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Aiden Caudill

Professor Morean

Eng 1201

28 October 2021

What is the Cost of Unemployment Benefits?

He just got laid off. The company he worked for lost money because of the pandemic so

they had to let some employees go. He no longer has the means to provide for himself and has

few options to decide from. He could take the first job he finds even though it doesn’t fit his skill

level which would take a job away from someone who would be a better fit. Another option is

that he could try to search for a job that would better fit his skill set but he doesn’t have enough

money to take the time to find it. There is one other option he could apply for unemployment

which would give him time to find a job and a way to provide for himself while searching.

Unemployment benefits are a type of insurance the government gives to its citizens to help them

if they’ve recently become unemployed. There is a lot of debate about unemployment benefits

that start from, what should the benefits be, all the way to if we even need unemployment

benefits at all. Unemployment benefits should be generous because it helps stabilize the

economy, provides support for the community especially lower income families, gives people

more time to find suitable jobs, increases everyone’s well being, and is worth putting more

money into.

Unemployment benefits are compulsory insurance. meaning the insured can not pick their

benefits, that was made to provide support for unemployed persons while job seeking (Sjoberg).

Unemployment benefits in the United States on average are usually twenty six weeks with three

hundred dollars a week (Farooq). Unemployment benefits act as a resort just in case someone
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happens to lose their job. The point of unemployment benefits is to provide for a recently

unemployed person so they have time to find a job that suits their needs. This is a highly debated

topic because critics argue that people will take advantage of unemployment benefits by not

looking for a job but still using the money given to them. Some other criticisms are that

unemployment benefits hurt the economy, the benefits cost too much money, the current benefits

aren’t enough to provide for a person, the benefits will make people lazier, and that if used it will

lead to the support of more socialist programs. Thanks to the research of many people we have

the answers to the benefits and repercussions of unemployment benefits.

The most looked at parts of unemployment benefits are how it affects the economy and

how it affects the job seekers currently using the benefits. Focusing on how the benefits affect

the economy is closely tied to how the benefits affect the individual. For example, if a person

using the benefits finds a job with a wage that reflects their skill level that helps the economy

better than the same person getting a temporary job that is nowhere near their skill level. A

person finding a job that their skill level qualifies them for helps the economy in two ways. The

first being that the person is more likely to stay at that job which will mean the now employed

person is putting more money into the economy. The second is that since the person isn’t taking a

temporary job it leaves that position available to a person that is better suited for the job. Thanks

to the unemployment benefits the job seeker is able to find a job that they will stay at while also

still putting money into the economy.

While that is the ideal situation the question that remains is what do unemployment

benefits need to look like to create that situation? According to Farooq the longer the benefits

last the better the job seekers have a chance of finding a high paying job (figure 1). This means

that if lawmakers increase the current unemployment benefits, specifically the length, the better
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chance that unemployment benefits will help the community by giving them an opportunity to

find jobs that suit their needs. From the data Farooq collected it shows that the more generous

unemployment benefits are the more they help both the economy and the individual. The current

unemployment benefits are not enough to support an individual much less a family.

Figure 1 is a collection of data showing how the longer unemployment benefits are the better the

wage is increased (Farooq).

Currently unemployment benefits don’t give people enough money to provide for

themselves or their family. Three hundred dollars isn’t enough for rent in even the cheapest of

places and that’s not even considering the costs of utilities. If an individual barely has enough

money to pay for rent and/or utilities then how are they supposed to buy food? How is an

individual supposed to focus on job searching if they have to consider how they’re going to make

it through the week. The fact is that twenty six weeks and three hundred dollars isn’t enough to
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provide proper support for an individual with no other source of income. One of the effects of

generous unemployment benefits is that the need for other social programs decreased.

Some people believe that if the government provides for the community with a socialist

program like unemployment benefits it will lead to the creation of more socialist programs. A

socialist program is a program the government creates to provide support for the individual by

helping them fulfill their needs. The truth is currently the United States has many socialist

programs so why are some people against them? The belief is that if the government provides too

much support people will stop working and that the government will end up paying too much for

these programs. The truth is that providing generous unemployment benefits won’t lead to the

creation of more socialist programs.

Research has proven that the more generous unemployment benefits are, the less the

public will support other social programs. According to Shin’s research in European countries

the more generous unemployment benefits were the less the public supported Universal Basic

Income. What this means is that if the government extends unemployment benefits the less

support people will give for other programs. Putting more money into unemployment benefits to

extend the weeks and money an individual will receive means that the government doesn’t have

to put more money into other welfare programs (Shin). Recently the government extended

unemployment benefits which showed some of the effects of generous unemployment benefits.

The effects of extended unemployment benefits have been seen from the extensions the

US government made for the COVID-19 pandemic. Many people either lost their jobs or

couldn’t go into work because of the COVID-19 pandemic. In response to this problem the US

government decided to extend the unemployment benefits to six hundred dollars for a maximum

of fifty weeks(Farooq). While the extension did help people, six hundred dollars still isn’t
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enough to fully provide for someone while the individual is job searching. There was a short

period of time where states suspended rent which meant that the six hundred dollars could be

used for more things. Unfortunately more than half of the states suspended the extensions before

the September sixth cut off (Iacurci).

The policy was meant to increase job searching by cutting the benefits but it seemed to

have the opposite effect (Iacurci). Cutting unemployment benefits decreased job searches by

about four percent in four states (Iacurci). According to the Bureau of Labor Statistics, the

United States has seven million less jobs than in February 2020 (figure 2). This shows that

cutting benefits, in other words stopping giving money to unemployed people, does not

encourage them to search for jobs. Now since the unemployed aren’t getting benefits they are no

longer putting money into the economy. People’s decisions are unaffected by unemployment

benefits and cutting benefits will only hurt the economy (Iacurci). There are almost no negative

effects of unemployment benefits which means for the most part there are only benefits.
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Figure 2 A study of the United States economy from 2008 to the present showing the number of

jobs the US had each year (Iacurci).

