Unemployment: Thinking Out Loud
Here in Rhode Island, we’re one of the few states to still be increasing the unemployment numbers. We’re currently at 10.8%, and second highest in the nation. Making matters even worse, the number of jobs available is also in decline.
We have many people looking for work and fewer jobs available for them to take. Meanwhile, these people are getting help from the state in the form of unemployment insurance. The unemployed are people receiving a few hundred dollars a week for up to 47 weeks now. It’s certainly not a good situation.
Meanwhile in the midwest, North Dakota has the lowest unemployment rate in the country, somewhere between 2.9% and 3.0% due to an oil boom. The same article mentions:
North Dakota, the state with the nation’s lowest unemployment rate, capped a decade of economic prosperity with dramatic population growth in its biggest cities. Fargo added nearly 15,000 residents to hit a record population of 105,549, the Census Bureau reported Wednesday. Its fast-growing neighbor of West Fargo added an additional 11,000 residents to reach a population of 25,830.
Hmm, business booming, low unemployment rate and the population grows? Wow, interesting how that works. Let’s see if we can work something out here that is mutually beneficial to Rhode Island, to the unemployed and to the states who need workers.
Picking numbers, let’s say that on average, the unemployed in RI are collecting $300 a week for the maximum 47 weeks. That’s more than $14,000 the taxpayers are covering for each person.
Keep in mind here, I’m not blaming the unemployed or stating anything negative about them. The plan I’m about to mention is 100% voluntary and no one is forced to take part. It’s more trying to set up a win-win for everybody.
Let’s incentivize the unemployed to go where the jobs are. If you’re unemployed and have more than $5,000 remaining to your possible unemployment benefits, we will pay you $5,000 to move out. We will basically pay the moving expenses for the unemployed to go elsewhere, along with the counseling for which states have the highest need, such as North Dakota. When a person would like to take advantage of this program, we track them with their social security number, as joining this program eliminates them from any further unemployment benefits in the state of Rhode Island. They are bought out.
Again, this is completely voluntary. It’s just another program that people can take advantage of if they choose to, and they can only take advantage of it if they are eligible for RI unemployment benefits.
We see that the job numbers in RI are decreasing and we’re not seeing any great signs of the unemployed being able find jobs quickly. When there is a mismatch between supply and demand, you work to balance the two. Aiming for increased demand (jobs) has not worked, and this would work on the other end, reducing the unemployed (supply).
Incentivizing people to go where the jobs are will reduce the number of people looking for work and reduce the strain on the state’s unemployment insurance budget.
Serious questions: Would running a full-time left-wing political blog for pay disqualify someone from collecting unemployment in Rhode Island? And would it be required that they actively look for work?
I think a lot of the people who might take this deal are anchored (pun intended) by homes they are under water on. This is one of the less obvious side effects of the liberal policies that pumped up the housing bubble.
“If you’re unemployed and have more than $5,000 remaining to your possible unemployment benefits, we will pay you $5,000 to move out. ”
This is basically what was done in the colonial era. If you arrived in a town without obvious means of support, and were not a native, you could be given a small sum and forced to move on.
Serious questions: Would running a full-time left-wing political blog for pay disqualify someone from collecting unemployment in Rhode Island? And would it be required that they actively look for work?
Posted by Dan at September 2, 2012 11:55 PM
I’d like to find out the Plain facts of that one myself…
If I were a Rhode Island taxpayer, I’d like to know if I was effectively paying for RIFuture for two years.
If I were a Rhode Island taxpayer, I’d like to know if I was effectively paying for RIFuture for two years.
Posted by Dan at September 3, 2012 3:35 PM
It’s as Plain as the nose on your face…?
Patrick, That would not work sending people from Rhode Island to Hawaii. 80% of the state population (about 90,000) lives on Island of Oahu but only 30% of island is developed. Oahu current unemployment is 5.7% and normal unemployment runs about 2-3%. In another year all of Hawaii will be fully back to normal employment levels. People from the mainland have been flocking to Hawaii for jobs but they don’t understand Hawaii is an international global job market (think multi-language) plus our housing market has rebounded back up from recession to highest in the nation ($645,000 median for single family and $310,000 median for a condominium) and projected to reach general median pricing of $800,000 by 2015. Rental units currently command not less than minimum of $2,500 a month before utilities. People from the mainland can’t find a job because they are not by-lingual and end up living in a homeless shelter, on the beach, or in scrub brush in tents when their money runs out till they are found and persuaded to go back to the mainland. In Hawaii we will pay for a one-way ticket back to the mainland as long as they have a family member meeting them at the airport. Hawaii’s 2012 tourist economy is on the verge of breaking all records! Record visitor spending in 2007 was $12.7 billion and first 6 months of 2012 visitors have spent $7.1 billion and if all stays on track by December 2012 visitors will have pumped over $14 billion into the Hawaii economy breaking the record! If the economy is so bad on the mainland under Obama according to Mitt Romney and GOP and world-wide like everyone is reporting then why are so many people flocking to Hawaii, the most isolated population in the world, spending money like… Read more »
Pretty much everyone I know on unemployment says something like, “Well, I have X weeks of unemployment, so I’m going to just chill out this summer and then start looking in the fall.” or something like that.
I think a better unemployment system would have a few more features:
1. Start with 6 weeks of 100% pay so people can make arrangements to downsize their expenses intelligently (get out of the lease, put the house up for short sale, etc.).
2. Twelve weeks of 50% pay.
3. The rest of the pay would decrease by 2% of the original amount each week until it was exhausted.
4. You can continue to collect through step 3 -if- you took a job that’s significantly ‘worse’ than your last one.
A lot of folks would find pretty quickly that taking the crappy job that’s ‘below them’ makes more sense than seeing their quality of life steadily decline.
Also, I want to see each new unemployed person given an interview and some basic counseling on how to proceed with their finances. Way too many people need to be TOLD how they can cut their costs down, or that their industry really isn’t ever coming back.
It would also be helpful if there was some way to temporarily assist folks who are in upside-down housing situations. I don’t want anyone to get soaked, so maybe allowing the interest portion of their mortgage to be deferred for a year or two. That would have to be state law, written into all new mortgages.
I couldn’t believe when I read Obama’s American Jobs Act and saw that it would prohibit discrimination against the unemployed. So if somebody came in to your office for an interview and hadn’t worked in the last 10 years, you would have to treat them the same as if they had been working that whole time or face civil liability. And can you imagine the perverse incentives that would create for frivolous litigation by the unemployed? Total madness. Thank goodness it was shelved.
Seriously, your plan for solving unemployment in Rhode Island is paying the unemployed to leave Rhode Island? How about a plan to, I don’t know, grow the economy or bring businesses back to Rhode Island?
“How about a plan to, I don’t know, grow the economy or bring businesses back to Rhode Island?”
You’re new here, huh? That’s the majority of what I and others advocate for. Thanks for the feedback though.
“We think conscience derives from natural law, it does not, it derives from custom” (Disremebered French philosopher)
So, as long term unemployment benefits become the norm, they become more acceptable. A “natural right” so to speak.
What is it the unemployed are expected to do? There are so many artificial barriers. Can an unemployed mechanic run a cut rate service from his garage? I doubt zoning would permit that. We all know of such businesses, but they all exist with a “wink” from someone.
Unemployment payments were supposed to be a temporary bridge between jobs for people actively looking for work. Now it’s become just another entitlement with little to no oversight that continues for years. It’s a simple bridge to Medicare/Social Security for those advanced in years and to SSDI, the “new welfare,” for others. The form it takes is irrelevant, of course – all these programs amount to government paying people for not working. As the saying goes, when you subsidize something, you get more of it.
“It’s a simple bridge to Medicare/Social Security for those advanced in years and to SSDI, the “new welfare,” for others”
Now THAT says it all. Virtually no good paying jobs for graduates (other than government) and the clown in chief adds 2 million more competitors for those jobs that mostly aren’t there with his amnesty…
Pure brilliance!
mangeek mentions, “It would also be helpful if there was some way to temporarily assist folks who are in upside-down housing situations. ”
Don’t we already have this as part of the Stimulus?
