Although it may be popular to hate on millionaires, millionaires have feelings too! In fact, the average American is now a millionaire according to the Fed. Therefore, let's be inclusive of millionaires!
One of my graduate school friends recently found himself out of a job. It was a tough slog, but at last, he and his co-founders decided to shutdown their startup and start something new. Nobody is really going to feel sorry for Greg, as he joined Google the year they went public. Hen then cashed out on a couple million dollars in stock options over the next 4 years.
His $180,000 a year salary was nothing to sneeze at either. But also nothing too spectacular in the land of $1 million dollar starter homes. In a nutshell, Greg is the typical Silicon Valley success story who busted his butt to get ahead, networked like no other, and fell victim to a downshift in the economy ack in 2010.
There are literally thousands of millionaire 30-somethings in the San Francisco Bay Area who are underemployed. Thousands are also just not working because they haven't found that great idea or that premium company fit yet.
Why should they bother wasting a companies' time and enlist only to quit 6 months to a year later when something better comes along? That's not fair to the company and so they do the right thing and wait.
When I asked millionaire Greg about his thoughts on the government extending unemployment insurance to 99 weeks he let out a big “YIHAW!”
You see, Greg has been collecting unemployment insurance for the past 16 weeks via the solvent state of California, and he is worried that Obama will crack down on people like him once Federal care starts kicking in.
A MILLIONAIRE'S TAKE ON COLLECTING UNEMPLOYMENT AS A MILLIONAIRE
“Sam, I've paid my fair share of taxes, and yet I still feel like I'm being persecuted by big brother. When the first unemployment check for $450 came in the mail, I felt a little guilty, so I saved it. But, after a while I realized that I was simply getting the money back that I had contributed to the system for the past 10 years!”
“There shouldn't be a difference between who can and cannot collect unemployment benefits. I might be doing slightly better than the average unemployed person out there, but I'm still looking for a job too you know. What makes a poorer unemployed person better than a rich unemployed person? Nothing.”
“Anybody in my situation is generally sick of how the government imposes restrictions on small businesses and entrepreneurs. Well, I took some risks with some old colleagues, and we failed. The $200,000 I invested in the business is real money. If the government wants to raise taxes on the people who make things great, then it is only right that we get back some of the money we gave to the government. “
Everybody Can Win In Today's Economy
“I just don't understand why people like myself who work so hard are being vilified by the masses. What did we ever do to them?
The economy really is big enough for all of us to make our fortune. Before, you had to spend hours in the library looking up research. Now, all you gotta do is Google something, do some plagiarizing, and voila! You got your essay. The slacker kids of the world should be thanking me and all my ex-colleagues at Google for allowing them to work even less!”
“I paid more than the average person into unemployment insurance since I made more than the average person. It's simple math really. 10% times $180,000 = $18,00 a year = $180,000 in contributions over the 10 years I've been working!
Meanwhile, the median salaried unemployed person working for 10 years in the Bay Area only contributed about $80,000 ($80,000 X 10% X 10 years). I deserve my money, especially since there's a cap on unemployment distribution!
“$450 a week isn't that much Sam. I mean, I just dropped $300 bucks on drinks tonight for all our free-loading fools! I got to be honest, I want to join free-loader nation as well, but then I remind myself that I paid $216,000 into the system over the past 10 years!
The government expects me to live off $150 for the remaining 6 days? One steak dinner for two and my weekly budget is wiped out. Give me a break!”
After the 5th drink…
“The great irony is that I'm a hard core Liberal/Democrat who like many, are all for extending unemployment benefits to as long as possible while I was working. So weird that once I stopped working, and started collecting, I'm afraid to tell anybody I am collecting. Liberals of the world, unite!”
“Is that girl looking at me funny? I hope she isn't a mean Republican.”
“Do you think it's too hot to go to Prague in August for a couple weeks?”
Millionaires Reason And Have Feelings Too
Greg clearly believes he shouldn't be discriminated against for collecting unemployment just because he's rich. He also doesn't believe in discriminating against your race, sex, or creed either. Greg is a pretty modern guy, wouldn't you say?
Your toes might start curling and steam might start erupting from the top of your head after reading his statements, but do recall that these are sound bites from a private conversation. Ask yourself, what's it to you that Greg is collecting money from the government? You might just find out that the problem is with you!
Greg isn't going about smugly proclaiming to all his friends that he's a multi-millionaire who is getting some $1,800 a month in unemployment insurance for the next 99 weeks.
No, Greg pretends to be glum about the job prospects of the economy to his friends and family. Greg was very generous with his unemployment benefits that night at the bar. Now, if he decided to buy us bottom shelf drinks, that's another story!
