Unemployment Assistance Part II: Roles and Goals

What would life look like if no public unemployment assistance existed? The United States in particular and the world in general is still suffering from “The Great Recession”. Without the availability of public unemployment insurance, how would life be different?

Before determining the roles and goals of unemployment assistance I believe it would be wise to address the question: Should public unemployment assistance exist?

While difficult to locate and often conflicting, there does exist a limited body of evidence based research addressing the beneficial and detrimental effects of public unemployment assistance. In summary, most agree the benefits are humanitarian and not economical.

• The Regional Economist
• CATO Institute
• Unemployment Insurance in a Free Society - Conerly
• Optimal Unemployment Insurance - Hopenhayn; Nicolini

In synthesizing my own feelings with the available literature,  I would give the following answer in response to if a public unemployment system should exist:

Short Answer: Yes, in combination with a repayment plan and a maximum lifetime limit. (Long answer with details forthcoming in future posts.)

When you know who you are. you'll know what to do.

- Mark Driscoll

Prior to constructing an unemployment assistance program, I believe it first needs to acquire an identity and given roles and goals. Flowing from a general identity, specific policies may be designed to accomplish the stated roles and goals.

According to the Federal Unemployment Insurance website, the role of Unemployment Insurance is to:

"In addition to helping workers and their families, the Unemployment Insurance programs play a key role in helping businesses, communities, and the nation's economy. It was created in 1935 in response to the Great Depression, when millions of people lost jobs. They couldn't buy goods and services, which contributed to more layoffs."

"Now, as then, the program helps cushion the impact of economic downturns and brings economic stability to communities, states, and the nation by providing temporary income support for laid off workers."

Additional Information

Providing leadership, direction and assistance to state workforce agencies in the implementation and administration of state unemployment insurance (UI) programs, Federal unemployment compensation programs, and other wage-loss, worker dislocation and adjustment assistance compensation programs.

Managing strategically in order to ensure high performance, greater public accountability, service quality, and customer satisfaction.

Working collaboratively with partners and stakeholders in business, labor, and state governments by:

Providing oversight, guidance, and technical assistance for the federal-state unemployment compensation system and providing budget and legislative support to state workforce agencies to administer their UI programs and assist individuals to return quickly to suitable work.

Similar in nature, the State of Minnesota Unemployment Insurance Office stated purpose:

"The Minnesota Unemployment Insurance (UI) Program provides a temporary partial wage replacement to those Minnesota workers who become unemployed through no fault of their own. It is an economic stabilizer/stimulator in times of economic downturn and helps maintain an available skilled workforce for employers."

Mission Statement: "Enhance workforce development and economic strength of Minnesota by providing unemployment insurance for individuals and employers."

My vision - 

"Provide sufficient and timely aid allowing for individuals to transition to new employment and if needed, standard of living after other available resources have been exhausted."

Goals –
While the purpose of various unemployment assistance programs provides a birds eye view, goals further focus the intended purpose of the program. In respect of your time, I have limited the content of federal and the State of Minnesota's goals by providing links to them immediately below.

State of Minnesota Unemployment Insurance Website

Federal Sites -
Home Page
About Unemployment Insurance
FactSheet
Administration Breakdown - Interesting flow sheet representing the hierarchy of federal unemployment insurance. Take note, the bottom half is composed of teams. All paid positions...


My Goals -

• Goal #1: Empower state and local governments
• State and local governments will be encouraged to go above and beyond the national unemployment assistance program.
• One size does not fit all and each community should be encouraged to tailor a system to fit their constituents needs.
• Goal #2: Funds reach recipient in < 2 weeks
• Most people will have their last paycheck cover them for ~2 weeks.
• Goal #3: Sufficient/Generous payments
• Maximize recipient's ability to find reemployment, not stress over ends meet.
• Goal #4: Flexible benefits
• Recipients may choose how much and how long to receive benefits.
• Goal #5: Time from initial request for assistance to completion of initial request averages < 1 hour.
• Simplify eligibility and verification requirements.
• Goal #6: Encourage personal responsibility
• Functions as quinary safety net (more on this later).
• Goal #7: Efficient delivery of benefits
• Reduce administration costs.
• Reduce waste, fraud, and abuse.
• Goal #8: Eliminate additional employer burdens
• Not popular, but I would be considered pro-business
• I do not agree with the government dictating who and why businesses hire and fire. Applying penalties to cutting workers is the government meddling in the affairs of private individuals attempting to manage their own business.

5 things unemployment system is and 5 things it is not -

Is not:

• Designed to make all people happy
• Designed to cover worst-case scenarios
• Primary safety net of unemployed individuals (or secondary, or tertiary, or quartenary)
• A penalty or burden to businesses
• Free ride

Is:

• Designed to make some people happy
• Quinary safety net designed to provide timely and sufficient assistance to those in need
• Compliment to state/local government unemployment systems
• Temporary
• Exchange of freedom for security

Hopefully you were able to acquire a perspective on the roles and goals I desire a public unemployment system to fulfill. I encourage you to read the articles listed above, of which are written by individuals with much less naivety, more education, and more experience than me (Why I need this blog). My next post will present details of our federal and the State of Minnesota's unemployment assistance programs.

Next Post Topic: Unemployment Assistance Part III: Current System

Gardening Part I: Overview

What do a deer, sprinkler, and 43 million households have in common?

- All can be found in a garden.


I am especially fond of the motion activated sprinkler for predator protection.






According to the National Gardening Association, 2009 saw 43 million households (37%) in the United States participate in home gardening, a 7 million household increase from 2008! In 2008, an estimated $2.5 billion was spent on gardening supplies equating to roughly $70 per household. Breaking down individual gardener characteristics by percentages and comparing to general population percentages:

• 68% are 45 years and older (20.6% general population are > 45 years old)
• 3.3 
• (Individuals 45 years and older are 3.3 times as likely to garden as an individual less than 45 years old)
• 67% do not have children in the home (38% of general population)
• 1.76
• 79% have completed some college (57.3% of general population).
• 1.38
• 64% are married (48% in general population)
• 1.33
• Economically, middle class households (household incomes of $35,000 to $75,000) are most likely to have a garden
• Have been gardening for an average (mean) of 12 years
• Median 4 years

Why Garden?
The most common reasons people garden:

1. Satisfaction
• 58% to acquire better tasting food
• 51% to acquire higher quality food
2. Savings
• 54% to save money on food
3. Safety
• 48% to be sure about the safety of their food
4. Productivity
• 40% to feel more productive

How do I compare to the average gardener?

• Demographics:
• Meeting the stereotype:
• Attended college
• Married
• No children
• Straying from the beaten path:
• 26 y.o. (24 when I started)
• 3rd year of gardening (median/mean: 4/12 years)
• Household income

• Reasons why I choose to garden:
1. It's fun!
2. High degree of complexity, autonomy, and strong connection (the more time and resources you invest the greater the likelihood a greater reward will be achieved).
• From Malcom Gladwell's book Outliers.
3. Economically neutral at the moment, potentially economically profitable in the future.
• I try to gravitate towards economically neutral hobbies.
• I also enjoy the challenge of designing profitable systems (I know weird!).
4. Physical exercise
• As my day job is almost entirely intellectual and indoors, getting outdoors and exercising is very enjoyable.
5. Socially rewarding
• As politics and economics interest only a small minority, a secondary benefit of gardening is I feel it allows me to connect socially with a larger sphere of people than I would otherwise.
6. Food does taste better, especially the lettuce and spinach, wow!
7. Potentially great teaching opportunity for children cover numerous topics:
• Learning/Researching
• Efficiency/Productivity
• Economics

Researching gardening statistics has produced fascinating results. I am particularly astonished by the recent growth in popularity of home gardening (7 million additional households in 1 year and the average (median) gardener has only been at it for 4 years!).

However, as exciting as it has been to write and thumb through gardening pictures from the last two years, it unfortunately appears I am a number of weeks away from getting seeds and plants in the ground. Bemidji currently has more than a foot of snow on the ground and the high temperature of the next 6 days is 42 degrees. In the interim, I plan to start growing seeds indoors and work on brainstorming a list of goals and plans to share in future blog posts.


Next Post Topic: Unemployment Assistance Part II:  Roles and Goals

Study Details (nerds like me!)

• Conducted in January 2009
• 2559 households surveyed
• Participant selection: Stratified random samples are drawn from among the Harris Poll Online® database members by age, gender, and region based upon their known proportions in the U.S. adult (18+) population. Estimates of the general population proportions are obtained from the March supplement to the Current Population Surveys (CPS).
  • Weighted Results: These results were weighted to the general U.S. adult (18+) household population based on known proportions among this population for education, age and gender, race/ethnicity, region, and income level.
• Sponsors: National Gardening Association in associaiton with the Scott Company LLC in general, and Miracle Grow in particular.

Unemployment Assistance Part I: Overview

"Unemployment Benefits MUST be extended!!

Unemployment benefits are already paid for two years - NOW we have to pay for three years??? Four???

When will it stop? When do you have to be responsible for yourself - after how long?

CORPORATIONS ARE MOVING OFFSHORE TO NOT PAY TAXES!!!!! Really???

So, what you are saying is our ridiculously high corporate tax rates screwed us when the business owners decided to move their business to greener pastures??? You all think there are no consequences to raising taxes... Keep raising them and watch it continue and we will lose more businesses, jobs, and tax revenue.

Corporations OUTSOURCED our jobs!!! Really?

You mean there are people in other countries who are willing to do a job you are not willing to do for much less pay and a much more desolate lifestyle? Oh, I'm sorry, did you read somewhere that because you were born in America, you had a right to make more than everyone else on the planet for doing the same thing?

Everyone in this country needs to wake up. Raising taxes HAS consequences. Companies will move offshore, entrepreneurs will CONTINUE to leave and CONTINUE to move their businesses to other locations. Unless all you people making less then $250,000 are going to start CREATING JOBS, I suggest you stop trying to make sure every corporation and ENTREPRENEUR leaves our country."

- Yahoo! Reader Comment


Disclaimer: I do not endorse, promote, or encourage anyone to read Yahoo! (or other Internet news providers) reader comments. I do admit, for cheap entertainment, I will stoop to reading comments posted below such articles. I do not find this constructive in anyway apart from occasionally finding some humorous and clever insight beneath a massive pile of trash.

This Yahoo! reader left little doubt of his disapproval of America's unemployment system. Regardless of how accurate you believe the statements are, the comment does highlight frustrations and questions surrounding our current unemployment system. Most notably:

• What should be considered adequate benefits? How much and how long should benefits be offered?
• What consequences, if any, are there of funding unemployment assistance?

During the next few posts it is my aim to provide clarity on the historical and current utilization of unemployment assistance, outline what roles I believe an unemployment system should fulfill, and breakdown specifics of both the current unemployment system and my proposed changes.


In 2012, ~$156 billion was spent providing public unemployment assistance to an average of 6 million weekly recipients. In 2012, $156 billion amounted to 4.2% of all government spending (6.8% of revenue) and 11.3% of total welfare spending. In comparison, $108 billion was spent on public food assistance in 2012. Thus, as also covered in Food Assistance Part II, I am primarily interested in modifying unemployment assistance on principle rather than for monetary purposes.

Unemployment utilization reached its peak in 2010, amounting to $235 billion spent providing aid with a record 12 million recipients the week of 1/2/2010. Prior to 2008, unemployment spending and the number receiving aid was more or less at an equilibrium as shown in the charts below. Compared to the year 2000,  2010 saw a 1017% increase in money spent and a 425% increase in recipients while America's population increased by 14.4%.

Looking at cost of expenditures to GDP standardizes costs to America's total economic production. The important note is the direction the figure is trending. An upwards trend signifies we are spending more of our productivity on unemployment assistance compared to prior years and vice versa. Between 2000 and 2010, a 698% increase in percent of GDP was realized. Currently, in 2012, our nation's unemployment system consumes 1.0% of America's GDP, up 431% from 2000.

Are such substantial increases in unemployment utilization for the better or worse? Who, if anyone, benefits or is harmed by our unemployment system? Data indicates both the number of recipients and total amount of aid recipients are receiving have increased. This growth is likely secondary to the increased duration recipients are now eligible to receive benefits as highlighted in the Yahoo! reader comment. Knowing where we have been, where we are, and where we appear to be going are all important components of analyzing not only what has and has not worked in the past, but what policies provide the greatest potential benefit for future utilization. 


Next Post Topic: Gardening Part I: Overview.