I work with someone who very recently took advantage of this (I forget the actual name)Stimulus program.
Of course they had to go through a lawyer (of course!), but in the end their mortgage payment was cut by almost $500 a month and the principle on the loan was lowered by something to the tune of 60 – 80K.
I believe the money (timeline actually) for this program may be nearing an end though.
“Unemployment payments were supposed to be a temporary bridge between jobs”
But what if there are no jobs? As I mentioned there are so many barriers, I am thinking of two hot dog stands shut down because they didn’t have bathrooms. We all know of the kid’s lemonade stands being shut down. I wonder if you can still sell apples (that great example from the 1930’s)
“Don’t we already have this as part of the Stimulus?”
There are programs for Fannie and Freddie-held mortgages, but that’s only a portion of the market. There are programs for people who aren’t paying their mortgages, but you have to ruin your credit and risk your home to participate (basically playing chicken with the bank on foreclosure).
I’m just thinking of someone in my situation, I’ve ‘done everything right’, bought a home in late 2008. I can’t refinance it unless I bring $70K to the table (who has $70K?!). If I lose my job and need to go to Oregon to get a new one, I’m -not allowed- to rent it out. All I would need is to refinance (no principal reduction) and rent it to break even and live elsewhere. For other folks who run their finances closer to the wire, suspending interest payments temporarily (basically just deferring it until they had a job again) would work pretty well to keep people in their homes without soaking the lenders.
“You’re new here, huh? That’s the majority of what I and others advocate for. Thanks for the feedback though.”
I’m not new here, I’m chastising you for getting away from that. Please, get back to writing about ways to improve life in Rhode Island rather than ways to get people who are struggling to leave Rhode Island.
Beg – I think you are missing the big picture of Patrick’s post. Rhode Island has a severe unemployment problem, i.e., there are more people looking for jobs than there are jobs for them to fill. This is a problem for the individuals because they are out of work, and this is a problem for the state because it is now obligated to pay these individuals for years on end as they continue their fruitless job search. Paying the individuals a lump sum to leave for a state with better opportunities could benefit each party. The state would reduce its unemployment number and payment obligations, while the individuals would be freed up financially to move somewhere with a better chance for finding meaningful and permanent employment. From an economic perspective, it could alleviate some of the “stickiness” of residing in the state and being paid a stipend to stay.
I think you’re missing that these are people we’re discussing, not chess pieces you can push around some imaginary board.
Rhode Island’s economy has been in terrible shape for years and thousands of people have left the state (according to the Census Bureau, roughly 30 thousand since 2004). The people who have stayed, stayed for a reason.
If more than half a decade of economic decline and utter failure from our political leaders wasn’t enough to drive people away, I sincerely doubt an advance on the unemployment benefits will be enough.
I get what Patrick was trying to do with this piece, but I wish he would use his considerable brain power to improve Rhode Island, not just to save the unemployment office a little cash.
Providing people with the additional option of a lump sum payment to seek employment in states with more opportunities is treating them like “chess pieces”? You could equally make that criticism about any law or policy that prohibits, mandates, or incentivizes behavior, including maintenance of the status quo, which carries its own set of prohibitions and incentives.
“If more than half a decade of economic decline and utter failure from our political leaders wasn’t enough to drive people away, I sincerely doubt an advance on the unemployment benefits will be enough.”
I’m not so sure about that. A number of RI residents to whom I’ve spoken remain in the state only because there is some financial incentive to do so, whether tied to a job, a mortgage, or some kind of benefit or assistance they are receiving. I think a check for $5000 would make a big difference in a lot of those situations.
Regardless, the idea only works in theory if not many states are doing it.
Also, there’s that pesky constitutional issue where you can’t ban anyone from returning to the state.
To respond to a couple comments:
“not chess pieces you can push around”
Remember, this is an opt-in program. No one’s getting pushed around. They’re welcome to stay and exhaust their benefits and keep looking for a job in RI. I’m just presenting another option.
“you can’t ban anyone from returning to the state.”
No would would be banned, they just could not receive any additional unemployment compensation. They’re welcome to live and work (or not work) in RI as long as they want.