Hear that? That is the sound of another self-righteous employed person complaining about the unemployed sucking up resources and driving the government deficit further into the red. Who cares employed people?? You guys aren't the ones who are struggling to find a job in this economy!
Several Truths About Being Unemployed
1) Few can live a comfortable lifestyle off of unemployment benefits which average $200-300 a week
2) The vast majority of people who are unemployed want to make more money, find jobs, and do something meaningful with their lives.
3) Our budget is headed towards a multi-trillion deficit, so who cares if we're going to spend another $50 billion to help millions of unemployed people survive for up to 99 weeks?
Budget Deficit Doesn't Matter When You Have No Job
The big debate over the Republicans and Democrats on the latest enhanced unemployment benefits is how the government will pay for the bill? The Democrats say don't worry, it'll come from somewhere while the Republicans say cut spending elsewhere to not add to the deficit.
Whatever the case may be, the budget deficit doesn't matter if you're struggling to survive. We'll have to provide for shelters and more public safety officers when crime creeps higher as desperation kicks in.
The ramifications of a budget deficit are only theoretical. People say the government will need to raise interest rates to attract foreigner capital to fund our greedy spending.
With higher rates by government, a crowding out effect occurs where efficient capital doesn't get directed to the private sector. Meanwhile, borrowing costs for citizens increase, also choking off investments.
Refinance Your Debt Now
Last I checked, the 10-year yield is close to 1.73%, and foreigners are happily funding us. Meanwhile, plenty of people are smartly refinancing their mortgages and saving money.
People say budget deficits are also bad for our children. How can we live with ourselves knowing that our children are the ones who are going to fund our bad spending habits?
We live with it just like we live with the fact that the older generation will happily collect their social security checks, while the younger generation continues to pay without expectations of anything in return!
Once again, all this budget deficit talk is just theoretical nonsense. It carries very little weight in determining whether or not we should help our fellow needy citizens or not.
Let's Care For The Unemployed
A portion of our paychecks are paid for by the employer. This expense (unemployment insurance) is effectively calculated into a working person's total compensation.
If the unemployment insurance expense is 6% per annum, one can assume that if an employer didn't have to pay this expense due to 0% unemployment, perhaps a couple percent of the 6% may lead to a higher paycheck.
So here is the thing for those who argue it's a bad thing to spend another $50 billion bucks extending unemployment benefits. Or arguing against the $1.9 trillion economic stimulus package during a pandemic.
Would you rather have the Federal Government pay or pass a bill to increase the unemployment insurance paid by employers by another several percent? If you choose the latter, prepare for MORE layoffs.
What's great is that even if you have investment income, you can still collect unemployment benefits. Unemployment benefits are tied to W-2 job income, and not to investment income.
Therefore, it behooves everyone to try and build as much passive investment income as possible for financial independence. It's not good enough to just contribute to your tax-advantage retirement accounts. You must focus on building up your taxable investment accounts and real estate portfolio.
Be Empathetic With Those Who've Been Laid Off
It continues to perplex me how vocal some employed people are about not helping the unemployed. Unless you've been unemployed yourself, you have no idea what you're talking about!
When you're unemployed for an extended period of time you start doubting your self worth. You ask yourself what's the point of life if nobody is willing to give you a chance. You give up looking because you can't bare another non returned phone call or e-mail. Each rejection is like a blade jabbed and then turned in the soul.
As I come to the end of this article, I realize why so many employed people are so smug about the unemployed. The reason is they are very unhappy with their own jobs.
They can't stand the fact that someone is getting $1,200 a month to “do nothing” while they have to work 40 hours at their miserable jobs to only earn $3,500. Miserable people like to make other people miserable. The next time you see someone irrational complaining why helping others is a bad idea, just know that they are going through their own torment.
If you were happy with your job and made millions of dollars, don't you think you'd be more supportive of trying to help your brothers and sisters out? I think so!
Related: The States With The Highest And Lowest Unemployment Benefits
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A quote I feel is relevant, from John Steinbeck: “The problem with the working class (meant to include all of those who work) in America is they act less like exploited proletariat and more like temporarily embarrassed millionaires.”
People in America have issues with lowering their standards, especially with our new economic realities. I have friends out of college that wouldn’t take a non-paying internship for the experience. And as much as they are bull shit (the whole non-paid internship thing is something I’m passionate about), doing that for 6 months will more likely lead to employment than bitching about not getting any paid job for those same 6 months.
