There are several compelling reasons why anyone on unemployment, or considering it, should stay on unemployment.

• Unemployment benefits have been extended to provide compensation for almost two years.
• It is more than likely that the federal government, or states (borrowing money from the Feds) will continue to extend unemployment benefits, especially when the unemployment rate goes up, which it will.
• A quick back-of-the-napkin calculation points out that if you accept a job for $30,000 a year, you will break even with what unemployment pays but without working 40 hours a week.
• If you are having trouble making your house payment, you can go on unemployment and receive up to $4,000 a month in compensation from the government (unemployment plus a tax-free no-recourse $50,000 to cover your mortgage payment, taxes and insurance).
• With the $4,000 a month scenario you would need to accept a job paying $65,000 a year to break even but without working 40 hours a week. You can also use the mortgage tax deduction (even though the government is paying your mortgage) which should wipe out any taxes you would pay on the unemployment insurance. Thus, $4,000 a month in your pocket…tax free.

The per capita median income for the United States is $39,138, which is only $9,000 over the break-even for being on unemployment. I think most people would agree with me that losing $9,000 is definitely worth not working a single hour all year, being able to spend all your time with your family, travel at will,  not paying for child-care while you work, or gas to drive to work, or dry-cleaning, or eating out while at work.

Therefore, considering the average per cap income for the U.S., it would seem logical that at least half of the population should find a way to go on unemployment as soon as possible and take a minimum of two years extended vacation.

My point with this post is to show that our government has created massive incentives for people to either go on unemployment, or if already there, to rabidly avoid going  back to work. Why would they? Why should they? It’s obvious that most Americans can make more money avoiding work. Is it moral or ethical? No. But it is logical. Ultimately, everyone looks out for themselves. Is trading two years of quality time with your family worth making barely more than what you could get on unemployment?

That is why, as reported in the WSJ, companies are having a tough time filling open positions. Many people who were laid off made decent wages, and as long as unemployment is paying the same or more than what they were making while working, there is no incentive for them to go back to work, and I can’t really blame them.

Our government is using our own money to buy votes. As long as there are more people collecting social security and medicare (baby boomers), Medicaid, government subsidized housing, food stamps,  (the “poor” and the fraudulent), collecting unemployment (10% of the population), underwater homeowners enjoying government money to keep their homes…as long as there are more of THEM than people that ARE WORKING and NOT taking any money from the government, then there are more people who will continue to support this kind of wealth distribution than there are people who are tired of paying for everybody else.

I blame our government, for providing an incredibly strong incentive to stay unemployed, rack up billions more in debt, and rob more from taxpayers who continue to show up every morning at 8am to earn the money the government needs to pay others off and encourage them to sleep in every morning and pursue quality personal time without a care in the world, or an hour on the clock.

Categories: Unemployment & Labor Law

Tags: disincentive, EDD, redistribution, unemployment insurance