“One strange thing about the American unemployment insurance (UI) system — which provides weekly payments to jobless people who meet certain criteria — is that it’s not insurance against being unemployed. More accurately, it’s insurance against losing a job “through no fault of your own,” which makes UI more like “getting laid off insurance.”
Aside from a few exceptions in some states for things like escaping domestic violence or hostile workplaces, voluntarily leaving your job disqualifies you from receiving unemployment benefits. Allowing people who quit to receive those payments would be “contrary to one of the fundamental tenets of the UI program. The idea is that we want to incentivize people to work,” said Doug Holmes, president of Strategic Services on Unemployment & Workers’ Compensation (UWC), an association that has represented the interests of businesses in matters of UI reform since 1933.
So the point of the American UI system is not to make it easier to quit a job. But a few economists are now beginning to ask: Should it be?”
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“Boosting UI generosity doesn’t affect overall employment rates one way or the other. Instead of loafing around in subsidized unemployment, more generous benefits can support people to quit their jobs in search of better ones, which benefits workers through higher wages and better job satisfaction, and the economy through enhanced productivity as people find better uses for their skills.
Put simply, more quitting can be good for the economy. If UI made it easier for more workers to quit their jobs, people would still look for work and the economy could be better off overall. The real losers would be lousy jobs, which would struggle to retain workers with a greater cushion to quit and go looking elsewhere.”
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“In theory, working a job and buying that carton of eggs are both voluntary transactions. If you don’t like your job, you’re as free to find another as you are to choose a different, cheaper carton of eggs. In practice, especially for lower-wage workers who face relentless economic pressure and lots of debt, adding a job search on top of full-time work just isn’t feasible.
As a result, people trapped in jobs aren’t able to send signals to the labor market that their work sucks and leaves them too drained to find something better. Let this kind of labor market evolve over the course of decades or centuries and you can wind up with an economy full of jobs that make too many people miserable. Without enough freedom to quit, the core logic aligning labor markets with people’s preferences is flying partially blind.”
https://www.vox.com/future-perfect/356461/unemployment-benefits-insurance-quitting-capitalism-economy
“Hey, remember the pandemic economy? How could you not, right? In early 2020, millions of people lost their jobs in the blink of an eye, through no fault of their own. In the United States, their subsequent attempts to get help from the government overwhelmed unemployment offices across the country, revealing the system to be fundamentally broken. The infrastructure was bad, the benefits insufficient, and the entire scheme next to impossible to navigate.
And then, something remarkable happened: The federal government stepped in to shore things up. It added extra dollars to state unemployment benefits to make sure people could get by and pay their bills. It expanded the pool of people who were eligible for benefits, so workers such as freelancers and contractors could access them, too. While far from perfect, the extra efforts to help the unemployed made a real difference in people’s lives and played a part in the country averting a deeper and longer recession.
It felt, for a while, like maybe there would be momentum to finally address the issues in America’s unemployment system. So many people had experienced first-hand just what a disaster it was on a massive scale, from outdated administrative systems to inadequate benefits. It seemed obvious that this hybrid state-federal program that had left so much discretion up to individual states just didn’t work.
And then … America’s UI setup didn’t really get fixed, because it never does.”
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“As workers stare down the barrel of another potential recession — and the layoffs that would accompany it — the problems that dogged unemployment insurance before the pandemic, many of which have persisted for decades, remain. Most of the momentum to repair the system has dissipated.
Congress and the White House allocated $2 billion to the Department of Labor in 2021 to try to help states update their unemployment systems, combat fraud, and promote equitable access to benefits. But that funding and the accompanying efforts can only go so far, and they are aimed at administrative fixes, not policy fixes. The benefit amount a worker is entitled to, how long the benefits last, and the requirements to get them largely depend on which state that worker lives in. Many states are still digging themselves out from under the last crisis. Given the narrative that has taken hold around unemployment during this most recent economic recovery — that UI kept people out of the workforce, that too much government assistance contributed to inflation — it’s not clear what kind of appetite would exist in Congress to help workers if and when another recession hits.”
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“The point of unemployment insurance is to replace income for people who have lost their jobs and keep them attached to the labor market. It’s meant to be a support for the broader economy in times of economic downturn, too, and keep consumer spending going. If I lose my job and can’t pay my rent, it is a problem for me and for my landlord and for the sandwich guy I no longer buy from down the street.”
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“UI is financed through state and federal payroll taxes that are supposed to cover both administrative systems and the benefits themselves. Many states have kept those taxes quite low, leaving the system chronically underfunded and resulting in luck-of-the-draw situations for workers applying for UI, depending on where they live.
The average weekly benefit paid out in regular unemployment insurance nationwide was about $385 in the 12 months ending in September. But if you look at Mississippi, for example, the average benefit is in the low $200 range, while it’s now above $600 for Washington state.
These benefits do not move with inflation, either.”
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“Many UI offices are understaffed, are still dealing with pandemic-era backlogs, and are using outdated technologies to administer benefits. Or, they’ve updated their technologies and they’re intentionally designed to make the whole thing harder for workers to navigate, or the update was just bad.”