Just the Idea of unemployment benefits can act as an assurance improving the

community’s well being. Sjoberg’s research was about whether or not unemployment benefits

had a similar effect as car insurance. The effect Sjoberg was looking for was whether or not the

fact that unemployment benefits exist provide comfort and decrease the job insecurity, or in other

words nervousness about an individual’s job, of an individual. Sjoberg’s research found that

unemployment benefits decrease feelings of job insecurity and increase the wellbeing of people

by making them feel safe. What this means is unemployment benefits can increase the welfare of

the entire community and not just those that are unemployed (Sjoberg). Unemployment benefits

are worth the cost and should be more generous to have a better effect on the community.

One of the most important functions of unemployment benefits is that it provides money

to an individual so that they can put it back into the economy. Research shows that

unemployment benefits help the economy by giving the unemployed money to spend instead of

the individual not giving to the economy while job searching (Farooq). The research proves that

unemployment benefits are good for the economy and does not take away from it. The more

money that is put into unemployment benefits the more money that's put into the economy. The

most important thing however is how the unemployment benefits help the individual.

Most of the time unemployment benefits help those who were laid off or became

unemployed suddenly. During the pandemic however there were much larger amounts of people

that needed the benefits. Unemployment benefits aren’t ideal, specifically the benefits aren’t a

reasonable amount of money and twenty six weeks isn’t enough for most people to make big

decisions. Even though the benefits are less than ideal it still helps a lot of people which is the
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most important thing. Unemployment benefits especially help women, minorities, and less

educated workers since in most cases these groups have less resources (Farooq). Unemployment

benefits are a necessity for the community and should be more generous so it can help more

people. Unemployment benefits give job seekers the opportunity to look for a longer period of

time for a job and in many cases helps them make more money.

Unemployment benefits are supposed to give individuals the time necessary to find a job

that suits the individual’s skill level and pays a living wage. The truth is currently unemployment

benefits don’t give enough money to the individual and aren’t long enough for someone to find a

suitable job. It is very important that the government takes the necessary steps to make

unemployment insurance a working program that values the wellbeing of the community over

profits. Unemployment benefits should do two things. The first is to give individuals the time to

find a job and to do this effectively the benefits must be extended. The second is to improve the

well being of the community. Even though the benefits aren’t adequate to fulfill its purpose it

still does improve the welfare of the community. Unemployment benefits are worth the current

cost and more money should be put into the program so that it can fulfill its role more effectively.

Unemployment benefits while expensive are worth the cost and putting more money into

the program is a necessary investment. One of the main arguments in the debate over

unemployment benefits is that the government spends too much money on them. The United

States government spends hundreds of billions of dollars on the army so why can’t the

government pay to support their citizens? The United States government does not spend too

much money on unemployment benefits and the money that is spent goes straight back into the

economy. It is important to acknowledge the benefits do cost money but the benefits make the

cost worth it. The United States can afford to fully fund generous unemployment benefits. If
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generous unemployment benefits are funded, individuals who will use them will come off the

benefits with a suitable job and better overall well being (Sjoberg). Critics have many arguments

against the extension or the existence of unemployment benefits however all their claims can be

disproven.

Critics argue that unemployment benefits hurt the economy and that it gives people the

opportunity to choose not to work making them lazy. The United States currently has a record

number of jobs available and critics blame unemployment benefits. Critics say that

unemployment benefits make people lazy and that if the benefits are cut people will go back to

work (Sánchez-Guerra). This is false because research shows that in states that cut benefits less

people returned to work than in states with generous benefits (Sánchez-Guerra). Unemployment

benefits can’t be blamed for job availability since research shows that benefits actually help

people return to work. Unemployment benefits don’t make people lazy, people want to return to

work but there is still uncertainty about the virus (Sánchez-Guerra). There is no proof, as of now,

which shows unemployment benefits being a cause of laziness or job availability. There is no

cost or negative effects of unemployment benefits on the economy.

Critics argue that giving large amounts of people money through unemployment benefits

hurts the economy. Unemployment benefits give individuals money which is then put into the

economy through rent, food, or other costs (Farooq). There is no evidence of unemployment

benefits harming the economy in fact most research shows unemployment benefits help the

economy by keeping money going into it. Unemployment benefits do not harm the economy in

any way; they only act to stabilize the economy by making sure that the economy is getting

enough money. Unemployment benefits have no negative effects, should be extended, and worth

the cost to fund the program.

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Unemployment benefits are worth the cost and should be extended so the benefits are

more generous leading to more people being helped. Unemployment benefits should be generous

because it helps the economy, the community, and individuals. There are many benefits to

unemployment benefits whereas there are almost no negative effects from the benefits. As for the

worker who laid off he applied for unemployment benefits which allowed him time to find a

suitable job. Thanks to the generous unemployment benefits put in place because of the

pandemic he was able to start making a living again.

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Works Cited

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doi:10.1093/jeea/jvz043. Accessed 15 Oct. 2021.

Farooq, Ammar, et al. “Unemployment Benefits, Job Match Quality, and Labour Market.” VOX,

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Iacurci, Greg. “Cutting off Unemployment Benefits Early Is Not Pushing People to Find Work,

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Parker, Randi. Personal interview. 15 October 2021.

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SHIN, YOUNG-KYU, et al. “Precarious Work, Unemployment Benefit Generosity and

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