Turns Out...Unemployment Benefits Extend Unemployment

Tuesday, May 11, 2010 5:20 PM

Congress is currently considering a proposal to extend unemployment benefits (for the third time in two months) that The Hill reports may cost tens of billions of taxpayer dollars. The price tag, of course, could be more, as the proposal is not yet available to public scrutiny. If the measure is not passed before the Memorial Day recess, however, the benefits will run out.

We have previously discussed the problems with the policy of paying people not to work. We have argued continuously that the prolonged taxpayer support of the unemployed provides strong disincentives for finding unemployment. The Detroit News reported today that continued spending on the benefits has done exactly that:

In a state with the nation's highest jobless rate, landscaping companies are finding some job applicants are rejecting work offers so they can continue collecting unemployment benefits (…).

Chris Pompeo, vice president of operations for Landscape America in Warren, said he has had about a dozen offers declined. One applicant, who had eight weeks to go until his state unemployment benefits ran out, asked for a deferred start date.

The article goes on to discuss that given the tax burden suffered by the average seasonal worker, the difference between unemployment benefits and an authentic paycheck is generally less than a hundred dollars. To top it all off, included is a quote from the director of Michigan’s Unemployment Insurance Agency, who said this kind of behavior is “not surprising.”

Huh. You think?

Tags: FederalSpending Federal MI | Comments (1)

Reader Comments: