Unemployment insurance in USA is managed by the states through the state trust funds. Here is a glimpse of what is happening.
..... spending on unemployment benefits fell by 24%, as fewer claims were filed and a temporary $25 weekly increase in benefits expired.
At the same time, businesses paid $12 billion more in unemployment insurance taxes in 2011. Many states have raised unemployment taxes on companies to replenish their depleted UI trust funds.
At the same time, businesses paid $12 billion more in unemployment insurance taxes in 2011. Many states have raised unemployment taxes on companies to replenish their depleted UI trust funds.
My view: An alternative to unemployment insurance is for the state to offer a low cost interest loan to unemployed people. They have to pay back the loan, but it will be at a low interest rate (and not the high rate of interest charged by the banks). Some of the loans will have to be written off, but a large part can be recovered from the lenders when they find their jobs in an economic recovery, or when they sell off their house in the future.
I agree.
ReplyDeleteThere is nothing wrong with an American government extending a friendly loan to its own citizens.
I'd also say its better for the USA government to form some kind of entity to buy distressed property from the homeowners.
The bank will have to take a reduced price for the distressed property. In exchange, the bank will save money on all the resulting legal paperwork of pursuing a defaulting homeowner. The bank further renounces all further claims on the defaulting homeowner.
The USA government will then lease the property back to the homeowner.
Perhaps on a lease with a buyback provision.
The homeowner and family is not thrown out onto the street. They don't have to move. Communities are preserved. The children are minimally impacted.
And the USA government saves money on social welfare for these affected families.
Yes, these defaulting homeowners should pay for their financial mis-management.
The point is to help them so that they can repay their financial obligations.
Not "punish" them to the point where they become desperate.
If we allow the bank executives to "resign" with multi-million dollar severance pay ... and this creates a moral hazard.
Why shouldn't we also help out the average citizens?
Look at unemployment in Europe (it is as high as 20+% in certain countries) and US (9%-15% unemployment, depending on whom you are asking). Any form of unemployment benefit, be it just a monthly payment or just a low interest loan, the employed will have to bear the "true cost" of these. And what does that mean - taxes will rise - 33% tax in the US and in Greece anyone who makes than 5000 Euro pays tax. Is that what we want in Singapore?
ReplyDeleteIsn't it better to give people jobs and keep the unemployment low?
And as for unemployment insurance, the insurance companies will also take their "cut" - after all they are running a business. So why not use the potential premiums and build a personal safety net?
@ ANON 1.51pm
ReplyDeleteAgreed. Let's give them "jobs" instead. Singapore already doing that.
Have you seen the elderly scavenging rubbish bins to look for tin cans to re-sell.
Or the elderly road sweepers etc.
And when they die, we can also harvest their organs. Since organ donation is on an opt-out basis.
Or what about those "jobs" that our national service boys are doing.
Singapore government does not owe Singaporeans a living.
Likewise, Singaporeans do not owe Singapore government a living.
Loyalty is a 2 way street.
You must be very generous to pay someone a multi-million dollar salary;
and listen to these newly minted millionaires lecture you that it is not his job to serve Singaporeans.
"What do you want? Three meals in a hawker centre, food court or restaurant?"
Very unfortunate for those unemployed American. Sadly, a big portion of them will never find job again. To start their own businesses probably will cause them to sink further into debt.
ReplyDelete