because I did the same thing…
The deduction on my paycheck for “CA State Unemployment Insurance (SUI) / State Disability Insurance (SDI)” comes out to exactly 1.1% of my federal taxable wages as stated on my last pay stub. That’s important because on the California Employment Development Department’s website (EDD), the official government website for California payroll tax information, the state disability insurance deduction is 1.1% of an employee’s federal taxable wages. So the amount I see being deducted from the ‘CA SUI/SDI Tax’ line on my pay stub is only for disability insurance, nothing for unemployment insurance.
Now on to the next topic…
The Ugly Abuse
Unfortunately, I know a lot of people who’ve been laid off. It’s a bad time economically and there is no way to know if I will be joining their ranks. I’ve learned enough so far in life to never say never. What bothers me more, is abuse of the unemployment insurance program. If someone is on UI, there are only two things they should be doing, either looking for a job or going to school full-time. Now according to the EDD, going to school while taking UI payments is fraud (because you’re not “available” to take a part-time or full-time job if you’re in school), but I don’t see it that way. The way I see it, if you go to school, then you are improving your skills which makes you more valuable and more likely to be hired. The more likely you are to be hired, the less time you will spend on UI and the less likely you will be to get laid off again in the future.
So what’s the big deal? The big deal is, that’s not what most people do with their paid holiday, they ride it out until the last check comes in without making any productive use of their time. There are only a handful of times in your life, if any, after you’re 18 years old when you don’t have to work because someone else (like your parents) is footing your expenses. The least you could do is be intelligent about it and use the time wisely.
Based on the The Ugly Truth, we know that any individual abusing the system didn’t pay anything into it, so they are “not getting their money back” which is often their claim. Second, that maximum amount that your employer pays into the system, per employee, for the entire year, is only $434. So as soon as someone collecting unemployment takes their first month’s worth of UI payments, and let’s assume the maximum payment of $1,800 a month…they have already “gotten back” four years worth of their employer’s contributions.
If someone takes 11 months worth of the maximum payments, they’ve used their entire working lifetime of employer contributions.
So how long can we be abused? Pretty damn long actually.
A regular UI claim is 26 weeks. The first federal extension adds an additional 20 weeks. The second federal extension adds 13 more weeks. On March 27, 2009 Governor Shwarzenegger extended those benefits another 20 weeks. That’s a total of 79 weeks. And according to the California EDD website, legislation is pending that may add additional weeks of coverage beyond all of that. So assuming the California legislature doesn’t add even more weeks of coverage (which they are likely to do), it’s possible for someone to abuse the system for 1.5 years. A 1.5 year vacation! And you’ve got to be kidding yourself to think that the idea of taking almost 2 years off of work isn’t so enticing to people that they aren’t abusing the shit out of this program. I guarantee that abuse is widespread.
So everyone abusing the UI system gets a free ride for shy of two years. And let’s be honest, we know the market for jobs is bad but most people on UI aren’t really looking. And that $434 employers pay per person per year…that’s not going to cover everybody, which means once again, working class tax payers are on the hook for bailing out anyone milking the free ride of unemployment benefits.
The last problem with welfare programs such as UI is the mentality it indoctrinates into those who choose to abuse it, that they can get something for nothing. The people abusing this welfare system don’t understand that their vacation is being subsidized by everyone who is still working, it is not free. I do not know how they reconcile this ethical dilemma in their mind, but it is the growth of a welfare dependent class in society that supports further socialization of the government until eventually, everyone is looking for something for nothing from the government. And like Margaret Thatcher so eloquently said, “The problem with socialism is that eventually you run out of other people’s money.”
The hard workers in this country, those who still retain a shred of work ethic, will one day give up and join the ranks of the welfare state once they are overwhelmed by the demands (taxes) they are burdened with to support the more ethically challenged. Who will pay for the lazy and corrupt who abuse our welfare systems once the workers throw in the towel and concede defeat?