I couldn’t agree more. That 6 month unpaid internship could lead to massive returns in the immediate future.
It’s because people have no idea what their government spends, so naturally they look at unemployment insurance and think it’s some insanely clever way to balance the budget–food stamps, too.
Even though more than 10% of people are on food stamps, and roughly the same amount are receiving unemployment benefits, the cost, relative to the rest of this outlandish budget, is marginal. I’m all about balancing the budget, but I still realize there are plenty of other items that are more expensive and easier to cut.
There will always be dead beats who try to take advantage of the system, and those who try and try and try and can’t get a job. I have a close relative who fell into the latter category. He literally applied to hundreds of blue collar jobs locally, in state, out of state, anywhere he could apply because all he wanted was to get a job. Sadly I think he was turned down a lot because of his age and with the amount of applicants, it wasn’t worth it to make a case for age discrimination.
That’s sad for your relative, and I think that’s bullshit. It’s bullshit to discriminate against age, and I hope the state/federal government can help him out when he’s most in need.
There is an old joke that goes something like this, a recession is when your neighbor loses his job and a depression is when you lose your job. Although that is supposed to be a joke it is very telling about many of us. If you are not affected, you are less sympathetic. Very few people want to be unemployed and should we punish the majority for the few. Could the government done more to create jobs? Yes and they should!
It really is easy to be unsympathetic when you aren’t in someone else’s shoes. It’s easy to point fingers and say this and that, but until we know what it’s really like, we need to stop with our petty insults and smugness.
I think it’s really sad that many people have little compassion for the unemployed. I was unemployed for a year after graduation and I know what it feels like, and I wasn’t even elligible for unemployment benefits. I hope jobs continue to be created so that we can get back to a healthy economy.
This topic cuts to the heart of the matter. I am a white male who lives (exists) in a small northern city in Minnesota. There are not a lot of opps up here, and I have a cd/mi background. Nobody bothers me, and I walk/bike around town. I am not enamored of the system of capitalism, it favors the “silver spoon” types that are too much into themselves. Get some spirituality in your lives people! This life is temporary, the next one (should you believe in a higher power and an afterlife) will be much better………………
Good to hear your story man, and glad you learned through experience.
The extension to unemployment benefits will provide assistance to unemployed Americans due to recession. It is now said that US economy has added 882,000 more jobs this year.
Well, y’know, Sam… I think stress brings out the worst in all of us, even as sometimes it also brings out the best. Economic stress, which all of us are facing whether we’re employed or not, evokes fear, and fear breeds meanness and bigotry.
IMHO that’s what leads to the kind of hateful talk and behavior we’re seeing in many realms, especially political and financial. At least, I hope that’s the explanation. The alternative (that there really are, objectively, a lot of hateful people living in America) is much less pleasant to contemplate.
Hi Samn,
I am a “Smug employed person” living in Canada — Well, I don’t really consider myself “smug” ;). Here are a few ideas I have for helping to lower the amount of unemployed:
* Cut the red tape out. The IRS tax code and its cousins make things far more complicated than they need to be.
* Level the playing field by reducing subsidies and legal protections that make it more difficult for new players to enter an entrenched playing field.
* Restructure welfare and other social safety nets so that they don’t penalize people who seek to better themselves and seek employment. On the employer side of things, make it easier to do things like unpaid internships, or perhaps internships for room & board. In my view, getting some experience is better than getting nothing at all, and getting some money is better than getting nothing at all.
In our current crisis, some structural unemployment is inevitable, as people don’t demand houses as much (for example) and shift their demands to other things. Reducing the barriers for people to gain experience and seek employment as well as reducing the barriers for employers to hire people will help reduce the unemployment rate.
Studies have shown that families where everyone is unemployed raise kids who find it hard to get a job, so it’s important that people don’t get too dependent on receiving benefits, even if they don’t pay all that much. If there are no other options, then I can understand the need, but the emphasis should be on increasing those other options, not increasing the handouts.
I think extending the unemployment benefits is based on the current economy. If that means 2 years of benefits fine because the unemployment rate is still over 10% in my state.
In good times, 26 weeks is great but not today. What really upsets me is politicians messing around with people’s lives to make a point. They have no idea what’s it like to try to live on unemployment and still keep your modest home.