Reader Questions
Readers, what's your take on millionaires collecting unemployment benefits and why?
Should we carry taxation discrimination farther (progressive tax) and bar certain folks who make above a certain amount from collecting unemployment insurance?
Anybody coming around to the idea that it's wrong for those 47% not paying taxes to raise taxes on the other 53% yet?
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Sam,
Good job on the repost. I didn’t catch this one back in August.
I think that you added the extra fuel to the fire by writing so vividly that you put us in the bar right next to Greg and yourself. I’m sure that you would have garnered more empathy from your readers had the scene been set in a cold barn with Greg drinking stale milk and swatting bugs from his face while at the same time struggling to write the code for the next greatest software suite. But we couldn’t have that, could we? ;)
If he truly needs the money, he should take it. The problem is that we all have our own relative definition of the word “truly”.
He’s legally entitled to take the money, so he might as well do so. Without getting into a broader discussion, that’s how I see it with this guy. I will say that I don’t feel bad for this guy at all, and think his attitude about this in general seems very poor – based on the information given. But he’s entitled to the money, so he might as well take it. Why not?
If your friend is ambitious enough to secure an education that allows him to make enough money to become a millionaire, I doubt that he will want to be on unemployment for any length of time. Sure, he is entitled to it, but his ambition level as demonstrated by his success level will get in the way of him staying on unemployment for any length of time. Perhaps it is a social experiment for him…. to see how the other half lives so to speak.
This is a difficult situation. It just seems wrong ethically for a millionaire to be receiving unemployment benefits. It is perfectly legal however. He has a point that he has paid into the system all of these years and is only reaping what he has sown. I would still say that no he shouldn’t receive them. Maybe the government can adopt a plan in which you can pay into unemployment insurance is you wish to receive benefits and that those who do not will not receive them. Just a thought!
I think your friend forgot what he learn in his ethic class. It’s perfectly with in the rule of the law to take this money, but sometime you have to hold yourself to a higher ethical standard. Personally, if I am a multimillionaire, I would not take the $450 a week unemployment check. That money is meant for those people that need it to feed their family and pay the rent.
We shouldn’t take networth into account when calculating unemployment. Maybe your friend has all his money tied up in real estates, then he would need the unemployment check. It’s up to each multimillionaire to make his own decision whether to take the money.
I’m 52, have never been on the government tit. I’m not a millionaire and was unemployed for 5 months and never went on unemployment. The only way I would ever take a handout would be if I was desperate and could not feed myself. There is something called pride, remember that? Pride in oneself and how you conduct your life? I believe it’s immoral to accept help when you don’t need it. Your millionaire friend needs to take a look in the mirror and ask himself if he is living his life honorably.
If he gave you $200,000 over the years, you would look down on him if he asked for $20,000 back a year?
Let’s try it and see! He can start giving me $200,000 today!
This is exactly why unemployment should not be handed out so easily. Yes, he deserves to collect if he CAN’T find a job, but it is not meant to be a 2 year vacation. I also had a friend on funemployment who turned down every mention of a job opening. Only during his last month of government payments did he begin to search for, and easily found, a job.
I prefer the work programs of the Depression era. If you want the money, show up 20 hours a week somewhere and sweep sidewalks, shovel ditches, clean toilets, etc. This would weed out many who only want free money, who work under the table, or are fraudulent applicants.
Ask Greg how he feels about the high taxes he will pay when he gets another 6 figure job that may be required to pay of the money we are borrowing to give him.
He can’t find a comparable $200,000 job so he waits and collects unemployment. What’s wrong with that? Greg like me hates how the gov’t discriminates against different income classes and taxes.
Ok, some things that need to be mentioned that I don’t see here.
1. Some states have employees pay into unemployment. Some do not. So it depends upon what state someone is filing for unemployment to determine if they “paid” into it or not.
2. States have different rules about collecting unemployment. In Alaska, it doesn’t matter if you were layed off due to seasonal work, quit to go to school, or fired because you were stealing from your employer. Everyone gets unemployment. So, again, it depends upon what state you were working in.
Until rules are equitable, you won’t have equality regardless of extending benefits for the 100’s of people who are probably working under the table or are self employed. Guess what? That is up to the individual’s honesty to report. lol
I agree with Bucksome Boomer! Under the current system, they do not ask you about your net worth to determine if you qualify for unemployment, only if you are unemployed (and a few other factors). So, of course he should collect unemployment benefits.
Now, to the question of “should we change the system to look at net worth, or liquid assets?”. That’s a hard call to make. I’m typically against state & federal transfer payments as the government has proven to be very inefficient at almost everything, so that’s a tough one for me.
