Archive for February, 2015

The Bad Economics of a Broken Unemployment System

February 26, 2015

How in the world is a dysfunctional unemployment system good for the economy? Looking at the facts of my own situation, I find it difficult to understand how the lack of a real support network is good for the community living beyond my own personal financial crisis. I have less money to spend and invest in the local economy, and I have less time and energy to devote to community and volunteer causes.

In September, I was fired from a job at which I earned $41,000/year. Having worked at that job for more than seven years, I should have been eligible to receive unemployment benefits. These benefits exist not just to help taxpayers through periods of unexpected unemployment, but also to give them the time they need to find jobs offering compensation comparable to what they were making before they lost their jobs. After applying for unemployment benefits, I received no communications about my application for more than four months. I could not afford to live without income for an extended period of time so I grabbed at every employment opportunity that came along. Those opportunities paid between $7.25/hr (grocery store) and $20/hr (catering). I now have a temporary office job that pays $12.50/hr. I can’t afford not to have this job, but neither can I afford to live on what it pays. I pay $182/month out of pocket for health insurance offered through the Affordable Care Act.

Any job offering a salary in the ballpark of my last full time job would likely have an extended application process. Without unemployment benefits, I can’t afford not to work while looking for a job that would compensate me commensurately with my experience (to use the popular phrase). But with a low-paying full time job, I have fewer hours to conduct a productive job search  and to prepare outstanding application materials.

In mid-February, my state’s Department of Labor and Industry sent me three determination letters that deemed me eligible overall to receive unemployment benefits. In late February, I received a fourth determination letter that ruled me ineligible to receive benefits because (for tax filing purposes only) I have my own business as a film projectionist. I work as an independent contractor at one theater and I was able to make $885 in October due to overtime; in December, by contrast, there was no work for me at all. (More typically, I make between $100 and $400/month as a film projectionist, and this has remained true during my unemployment.) It is shocking that a peak monthly income of $885 should disqualify me from receiving unemployment benefits–especially since those benefits would total twice as much. The Department of  Labor apparently rewards those who make no attempt to work right away and who can afford not to do so.

My current monthly earnings total half of what I was making before I lost my job. I can’t afford to live on these wages so I have to forge ahead with my job search. If I am invited to interview, I need to lose income in order to attend that interview. If history is any indication, the odds are not in my favor that an offer will ultimately be made. Is it worth risking the missed income to pursue an interview or multiple rounds of interviews? There is much about unemployment that is demoralizing, but it need not be such a financial struggle. It’s hard to have confidence that I will be able to secure a job at the level and salary of the one I recently held. I am fiscally conservative by nature, but my current lack of security is making me even more guarded in my spending. I don’t feel like I can spend money I don’t have and that I might never recoup. I am not the only person who has experienced unemployment. Can the economy really afford a stable of workers who fly without nets when they are unemployed, who jump at undervalued opportunities to become employed and who adopt the nervous spending habits of those who worry they will again be unemployed? As I see it, a more responsive and functional unemployment system would not only benefit unemployed individuals, but also the broader community that would benefit from a more affluent consumer base.