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Certainly, it’s not good economic news that Idaho’s unemployment is breaking more and more records. Last week, the $16.2 million in unemployment insurance benefits paid by the state broke the previous weekly record, which was set the first week of April, and the year-to-date figure of $627 million in benefits paid to out-of-work Idahoans has shattered all records - in all of 2008, the state paid out $247 million. But according to the state Department of Labor, there’s an economic silver lining to this: Moody’s Economy.com estimates that every dollar paid in unemployment benefits actually has an economic impact of $1.63, because unemployment, unlike other income, is almost always spent, not saved. And it’s spent on basics like house payments, rent, utilities, food and gas - which boosts the economy.
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Geo_Condit on December 22 at 1:36 p.m.
I think one should be looking at the opportunity costs of the money that employers pay to IDOL. If employers were paying their employees the money that they pay for UI instead of to a service provided to all employees, how much would be saved by the employees? Wouldn’t the market respond by creating more businesses that help people find jobs and grow the ones that already exist. Much of that money would have been spent on goods and services before the down turn, lessening the effects of the downturn itself. How many dollars would have been saved by the employees with fatter checks? It would have helped the balance sheets of banks, giving them more cash to lend, thus spurring more economic activity. Could the dollars that go to fund state workers’ pay, and all the otehr costs associated with the department be put to a better use? For that matter could the workers at IDOL themselves be put to better use?
I don’t know how they get a positive economic impact of 61.3% when much of every dollar goes to pay property, sales, tobacco, alcohol, phone, cable, and fuel taxes, to name a few.
Also, if there were no such thing as unemployment insurance, wouldn’t the effect be that people in general would become more responsible in their savings habits because they know there isn’t anyone there to save them, but themselves? I think you might agree that creating an incentive to save would be better for the system as a whole.
Megan_B on December 22 at 1:58 p.m.
If only the money spent for unemployment benefits could be turned into a low-wage paycheck in exchange for labor. People would then feel the dignity of having a job, gain work experience, and make money at the same time. We could be spending this money hiring people to fix the roads, and develop new, alternative energies that could save our economy. Instead? You can be unemployed for almost two years. I know too many people who purposefully remain unemployed, while working a job under the table, just to keep collecting free money from the government. How about we get a little something in return? Now unemployment benefits for 6 months or so, that makes sense, but 2+ years? What a waste.
busylady on December 23 at 2:07 p.m.
Since the base rate for unemployment insurance in 2009 was 1.6% of salaries, that money wouldn’t add much to the paychecks or savings accounts of employees. It would be difficult to set aside enough to live on for months at at time out of that little increase in salary. Better to have the unemployment insurance there for those who need it when jobs go away.
There are some seasonal workers who enjoy living on unemployment benefits in the off season, but not that many., Right now, there aren’t jobs for everyone.