Our Stingy Benefits

Conservatives from the time of Calvin Coolidge have been terribly worried that “the dole” would be so attractive to people out of work that they would never get off it, and the government would be stuck paying all those freeloaders. All those who fear that the unemployed and disabled have the life of Riley should quit worrying. The American style of helping those who need help is remarkably stingy, and getting worse.

Unemployment benefits are under 40% of wages and falling. Could this this 40% payment be so attractive that nobody would want to return to regular work? Take someone with an average $50,000 income, which is $962 per week, gross. A 40% tumble to $385 is like stepping into an unexpectedly deep icy puddle. A complete change of lifestyle is required to live on $385. Smaller living quarters, a used car, no restaurant meals… For a very few, $385 is quite adequate, but for most, the loss would be difficult and unpleasant, and it would mean postponing college plans for the family’s teens as well as many other things. More chilling than the icy puddle is the realization that you might run out of benefits before a job shows up.

 

How do our old age benefits measure up? Here is a comparison of seven modern nations, with the US at the right. Our benefits are half of the next lowest figures. Pretty stingy, as if the elderly didn’t really deserve adequate support during their declining years.

The duration of unemployment is also moving in the wrong direction. It usually takes a decade to fall from its worst or longest duration, just after a recession, to its best or shortest, which always comes just before the next recession. The general trend since the 1960s has been for longer periods of unemployment, both at peaks and troughs of the unemployment cycle. That is, at the lowest or best point, in 1968, unemployment lasted an average of about 8 weeks, whereas the low point 3 decades later was 12 weeks at best. The worst levels are also increasing, with a high of 12.5 weeks in 1969, and an average of 20 weeks in several later cycles. The most recent recession, in 2008, saw minimums of 17 weeks, and maximums over 25 weeks. So the average duration of unemployment is trending upward both at its lowest and its highest. The current recession is the worst by far for length of unemployment since 1948.

All studies of unemployment compensation in America show a worsening of conditions for the American worker, and that American assistance is markedly less than all other modern western nations, for unemployment as well as disability and old age, and getting worse. Duration of unemployment, on the other hand, shows a long upward trend, and the current recession is the worst for duration of unemployment in 60 years.

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