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Thursday, May 14, 2015

Bring Back Unemployment Lines

I was thinking the other day that it is too bad that Unemployment Compensation became automated and that people don’t actually have to come out and be counted publicly anymore.

It used to be a telling tale of how the economy was doing to see people lined up outside the local Unemployment Office in each city and town. In good times it would be just a few people standing or sitting around smoking and drinking coffee and shooting the breeze waiting for the doors to open and in tougher times like as the result of the economic missteps of the Carter Administration, the lines stretched down the block and around the corner. You would drive by and be amazed at the number of people in line. It was the consummate measure of how the president was doing that was hard to miss by the general public whether you were political or not.

By the end of the Carter Administration, unemployment lines were ‘Ponderous” and lead to Jimmy Carters electoral defeat at the hands of Ronald Reagan. People couldn't miss the increase of the lines for unemployment benefits.

After 1981 the administration of Ronald Reagan returned those lines to a normal length first by denying as many claims as it could get away with and then reducing taxes and regulations for businesses so that people were no longer prohibitively expensive to hire. Spurred on by these changes, companies were hiring and people had the incentive to work since the saying was back then: “When did you find work? …When my unemployment ran out!”

Up until the Unemployment System was automated in the mid-1990s, an unemployed person filing for benefits had to apply in person. They also had to come back every week on their appointed day and sign a book and answer questions on whether they looked for work or not. In the state of Massachusetts there was also a form to fill out with the employers you contacted to apply for work. For this it was a requirement that people who wished to sign up for or continue with their benefits had to line up outside the office.

Today approximately 85% of all UI claims are filed remotely.

The Government claim is that every dollar paid in unemployment benefits generates approximately $1.60 in economic activity but that cannot be true. This claim does not take into consideration the “Overhead” involved in doling out the money. A million dollars may enter the Government Machine but what comes out isn’t close to that number ever!

The government employees that run the Unemployment Department also draw a paycheck. Where does this money come from? Taxes, that’s where. The companies pay for unemployment compensation in the form of a tax on their profits. In truth, Unemployment compensation in all but a few states is funded almost entirely by employer payroll taxes. Only three states; Arkansas, New Jersey and Pennsylvania collect taxes from employees under certain conditions.

Of course taxes on companies aren't paid by the companies. These taxes are passed along to the consumer as part of the price they pay for goods.

This is the old “Taxing ourselves into Prosperity” ruse that government likes to trot out there every so often. The last person I recall using it was Nancy Pelosi when she was the Democratic leader of the House of Representatives.

So today we live in a different world. Since our unemployed no longer stand in line, instead applying either over the phone or via the Internet and receiving their benefits directly deposited into their bank accounts, we only know what the percentage of the population is unemployed by what the government tells us. The government now controls those numbers and the government cannot be believed.

So I wish we could bring back those old, heady days of the unemployment line where people stood together, mixed together, exchanged information and telegraphed to the whole country just how good or bad the economy and our president was doing. It was the only truthful reference we could rely on. But it’s been a long time now since then and we the people have little to go on anymore. It’s just all too easy to get the money and the actually numbers are now a mystery.

But I'll bet that if today’s unemployed or rather, the people now drawing unemployment benefits had to stand in line for the money, people would be shocked beyond their imagination at the size of the lines that would form. What do you think they would say then?

But of course, that isn't going to happen.

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