As someone said earlier, unemployment is there to help support those who worked and are currently unable to find a job. It’s not an emergency fund for every American. However, how do we determine who is needy and who isn’t? That’s truly the problem with all of these transfer payments, how does the government (that is very distant from the individual) determine eligibility?
I’m surprised there’s so much discussion on this post. It seems straightforward to me. Greg qualifies for unemployment, he’s unemployed so he draw unemployment compensation.
It seems lke a lot of people are bringing personal prejudices into the conversation versus pure logic (I’m personating a vulcan today to continue my Star Trek week).
Well said Bucksome. I’m surprised by the debate as well. If we have no predudices, I think we’d all be FOR Greg collecting unemployment since he is: 1) unemployed, 2) looking for a job, and 3) paid into the system.
I think he should be able to collect unemployement just like anybody else, but he shouldn’t mooch off the system – nobody should. I’m all for safety nets, but I don’t like all the unemployment “nesting” I hear about. Get a darn job if you can.
Oh, and of course no one feels as sorry for him as the unemployed that aren’t millionaires. I believe the benefits should be available to everyone, but of course I feel more empathy towards people in actual need…that’s just human. Your friend won’t be hungry and hopefully won’t be homeless (although it sounds outrageously expensive where he lives). If he stays unemployed too long, he could think about moving somewhere with a lower cost of living. He could retire and live pretty nice off of interest in some places based on what he has…
@ Larry – The median home costs $600,000 in the SF Bay Area. You think an $80,000 a year salary gonna get you there any time soon? Don’t think so!
I know it’s an expensive area, Genie. I live on Long Island, also expensive, but also with a wide range of prices. Unless you’re disputing the statistics on salary I’ve quoted, there obviously are people in that area who aren’t making money hand over foot, and who manage somehow to survive. If the median is $600K, then there are homes of both lesser and higher value, or couples have dual incomes, or people rent alone or with roommates.
You can buy a 600 sqft one bedroom for $600K in a nice part of SF. That’s living large!
Sounds like he got a bit smashed! =) Good thing you were sober enough to remember the whole conversation.
Maybe they should look at assets too, instead of automatically giving someone unemployment cheques when they are actually quite well off.
People here in Vancouver who have “astronaut” husbands (who work overseas but don’t claim taxes in Canada) who are loaded (e.g. huge assets, million dollar homes) but don’t report as being loaded (e.g. no income) still get some money given to them by the government.
I kind of have a thing against that.. sorry to say.
Greg is doing nothing wrong. He was forced to buy unemployment insurance, and now that he is unemployed, he should collect the benefits. Telling him otherwise just because he is rich is absurd. Let him collect what rightfully belongs to him.
Hi Sam, I am of the belief that even if one is wealthy and unemployed, as long as they have paid their taxes, then they deserve unemployment. Life is not fair. I think the most incredible part of this story is that your friend and so many others in their early years cashed out with millions from hi tech cos! Is it fair? Is it fair that teachers, cops, & nurses are paid much less than entertainers and atheletes? Life is filled with inequities, but that does not mean that your friend doesn’t deserve unemployment!
It’s true, plenty of folks in their mid to late 30’s did VERY well in the Bay Area since they got to ride the incredible internet bubble. It is an absolute fallacy everybody lost money. Plenty of people made a lot of money. And Google was post internet bubble, and the stock still went up 6X. Right place, right time.
Sam, what is your political position? You always try to be so wry in your comments, so I can’t be sure ;)
It’s insurance, so he paid into it. So long as he’s looking for work etc. why not get the benefits? If he’s not looking for work, then that’s another story.
Just an observation: I’m not sure how things work in California, but here in NJ, unemployment taxes are only deducted on the first $29,700 of your salary. So here, he WOULDN’T be paying more into this particular fund. State and federal income taxes, sure, he’d be paying more… but not into the NJ state unemployment fund.
Okay, one more thought on this one.
What if said rich guy got disabled instead. He’s still rich, but his future earning potential might be down the toilet. Does that change how people feel about this guy? And if so, what the heck is the real difference?
The system is in place for people who are between jobs. You wouldn’t expect an accountant to go become a garbage collector, even though they both can pay pretty decent wages.
I also would rather have him make $200K and pay twice the taxes to feed the support programs. I’m still pro-rich guy here.
