Conversation with an Unemployed American

Yesterday evening I bumped into an unemployed acquaintance in Starbucks and the conversation confirmed for me my concern about the recent extension of unemployment insurance to a full 2 years.

His situation?  6 months ago he lost his job as a salesman in a commission-oriented retail store.  Since then he has been collecting unemployment payments of $394 per week from the government, of course funded by taxpayers.  He has also been working for his brother “off the books” earning another $300 per week.  He tells me that when he went to the Department of Labor to sign up for unemployment he was asked to step over to a desk with a computer terminal on it and search a jobs data base.  He said there were many jobs, “hundreds”, that he was qualified for, but that only paid $12-15 per hour.  His next statement stunned me: “I didn’t go for any because I can make more on unemployment than at any of those jobs”, and then he said with enthusiasm, “and now I have 2 years!”.

It was so often said by many on the left last December that people like me who were skeptical or against the extension of unemployment payments that we are heartless, greedy, and insensitive to the plight of others.  That we sit on our riches condemning the poor like bourgeoisie refusing to throw our bread crumbs down to the proletariat.  It is seriously depicted this way by politicians, and even worse it is a point of view accepted with enthusiasm by their followers.   This is of course incorrect as it relates to most of us (there are some who are non-caring, but it is surely the exception), and highly insulting to people like me who care deeply about the less fortunate.

Do I want the poor and unemployed to get help?  Absolutely!  Do I disagree with the existence of social programs to help those less fortunate or down on their luck?  Of course not!  There are people who need help and we are obliged to assist them, and this is clearly on of the key functions of government.

But my disagreement with these programs is not that they exist, or that people use them, or that the tax dollars I pay fund them.  It is that so many people ABUSE them.

How easy it is for the left to paint the picture of an unfeeling and greedy right, and how difficult is it for the right to explain, “wait, it’s not that we are greedy, it’s that the incentives are all wrong, and that the system is ripe for abuse”.

In the case I described, if we cut off that person’s unemployment payments he would have a job in a matter of a few days.  Instead, he collects unemployment payments funded by taxpayers and spends his evenings in Starbucks drinking a mocha latte.  How many millions more are there like him?   My bet is that half of what we spend on unemployment is used for situations such as the one I described above.  We must do a better job getting help to the half who need it, and to stop providing it to the half that doesn’t.

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4 Responses to Conversation with an Unemployed American

  1. missdisplaced says:

    Per the unemployment law in most states you actually ARE allowed to earn a certain amount of money while still collecting unemployment benefits. For instance, if your claim pays $530/week (which is the max anyone can get) you would be allowed to make $200 per week without having the weekly benefit reduced. This is because that person getting $530/week unemployment was probably making a $65k/year job prior to being laid off, so this is still a BIG reduction in income. You ARE also obligated to report it, and if you made more than $200 they would pay out less per week.

    Your friend is pushing it though. At $394, he would be “allowed” about $150.

    My experience in the two years of unemployment is that none of the “minimum wage” jobs will hire a “overqualified” person anyway—willing to work or no. I should know, I’ve applied for them all: from Wallmart to the the corner Pizza shop. I eventually found something 1099 contract for 3 months, which is what most companies are doing right now to skirt the “hiring” issue, even if technically they are NOT contract jobs and should be hourly positions. Thing is, if you do take something like that, it really messes up your unemployment benefits when the contract is up: which is NO incentive whatsoever to take a temp job.

    Thing is, everyone “works” the system. Even employers.

  2. Gene Josephs says:

    We have a young couple in our extended family both in their early 40’s who live in NJ who both are in the same situation where it is easier and more profitable to stay on unemployment.

    I wonder about the tax ramifications? Is unemployment benefits, taxable at the Federal and State Levels?

    Gene

    • vofreason says:

      Gene, unemployment benefits are taxable by the Federal government but not by New York State. Apparently it varies by state as to whether or not these benefits are taxable. FICA is not withheld from unemployment payments, and it is likely that in many cases of unemployment payments that after dependents and deductions those collecting unemployment pay zero in taxes, unless they have income from other sources that they report (for instance, they work 6 months and then go on unemployment for 6 months). It seems right to collect taxes in the latter case, but not in one where the person has been on unemployment all year.

  3. missdisplaced says:

    Yes, the Feds tax your unemployment but not the state (usually). Any 1099 earnings are taxed at the higher self-employed rate.

    It makes no sense to me why the unemployment system punishes those who do try to take part-time or temporary positions. Because they look at quarterly earnings, taking a temporary position will then disqualify the UI benefits completely once the position ends, thus making it a disincentive for those who really are trying to work. You can’t really fault the people for not taking that 3-month gig when they know they will have no unemployment to fall back on when it ends and the next gig might not happen for six months.

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