Good point Bucksome. Which means that a good proposal would be to have a specific link to the unemployment rate and unemployment benefits i.e. 4% unemployment (close to full unemployment) then 26 weeks, and 1% higher in unemployment we add 10 weeks and so forth. Makes sense!
“It continues to perplex me how vocal some employed people are about not helping the unemployed.”
Sam, the argument isn’t about not helping the unemployed. It’s about the length of the benefits. I say 99 weeks is preposterous.
When they first started the benefits only lasted for 26 weeks. Then it was 52 weeks. Then 78 weeks. Now 99 weeks.
Perhaps we should make indefinite unemployment benefits a reality via an amendment to the Constitution? What do YOU think is reasonable? :-)
How did this country and its citizens manage to become the number one economy in the world in the absence of unemployment benefits? What happened in the 20th century that suddenly made unemployment benefits necessary, let alone indispensable? I know the answer to the first question. I have a theory for the second. But I’d be curious to hear your thoughts to both of those questions.
It’s just like taxes, Sam. You give an inch and eventually it becomes a mile. Where do you draw the line?
Thanks for letting me use your blog to espouse my self-righteous opinion. ;-)
Best,
Len
Len Penzo dot Com
99 weeks of unemployment is a sweet gig. The company I worked for in 2002 went belly up and I got 13 weeks unemployment that was extended to 26 weeks, I thought that was very generous. 99 weeks is really a huge number. I think there should be a time limit to unemployment to help force people into accepting a job.
If people are poverty stricken there should be indigent support like welfare and SNAP (food stamps) but this should be decoupled from unemployment payments in my opinion.
My list of how to reduce unemployment is easy and is listed below:
1. Remove the permanent deferment of US companies paying corporate income tax for profits earned overseas, given them a 2 year window to pay this to the US government in full – this would help the deficit! Then, lower the corporate income tax rate on companies making profits within the USA to 15%. BAM, instant employment creating in mass!
2. Make it illegal to have any public union for government workers. Following this, switch the existing pension plan from defined benefit to defined contribution. Hire people based on worker demand who will accept a job at lower wages. Federal spending will go down and employment will go up.
3. Eliminate Davis-Bacon and other union legislation that forces wages paid on government projects at expensive union set levels – there will be more work done at lower wages.
4. Eliminate the FASB provision that allows banks to mark to model and force them to mark to market within 6 months. When institutions start to go under let them and take the government money to boost up the FDIC funds to ensure all depositors are made whole. Let the bondholders and too big to fail institutions take their haircut.
5. Unload Freddie & Fannie from the US government. Set a timetable and sell off the mortgage backed assets via an auction market over time.
6. Plan for painful deflation but temper this with employment growth and an ultra solid floor under the economy that guarantees a good recovery.
If the Obama administration got their heads out of their butts they may think about implementing some of these things. Instead it’s just extend and pretend and keep borrowing and hope it all goes away. Don’t look at the government policies, instead focus on Chelsea Clinton and her glorious wedding with gluten free cake and vegan entrees with the grass-fed beef on the side.
-Mike
That’s sweet you got 26 weeks of unemployment! I’d totally use that money to go to Cancun or something and live like a king for 2 months!
Some great suggestions you propose. I like Freddie & Fannie though. We need them to grow 10X as large to buy up all the mortgages and get implicit guarantees by the government!
Sam,
You were kidding about your suggestion with Freddie & Fannie, right?
-Mike
I’m employed and the only reason I feel the way I do is because I know alot of unemployed people who are on unemployement, who are NOT looking for jobs, who keep hoping for that extension to come in so they can sit on the rear’s at home and do nothing! While there is people out there that really are trying to find a job and cannot get unemployement or an extension. That is probably the reason why so many that are employed have a bad attitude. That’s my reason anyways!
never take being employed for granted. These days you never know how long a job will last. There are no guarantees. Life sucks like that sometimes.
I’ve seen all the cases that Darwin talked about in regards to how people treat unemployment benefits. At one point, we need to say stop, this is not working and we need to think outside the box to fix the situation. I would not like to see our unemployment program balloon into a federal job bank (like the auto industry) where people are funded not to work for 20 years.
The areas that people are struggling with need to be identified and resources directed to address those needs.
