It’s important to understand that unemployment benefits aren’t intended to replace a worker’s income. They provide support so financial hardship doesn’t interfere with a newly unemployed worker’s job search. Think of these payments not as handouts but as investments; warding off long-term unemployment saves money in the long run, or so the theory goes.
There’s evidence to back up the theory. According to a 2011 report by Congress’s Joint Economic Committee, people who receive unemployment benefits search harder and smarter for jobs than people who aren’t covered. They tend to make better job matches — that is, they find long-term positions that suit them and may pay more. With a better job match, people stay in their jobs longer, reducing turnover costs, layoffs and firings.
Many unemployed don’t even collect benefits when they are eligible. During the 2008-2009 recession, about half of people eligible for benefits never filed for them, according to a recent study.
Benefits also don’t last indefinitely. Each state has its own rules, but generally, most offer payments for up to 26 weeks. Workers must be able to prove that they earned enough and worked long enough to qualify for the maximum number of weeks, and lost their jobs through no fault of their own. Employers, rather than employees, pay the direct cost of unemployment insurance through a payroll tax.
Four years ago, Congress created a temporary program of emergency federal benefits that supplements the state benefits. The federal program has been extended several times. As a result, 24 states with the highest unemployment rates had paid up to 99 weeks of benefits. That was scaled back to 79 weeks in the last reauthorization. Five states have been offering 60 weeks, with the remainder falling in between.
The federal program is set to expire again at the end of the year. The last time Congress extended benefits, the unemployment rate increased by one-tenth of 1 percent, but not because people stopped looking for work. The opposite happened: The long-term unemployed continued looking for work so they could continue to qualify for benefits. The extension worked just as it was intended, inducing people to search for jobs.
2. Americans without jobs are hurt by immigrant labor.
In 2010, 30 House Republicans claimed a “direct link between unemployment and illegal immigration” in forming what they called the Reclaim American Jobs Caucus. But most economists disagree with that claim. They say immigrants boost the population and labor force, making it possible to establish more businesses and sell more goods and services, which in turn require more workers.
Daniel Griswold of the libertarian Cato Institute put it this way in a 2009 article: “The addition of low-skilled immigrants expands the size of the overall economy, creating higher-wage openings for managers, craftsmen, accountants, and the like.” In a dynamic economy, adding workers increases business activity.