Incentive Not to Work
In contrast to the PolitiFact about which I complained, yesterday, this one by Eugene Emery was actually informative. The statement under scrutiny was from Republican candidate for governor John Robitaille, that “Rhode Island has a very generous unemployment compensation rate compared to most other states”:
By the latest measurement, during the first quarter of 2010 Rhode Island ranked second in the nation. The state paid the typical recipient 47.8 percent of the average weekly wage of $816.71. (Hawaii topped the list, at 54.8 percent. Massachusetts, by that measure, was at 37.3 percent, ranking it 29th.)
Put another way, the average hourly wage in Rhode Island during the first quarter of 2010 was $20.42. The average person receiving unemployment insurance got the equivalent of $9.76 per hour. The benefit could be as much as $13.76 an hour for an individual or $17.20 per hour for someone with five or more dependents.
Robitaille’s contention is that unemployment benefits so high discourage people from going back to work once unemployed. I’ve actually run into that dynamic, with a new carpenter who spent most of the single day that he worked with my company telling another new guy how nice it was to be able to go fishing and such while receiving a government subsidy.
It’s important to note that unemployment needn’t exceed the pay rate that a potential worker could expect. It just needs to be more than he or she requires to live an acceptable lifestyle.