I’ve been helping unemployed people get jobs. People who are over 50 are struggling because they are competing with younger workers who cost less. It is painful for me to see people in their 20s and 30s turn down high 5 figures jobs and stay unemployed when the older folks are struggling to get an interview.
I can’t pass on the job opportunities because not everyone have the required skills. 2 of my clients have been looking for 4 months and made several offers to unemployed applicants. They were turned down. These are well paying jobs that I would jump on for my brother if he was qualified.
People who are struggling include the older executives who have gone through rounds and rounds of interview with little luck, the blue collar workers who only know how to do one thing for the past 30 years and the combat veterans coming back with disabilities.
There are people so ill prepared and incompetent that they’re not competitive in this environment.
The world is changing rapidly. Our work force need the motivation and retraining to make themselves relevant for the jobs that are available now in the US. There are people who want to move up and better themselves but cannot afford the training at the moment.
One local manufacturer spent 8 months searching for someone qualified to run his new $1.5 Million machine and ended up importing someone from India. Why? because this Indian worker invested $3,000 and took the training course in the US. 95% of his classmates were non US citizen. What did he get for that investment? A blue collar job at $145,000/yr. There was a competition to hire those students because they were the only ones who knew how to run these machines that cost millions to invest in.
These are the types of opportunities that we need to retrain our people for.
Several companies who were starting to bring back manufacturing jobs to the US have shut down their efforts last year and reinvested back overseas. Some small business owners are reassessing their costs for 2011 with healthcare and planning additional cuts. If additional layoffs are on the way, throwing money into unemployment benefits is not going to solve the long term problems.
@ ctreit
Don’t they need to prove they are disabled though to receive benefits? It’s not like anybody can get them right?
@ myfinancialobjectives
Do you know if part-time employees can also qualify for part-time unemployment? If not, then there’s definitely no reason to work part-time for minimum wage then.
I think those who vehemently oppose federal funding in any and all its forms are usually those who are quite prejudice in nature. I have never talked to or witnessed a conversation with someone who (wasn’t) prejudiced and was FOR federal funding. They hate it, like a fat kid hates green beans and broccoli.
Which is just plain sad. Because usually these are also the same people who were born on third base and think they hit a triple. You know what I mean. They look down on those less fortunate like they want or chose to be that way. Yet, if they were in the same shoes, they could never ever survive because they’ve been spoiled all their lives and don’t know how to hustle.
But mostly it’s old fashioned prejudice that forbids them from supporting (any kind of aid) to help those who don’t have a rich daddy.
I know several families that have money, good money. And their kids are some of the MOST irresponsible people I have ever met in my life. Not too mention I’m referring to kids that are like 40 years old. lol. Not 12.
But these are the same people who turn around and scoff at welfare. As if they are too good for it. but they’re not. They’re classless, irresponsible jack wipes through and through.
The only difference is they’re jack wipes with money.
Rant over…whew! Sorry, I went a tangent there. lol.
Danny, good rant, and you probably have a point about people who are naturally prejudice in nature.
“Same people who were born on third base and think they hit a triple.” Now that is an awesome statement! Never heard of that one before! Thanks for that!
Best, Sam
No problem, Sam. I think the quote originated about W. Bush. At least that was the I heard of it. lol.
Cheers!
I was born poor and still don’t agree with the fed government dumping money into programs. There are inefficient (bureaucratic waste) and don’t do the job they’re intended to do (to get people working). There is no real accountability or encouragement. It’s like hitting a nail with a screwdriver. You might get it in but it’s really inefficient. I think a better model would be something like what’s done by Habitat for Humanity. Where the person getting something puts sweat equity into it for themselves and for others. Something where people work along side each other.
Sweat equity, I like the idea! Better correlation with effort and reward.
I think a lot of people view the unemployed in a bad light for exactly the reason you stated: They think they are getting $1,200 a month do “do nothing”, when in reality, they are trying so hard to get a job!
On the other hand, a good friend of mine was looking for a suitable job for months when finally he just decided to get something part time. There is something to be said on both sides of the argument. A lot of people could probably get part time gigs until they are able to get back into their full time work. Does my friend like working at Home Depot right now? No, but hes going back to school for his Masters and still applying for more full time jobs. Like I said, the argument can go both ways.
