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Unemployment insurance should be a safety net, not a lifestyle

Published April 28. 2012 09:02AM

As the economic recovery takes hold, it is time to reconsider unemployment insurance benefits. The State of Pennsylvania extended the benefit duration in response to the current recession and high unemployment. The extension provides a safety net for the recipients and for the economy. Unemployment insurance checks permit people to purchase their groceries, pay their rent, and buy necessities. At the time of the benefit extension, businesses were not hiring. Things have changed! We are in the midst of a minor recovery and some small businesses want to hire new staff. It is now time to curtail the benefit extension, as there are many jobs that remain unfilled.

I talked to several business owners recently who were trying to hire staff. They were in the service industry where wages are typically lower than the manufacturing or government sectors. Despite the large number of people on unemployment insurance, these small businesses cannot get people to apply for their open positions. One business owner mentioned that he couldn't compete with unemployment benefits. He pays above minimum wage and his staff receives tips and gratuities from the customers. One server mentioned that in her short three-hour shift she made over $60 in gratuities. She also mentioned that it was a slow night. Good staff will receive better tips and can earn a respectable living. Despite the decent compensation from the combination of wages and tips, the restaurants I frequent are always short staffed.

Jobs like these go begging for applicants. Restaurants and fine dining establishments cannot compete with unemployment insurance, as some people between positions prefer a benefit check that enables them to stay home rather than working. If they were employed, they would have childcare, transportation and other employment related expenses. Their net pay from their job after deducting work related expenses could be less than they receive on the dole. As a result the dole becomes a lifestyle rather than a safety net.

Rather than sitting at home collecting unemployment insurance, I believe that long term benefit recipients should take government sponsored retraining programs. There are plenty of programs available starting with obtaining a high school graduation certificate (GED) and ranging up to a college degree or professional designation. Many community colleges offer these programs and will help potential candidates complete the paperwork and submit the application. This requires a strong commitment as reentering the education system is certainly difficult. If you are unemployed with few job prospects, retraining is the best chance you have to bolster your career and increase your income.

Another option is to apply for government jobs at the state and federal level. These jobs pay well and have good benefits. In some areas, government employees earn more than their private sector counterparts. I have worked with many government employees and found that they can be divided into two groups. There are those who work and there are those who are employed. Most of the ones I met worked hard and were committed to their jobs. As with any workplace, there are some laggards in the civil service. After decades of providing services to the government, I realized that even the underperformers in the government were showing up for work every day to receive their wages and provide a level of service to the taxpayers. If any fault is to be placed for underperformance, it should be placed on the management. If civil servants cannot do their job properly, they should be let go. As the laggards are let go, more jobs would be created for those who are actively seeking employment.

The private sector is not creating the number of jobs we need. The federal government has created an aura of uncertainty by failing to pass a budget in over 1,100 days. After a recession, the economy normally grows at a five to ten percent rate during the recovery. Our current recovery, if it can be called that, is growing at a lethargic rate of one and a half percent a year. As a result, there are very few jobs being created. Some organizations continue to lay off workers as they strive to lower costs and improve their competitiveness. As businesses return to profitability, they will again hire more people. Despite the need for business expansion, the government continues to place burdens on the private sector. Excessive taxation and over regulation deters business expansion. As a result, more businesses are moving overseas to countries where the entrepreneurial spirit, a motivated workforce, and less government regulation create an effective environment for starting new companies or expanding existing businesses.

Even though the economy is lackluster, starting a new business remains an option for both the employed and the unemployed. There are plenty of businesses already in existence so new entrepreneurs will need to be creative to differentiate themselves in the marketplace. In researching this article, I found a new type of business that was both creative and well paid. Professional "line standers" charge up to $40 an hour to wait in line on behalf of their customers. Whether you are lining up for concert tickets or seats at the Supreme Court hearings these people stand in line so you can do other work. As they approach the start of line they give you a call so you can take their place. There are several companies that also provide the service. ( I'm sure there are many other new business concepts that are both simple and profitable.

A new business starts with an idea, some imagination and a lot of hard work. Business creation can be very rewarding for those who succeed. We need to remove the staffing roadblocks facing small businessmen and women. Rather than paying people not to work, we should persuade them to take the jobs that are available even if they are low paying jobs. This will help businesses find the staff they need while lowering the cost of providing unemployment benefits. In addition, the benefit duration should be reduced to the original term of thirteen weeks. If after that time a recipient cannot find work in their chosen field, they must face up to the reality that they need to change their profession.

To receive extended benefits, they should enroll in a trade school or post secondary education. If they don't do so, their benefits should be cut off. For those who decide not to return to school, there are plenty of jobs in the service sector that they can take to support their families. These jobs may not be desirable, but if a person does not want to upgrade their skill sets, then they have to take whatever job they can find.

My message is simple: If you are unable to find work, reinvent yourself or take a lower paying job. I hope that most of those between positions will use their situation as an opportunity to launch a new career or open a business. Every person who returns to work reduces the drag on the economy. This will create an upward business cycle that will lift our country from the malaise where we now linger into a new age of prosperity.

© 2012 Gordon Smith - All Rights Reserved

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