The popular claim is that people who collect unemployment take longer to find a new job, because they are looking for a “more desirable job”. Of course if people getting unemployment checks were given years instead of months, they would take years in their search. Nations like Germany have seen this happen and attempts to reform their unemployment compensation handouts always drive Liberals crazy. The bottom line, beggars can’t be choosers. People out of work need to be encouraged to take what is available, instead of feeling that they can watch a season of daytime TV before actually deciding they’ve found something that is “desirable”.

The Government Accountability Office has confirmed that people getting unemployment benefits do take longer finding a new job.

And the real irony is that people who make the least are not as likely to use unemployment insurance as people who make more. People who are very poor are encouraged to vote for Liberals who adore government giving people a check. They are not the ones seeing the most benefit.

Later in the report details are given of how people who are better educated are more likely to get unemployment benefits.

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Unemployed workers with more years of education are more likely to receive UI benefits than otherwise similar workers with fewer years of education. Specifically, our simulations show that the likelihood of receiving UI increases for each additional year of schooling that a UI-eligible worker has completed before becoming unemployed (see fig. 4). For example, a UI-eligible worker with a college education (one who has completed 16 years of schooling) when he or she becomes unemployed is almost one-fifth more likely to receive UI than a UI-eligible worker with a high school education (12 years of schooling).

Although the impact of education on the likelihood of receiving UI benefits has been analyzed in other research, this research found no significant education effect. However, to the extent that workers with more years of education are better able to access and understand UI program rules, they may also be more likely to know when they are entitled to benefits and to have the information that they need to file successful benefit claims.
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So people who are better educated are better able to work the system. This proves that yet another government program that supposed to be helping poor and lesser educated people the most really does not. People who make more, regardless of their years working should have more savings to do for themselves. And given people who use unemployment insurance take longer finding a new job, the program really is not “helping” people find work. It’s helping them to stay at home.

Employers pay for their employees’ unemployment insurance, but the amount employers pay is less than the payout of benefits for those who collect. Which means the government supplements unemployment insurance via taxpayer dollars. And given companies just pass on the expense of taxes like this to the consumer, it means the consumer ultimately pays.

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Benefits are financed through federal and state employer payroll taxes. In fiscal year 2004, employers paid about $39.3 billion in UI taxes, and 8.8 million workers received UI benefits totaling $41.3 billion.
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The House Ways and Means Subcommittee on Human Resources is having hearings about all of these findings today.

I think this is another example of how government programs never perform as expected. And given the program does not properly fund its self I think this is a program that should be privatized. Allow people or companies that want to be part of this benefit to do so optionally.

Currently, the poorest of Americans are not seeing the most benefit. The poorest of Americans are seeing lower wages because their employers must pay for this insurance, while consumers see higher prices. Government programs like this can depress a market, instead of helping to build it up. Because people are not as inspired to keep looking for and accepting available work. When people don’t take available work, then employers feel there are no available workers. Which means they turn to an easy out like illegal aliens. When people are given money, they are not going to be as inspired to move to an area with more work and areas with more jobs see less available workers than they need. Government’s unemployment insurance program is preventing the natural migration and flow of people and the marketplace. Although it is supposed to help it, I feel it does the opposite.

update (3/15/2006 5:25PM ET): While some skilled American workers sit around collecting unemployment, the government is planning to expand the number of H1 B visas. I mentioned in this previous post that President Bush was pressing for this.