IN AN ECONOMY as fast-moving and cyclical as ours, unemployment compensation eases the personal hardship of worker layoffs and promotes labor mobility. By international standards, the United States is neither careful nor generous in its treatment of experienced workers. Benefits provided to unemployed skilled workers are relatively low, and little responsibility is placed on employers to maintain employment and ease worker adjustment to industrial change.
Unemployment benefits are, nonetheless, a big-ticket budget item. Costs this year are estimated to exceed $25 billion, and outlays remain high even when the economy is booming. Partly this is because benefits are extended broadly -- and frequently for long periods of time -- to many people who are voluntarily out of work (retirees, for example, or short-term workers who have returned to school or home work) or who are chronically unable to find or hold stable employment.
The tricky job of unemployment benefit policymakers is thus to provide adequate compensation to allow worker adjustment to necessary economic change without, at the same time, interfering with labor markets by promoting worker turnover, increasing payroll costs and prolonging unemployment.
The Reagan administration's proposals address only the second part of this concern. The primary aim of the proposals is to cut back on the numbers and kinds of workers receiving unemployment benefits for over six months. These "extended" benefits, partly financed by the federal government, are now paid in individual states with relatively high unemployment rates and in all states when national unemployment is high. While the particulars of the plan are worth debating, the administration is on relatively firm and familiar ground here.
Far more questionable are the restrictions proposed for the state-financed unemployment benefit programs for the short-term unemployed. The administration's plans would require that persons receiving benefits for more than three months accept jobs paying no more than the value of their current benefits. Frequently that is less than half their previous pay. Forcing these workers into less skilled jobs will simply lower their productivity and push less skilled workers out of employment altogether.
A flat federal requirement of this type departs from the traditional view, strongly supported by employer groups even in this case, that since regular unemployment benefits are financed almost entirely by state-levied taxes on local employers, states should have considerable freedom to decide what benefits to pay and what conditions.
There are practical difficulties as well. Work requirements are very difficult to enforce -- how do you make someone behave well when he is interviewing for an unwanted job? The Employment Service, whose task this will be, already has its hands full trying to police existing work requirements for welfare and unemployment benefits and, under the Reagan budget, it faces staff cuts of over 20 percent.
Compared with other industrialized nations, the United States is very careless of its skilled labor force. Apart from what their previous employers may provide, experienced workers losing their jobs receive little help in locating new jobs, moving to them if necessary and acquiring new skills to adjust to the changing needs of industry. This kind of positive assistance -- the kind provided by our ablest international competitors -- not only would be fairer treatment for our nation's workers, it would also represent a more suitable policy for a government interested in promoting rapid economic growth.