A case for shortening unemployment benefits

As the United States government struggled last summer to compromise on how to decrease expenditures without causing further damage to the fragile economy, unemployment benefits were targeted. Many states made cuts in the amounts paid out, while others passed grandfathering policies that only would affect the newly-claiming jobless. In North Carolina, however, the federal unemployment program ended, and the duration of jobless aid decreased from seventy three weeks to just twenty weeks (the state’s policy) at the start of 2014. For many, that meant still being without a job and now without any sort of check.

The story here are the results since the news broke in July of last year, and it may come as a surprise. North Carolina’s unemployment rate has dropped almost 1.5 percent, from 8.8 to 7.4. The realistic view is that once the unemployed are forced to find work to survive, the decreased unemployment number makes sense. When the checks stop coming for those who have relied on it for up to seventy three months, it’s time to put the nose to the grindstone and find some sort of work.

The drop in the unemployment rate does have an asterisk of sorts. That comes in the form of the large number that have dropped out of the North Carolina workforce in the same span. The workforce has decreased by about 3/4 of a percent, which is evidence that many have just given up. Yet, the workforce percentage has been dropping across the board in all of America. Whether it is over a year or in about four months, individuals need to decide whether they will take a lower paying job or quit trying to find one. Even taking the percentage who dropped out into consideration, by cutting benefits down to 1/3 of what they were, North Carolina has spurred about a 1% decrease in unemployment in six months.

I don’t mean to show a lack of compassion in this post. In fact, the New York Times article that I first read about the North Carolina situation in tells the story of Ms. Alnetta McKnight, who has struggled to find work since losing her job last year. Ms. McKnight shows no signs of laziness, as she has applied to 150 jobs with no luck. Her family has been forced to make many sacrifices as she tries to provide for her family without a paycheck. However, I believe the data tells a compelling story. If almost 1/9 of the jobless have found work since the policy changes (and this was before their checks were actually cut off) there is a good chance more unemployed take action now that their checks have actually stopped coming. Unemployment benefits are an essential part of the federal budget, and are necessary to help during the phase of finding a new job. However, there must be a limit placed to prevent free-riding on another hard-working American’s money. In this case, I think North Carolina got it right.

 

Featured Articles:

Lowrey, Annie, “States cutting weeks of aid to the jobless,” The New York Times. January 21, 2014. Link

Luhby, Tami, “Why the unemployed are seeing smaller checks,” CNN Money. June 7, 2013. Link

Infographic on individual states’ cuts: Link