There is another cost to cutting unemployment benefits. According to an article in this weeks “Economist” some unemployed switch to social security disability once they lose their unemployment benefits. Then they leave the workforce and become a drain on the budget until they die.
@ Investor Junkie
It absolutely is the responsibility of the children to take care of their parents if it so happens that the parents aren’t able to take care of themselves. Isn’t that what family is all about? I guess I’ll have to write a post.
I guess I should start taking out my savings and spend it. My three boys should take care of me then.
You should, b/c it is only right that your 3 boys grow up to be good citizens and take care of you when they are old and wealthy.
I can totally see employed people being bitter about their current jobs (if they don’t like what they do or feel underpaid) thinking unemployed people getting government checks have it better than they do. I suspect these employed people have probably never been unemployed either as it’s easy to throw blame and negativity around if you’ve never been in the other person’s shoes. Sure there will always be some people that abuse the system but I agree that the majority of the unemployed want to be working and earning reliable, higher income than what comes with an unemployment check.
I wrote an article recently about the 99 weeks. It was balanced, but seriously, if 99 weeks isn’t enough, how long is reasonable? 5 years? At some point it just becomes a permanent welfare gig. Here are some key problems:
1) The truly desperate – these are people that simply cannot find anything, not even minimum wage jobs. The local economy has been decimated and they have tried everything. I feel for these people. They may have to move to find work, if they can afford it. There are jobs in this country, but perhaps not where you live. Terrible but true.
2) The “waiters” – these are people who had relatively high paying jobs and were laid off with severance, then a lower paying unemployment which runs for 2 years now. I know them, and you may too. They actually get decent offers, in some cases, 6 figures. Yet they turn them down because it’s not “what they used to make”. In some cases, eventually they land something after a few months and go with it. But if it weren’t for extensive UI, they’d be accepting jobs more quickly. There is ample data to back this up and even Krugman the king of the lefts admitted as much in the NYT editorial.
3) The scammers – gotta love these people. and yes, I know many second hand through friends and family that relay their frustration over the audacity of these people. They don’t work, never really have worked and have no intention of working, but were able to snag a job or just get laid off and collect each time the extension gets longer and longer. Example – a guy who does only seasonal work. he works in winter, gets laid off, collects unemployment and lives with mom so overhead is low. He’s done this for decades but now he’s getting paid for 2 years without working. Next, the pregnant mom about to deliver who planned on staying home and not going back to work anyway. So, she was laid off and never intended on working, at least until the kids make it into school, but now she’s living off the public dime for 2 years. It’s gravy. And get this – when the senate was debating the extension, she said she was “getting screwed” by the Republicans. SHE was getting screwed.
So, it’s a mixed bag. There are the truly unfortunate, those that are being pickier than they should be, and dirtbags. When all unemployed get painted with one brush, that’s unfair. But let’s stop pretending that “everyone out of work is struggling”, etc. It’s “many”, not everyone. Out of every crisis comes scammers and the entitled and this recession is no different. I’m thankful for my job everyday. But callin’ it like it is.
Hey Darwin, thanks for your thoughts. I really think it’s the very few minority who give unemployment insurance abuse a bad name.
If people want to abuse unemployment insurance and live off poverty level wages and be happy, then by all means, go for it.
@ George
Agreed, “milking” is a loaded phrase indeed, which goes back to tautology #1: Few people can live a normal life under unemployment benefits.
@ Free Credit Score
I’m not sure how hard it is to take a job that’s beneath someone if that someone is going to get evicted or starving. I’d do anything. Heck, I’d write non stop on this site and drum up business if I had to to survive.
While “milking” may be a loaded phrase, I’m pretty sure it’s not the first loaded phrase being used here. ;) (like “smug employed people”?)
“Smug employed people” isn’t a loaded phrase. It’s the truth. There are a ton of smug employed people who look down upon those with no jobs. Shameful.
It isn’t looking down on people who don’t have jobs. I feel bad for anyone that is unemployed and is truly working hard to find a job. It is the many many people who are milking benefits and just collecting checks for doing nothing. At 99 weeks it is welfare, plain and simple. Stop being lazy and go take care of yourself and your family.
“Milking unemployment” is such a loaded phrase when the unemployment benefits in the US are a fraction of one’s former salary (what are they, 25% if you’re lucky?). If you have a house payment, then that unemployment check will very likely go entirely for the mortgage payment and the income tax on the benefit.