I don’t think one should be discriminated against just because they made a lot of money in the past and may still have quite a bit sitting around in a bank. He did pay into his benefits during his productive years, so he is rightly entitled to those benefits as the law stands today. However, I agree with Charlie (commenter above); there aren’t any specific rules or guidelines that says benefits must be used for certain items such as necessities. It would be interesting to find out how people spend their unemployment checks. I bet if a study was ever completed, the government would enact some new guidelines that would limit the way it is spent.
I hate to see anyone who can support themselves collecting anything from the government. The money is supposed to be there for those that don’t have anything else. And in your friend’s case, he has “something else”. What ever happened to pride? Maybe if he’d slow down on the steak dinners, he wouldn’t need the unemployment checks…..
Ummm.. the debate isn’t whether he needs the unemployment checks. The debate is whether is OK for him to collect unemployment when he doesn’t need it!
Why should millionaires not get unemployment insurance when they are unemployed? Unemployment payments are not a needs based payments. If your friend had a $180,000 income and lives frugally (relative to his income) on $6,000 a month saving the rest of his money, the weekly unemployment check of $450 covers only a fraction of his expenses. Lower income people get a much larger portion of their expenses replaced by unemployment insurance. Imagine your friend got the same portion paid in unemployment insurance! A lynching crowd might come out and take “good care” of unemployed millionaires.
Brilliant observation! If someone was only making $900 a week, or a respectable $46,800 a year, and got $450/week in unemployment benefits, that’s 50% of his/her income, which is pretty darn good!
Greg makes $3,500 a week, so imagine the outrage lynch mob indeed if he received $1,750/week in unemployment benefits, or $7,000 a month in benefits! That’s only fair though in this scenario yes? Afterall, SF is more expensive than Iowa.
Nobody pays 12% unemployment taxes.
From the DOL website:
The FUTA tax rate is 6.2% of taxable wages. The taxable wage base is the first $7,000 paid in wages to each employee during a calendar year. Employers who pay the state unemployment tax, on a timely basis, will receive an offset credit of up to 5.4% regardless of the rate of tax they pay the state. Therefore, the net FUTA tax rate is generally 0.8% (6.2% – 5.4%), for a maximum FUTA tax of $56.00 per employee, per year (.008 X $7,000. = $56.00).
For the State of California:
The California Unemployment wage limit for 2010 remains unchanged at $7,000. The California Unemployment Contribution rate, however, varies from company to company, from 1.5% to 6.2%. The Employment Training Tax rate for 2010 remains at 0.1%.
So, here is the total annual tax, assuming his company paid the highest tax rate to California:
$56 (Federal) +
$7,000 * (.062 + .001) = $441
= $497
This is paid by the EMPLOYER, not the employee.
Great find Naomi, and something I was aware of. But isn’t it interesting how CONVULUTED and confusing the system is?
Also, if employer’s didn’t have to pay for this tax, and that tax etc… don’t you think they’ll have more money to pay the employee? Of course they would! All these taxes on this and that serve to DEPRESS wages.
Maybe all of that tax wouldn’t be thrown back into wages, but any costs borne by all employers are eventually paid for by the consumer, so these sort of taxes that “don’t matter” because the “employer pays it” are actually paid for by the consumer in the form of higher prices and the employee in the form of lower wages.
Wait a minute…this is something that you were aware of? I think you should have stated this in your blog entry. To let your readers think that Greg paid $216,000 into “the system” is irresponsible.
Yes, shame on me. The goal is to get readers to debate their way to the truth. And even the data you stated isn’t the whole truth if you ask any small business owner who pays for unemployment. They will reguarly say they spend 7-10% to cover for employees, and gripe why the employees don’t pay for themselves, which then leads to the employer just cutting employee wages.
Greg probably paid a whole lot more into the system with the progressive tax system we have here! By probably several hundred thousand more actually!
Worth reading (see also links at end):
https://www.stateline.org/live/details/story?contentId=503104
It is interesting that there are no rules on how you can spend your unemployment checks. Most people are probably using them to cover housing and food when they’re out of work as those are usually the biggest expenses, but it would be interesting to see stats on how people are really spending those checks. I heard about people in California abusing welfare money to buy alcohol at clubs. These systems have so many loopholes and until they’re closed there will always be people going through them.
Maryland issues a credit card that can only be used in certain areas. No checks! Rent, food (no booze or smokes).
My son in law is out of work. He is the first one in our family to use unemployment insurance. There are four of us employable, and almost 70 years combined putting into the system. Our advice was to take his time and work through it. The average turn around time in the DC area is about four months. Not like he is going to go anyplace exciting on $400 a week (especially since our daughter and grandchild are with us while he looks).
As far as the 99 weekers- they need to MOVE and find a job. No reason for 99 weeks on unemployment.