Why Unemployment Benefits Should Not be Extended–Again, Part I/Correction

Democrats, Republicans, and the President are in desperate negotiations to extend the Bush tax rates as the clock ticks toward the end of the year. Congress and the President have known this day would come for ten years, yet only now that the tax rates are about to expire have they decided to act.

Note to liberals: extending the Bush tax rates is not a “tax cut”. Tax rates will remain the same. If the Bush tax rates are not extended, we will see large tax INCREASES ON EVERYONE who pays income taxes.

In return for not increasing the tax rates, the Democrats want an extension of unemployment benefits. Originally in this post, I said that unemployment compensation would be extended for another year for those who have maxed out at 99 weeks. Apparently that is not true. They will be extended for those who have not already expired their unemployment compensation. Those who have received 99 weeks of unemployment have (at least for now) expired their unemployment compensation. http://hotair.com/archives/2010/12/12/a-note-on-the-unemployment-extension/

I got my misinformation directly from the President. Like so many of his speeches, President Obama was misleading: “Unemployment Insurance will also be extended for another 13 months, which will be welcome relief for 2 million Americans who are facing the prospect of having their lifeline yanked away from them in the holiday season.” http://www.unemploymentextensions.org/

So, it appears I was incorrect in that unemployment insurance will not be extended past 99 weeks, even though the President insinuated it would be. I am sorry for that misstatement. I should not have taken the President’s words  at face value.

The California Employment Development Department has a fairly good explanation of this, although it varies by state. Interestingly, that website says that “Two bills were introduced in Congress that would add an additional tier of extension benefits to the maximum of 99 weeks. But there are no reports of any significant movement on the measures.” So apparently some in Congress are attempting to extend the 99 week limit.

Long-term unemployment insurance isn’t a good idea and discourages people from getting a job. It is also costly. Those who are on unemployment often claim they already paid in as unemployment taxes the unemployment compensation that they are receiving. However, that is highly unlikely.

Not to get too far into the weeds, but the Pennsylvania Unemployment Tax Rate varies on the type of employee, and ranges from 2.21 to 10.5 percent on the first $8000 of wages earned for each employee.

http://hubpages.com/hub/PA-Pennsylvania-Unemployment-Tax-Rate

So, let’s say an employee pays the maximum, 10.5 percent on the first $8000 of wages. That means the maximum an employee would pay is $840/year in unemployment taxes. That’s the most they’ll pay.

How much will that employee receive should they be laid off? About one-half of their full-time weekly wage.

Isn’t that great? The most you pay in per year is $840/year and what you get back is half of your weekly salary.

Clearly, denying the extension of unemployment benefits just before Christmas would be politically unpopular. But when you’ve received months of unemployment benefits, you are on welfare. Actually, you were living on the taxpayers after a few weeks of unemployment benefits.

If the current tax rate extension/unemployment extension bill should pass, come January Congress should quickly consider when and how they are going to stop extending/start reducing unemployment insurance.  All they’ve done is kick the unemployment insurance can down the road—again, and it is unlikely that the unemployment rate will be any lower at the end of 2011 than it is now.

Like all entitlements, once you start giving them out, they are very difficult to rein in.

Tomorrow: An example of why extending unemployment insurance isn’t a good idea.

aln

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8 Responses to “Why Unemployment Benefits Should Not be Extended–Again, Part I/Correction”

  1. T Hall Says:

    Your l$840/year math example doesn’t take into account a long term employee. I was employed for 15 years, so 15x$840=$12,600 that I paid into unemployment insurance. When my employer’s business almost went under, we went on the Shared work program, which keeps me working part time for him and I get part time benefits, until he either gets the business back on its feet or my benefit amount runs out,(meanwhile searching for a new job) My benefit earned amount is about $12,000.00. So no tax payer is paying for me, and it isn’t welfare. You might try a little research into ALL unemployment programs before you wave your judgmental little wand over everyone.

    • thomasjeffersonclubblog Says:

      However, T Hall, if you weren’t working part-time and getting partial benefits, it wouldn’t have taken you very long to go through your 15 years of contributions. You are also assuming that you paid the highest amount for 15 years. From what I’ve read, construction workers are some of those who pay in the highest. Perhaps you are one of those who pay in at the highest level, or about $840 a year, but you may also be one of those at the lowest, which would be about $177/year, or about $2655 in 15 years. If you’ve gotten $200/week for 13 weeks, you’ve basically gone through all you paid in at that level.

      It must be fairly obvious at this point that I have never had any experience with unemployment insurance, and I hope I’m never in that situation. I feel for those who are. But, relying on the government to keep extending benefits is not the answer.

      aln

  2. You are laughable in your ignorance Says:

    I should also probably mention that EVERYONE is cut off if/when they exhaust their tier 4 benefits. And, not everyone gets 99 weeks of benefits. It depends on the state in which they reside.

  3. You are laughable in your ignorance Says:

    Okay, I can understand your ire and your anger. After all, you have completely misunderstood what this extension is.

    It is NOT an extension of benefits for people who have been unemployed for 99 weeks. It IS a continuation of the four tiers of benefits for those unemployed who are eligible for any one of the tiers now. The extension is an extension of the actual program… NOT benefits. Anyone who is a “99er” will NOT receive any additional benefits. No one will receive additional benefits. It simply continues the program for another 13 months, making benefits available to unemployed people who are already eligible, and those who will soon be eligible if they do not have a job at 26 weeks.

    Please get your information correct before you spout off about issues. How clueless can you be? Or is it that you choose to use incorrect information to get readers?

    • thomasjeffersonclubblog Says:

      Thank you for pointing out my mistake. We do not try to misinform our readers. We have corrected the post.
      aln

  4. Why Unemployment Benefits Should Not be Extended–Again, Part I … | The Daily Conservative Says:

    […] here: Why Unemployment Benefits Should Not be Extended–Again, Part I … Share and […]

  5. Donna M Says:

    your NUTS!

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