Fix Unemployment System, Don’t Break It

[Omaha Steve]

http://blog.aflcio.org/2006/09/19/fix-unemployment-system-don%e2%80%99t-break-it/

Fix Unemployment System, Don’t Break It

The nation’s unemployment insurance (UI) safety net system could use some major improvements. Eligibility should be expanded so more laid-off workers can qualify for benefits. And the weekly benefits, which vary widely by state and average a little more than $260 a week, should be increased. No surprise: The Bush administration has opposed both proposals.

Now come two recent “think-tank” papers offering a pair of changes that masquerade as improvements but actually could make workers pay for their own UI benefits and take low-paying Wal-Mart and McDonald’s jobs.

Both those ideas—individual UI accounts and so-called “wage insurance”—mirror proposals by the Bush administration and the conservative Heritage Foundation.

In a paper prepared for a think tank called the Hamilton Project, founded by investment banker Robert Rubin of Citigroup, economist Jeffrey R. Kling calls for shifting the burden of financing UI benefits from employers to workers by requiring workers to fund individual accounts through a payroll deduction. Currently state and federal employer payroll taxes finance the UI programs.

According to Kling, workers also could voluntarily make even higher payments into these accounts, invest in stocks and bonds and keep any remaining balance when they retire. But if they use up the money in their accounts when they’re unemployed, they would have to borrow against their future income to make up the difference. If this sounds a lot like privatized Social Security accounts and Bush’s plan for workers to fund their own private health savings accounts, that’s because it is.

Kling touts individual UI accounts because workers would be less likely to use jobless assistance if they have to pay it out of their own savings account, especially if they have to borrow money when their account runs dry. The great thing about that, supposedly, is that it would encourage workers to jump at the first job opening available, even if it’s in an unrelated field.

The flip side, though, is that this financial pressure could force skilled workers, such as nurses or electricians, to settle for flipping burgers instead of searching for work for which they are trained and qualified. Or it might discourage them from getting the training they need to qualify for a good-paying job with decent benefits.

FULL story at link above.