Time to Make the Necessary Policy Shift on Jobs
Unemployment benefits will begin phasing out for thousands of out-of-work Rhode Islanders starting Monday, the result of Congress’ failure to pass a temporary benefits-extension bill late Thursday night.
Another result is that about 2,000 unemployed people will run out of benefits altogether between now and late July, state Department of Labor and Training officials said Friday. …
Thus, instead of being potentially eligible for up to 99 weeks of benefits overall, they will generally be capped at 46 weeks, Hart and Filippone said.
Why are we considering it tolerable that Americans are requiring unemployment benefits for almost two years? And how much longer should we attempt to sustain such spending before shifting people to a system that’s set up for longer-term care? At some point, it ceases to be unemployment and becomes welfare.
Turn to a related angle, the loans that are financing local unemployment:
Rhode Island employers will have to pay an extra $39 million in unemployment tax next year, a side effect of the state’s high jobless rate. …
The tax increase will come as employers continue to struggle amid a nagging recession. It will be in addition to the high unemployment taxes they now pay, said Grafton H. “Cap” Willey IV, co-chairman of the Rhode Island chapter of the Smaller Business Association of New England, an advocacy group for small business. “It’s a tremendous burden,” said Willey, who is also a managing director of CBIZ Tofias, a CPA firm with offices in Providence and Newport.
At issue is a tax that employers must pay to the state unemployment insurance trust fund, which in turn pays benefits to out-of-work Rhode Islanders. As the jobless rate has climbed, demand for benefits has risen, draining the fund. As a result, the fund has been borrowing from Uncle Sam for the past year to help cover benefit payments.
The longer this goes on, the more difficult it will be, because the burden of the debt will grow precisely on those who need it to be relieved in order to get the economy rolling again. As we’ve watched, in Rhode Island, for most of the past decade, government officials are merely trying to maintain the status quo while awaiting some miraculous change that will fix their problems. It doesn’t work that way.
The money to cover unemployment benefits must come from somewhere other than employers, and it must not initiate new taxes. In other words, the governments of Rhode Island and of the United States must lay their expenditures out across the table and divvy up the shrinking revenue as well as they can, prioritizing economic growth. They must also take the much less financially difficult step of loosening the chains that they’ve laid upon the various industries, from farming to healthcare.
Government officials won’t take such steps, though. In Rhode Island, they’re too myopic to look beyond their own standing. At the federal level, the Democrats are trying to shove as much of their long-term agenda into law as they can, and any policy disruption will have to wait, even if it continues to translate into economic depression.