Unemployment Benefits Extensions are Extending the Recession?

http://blogs.law.harvard.edu/philg/2009/11/16/unemployment-benefits-extensions-are-extending-the-recession/

by manish • 17 years ago

8 10 17 years ago

blogs.law.harvard.edu

alttab2• 17 years ago

I've seen first hand that this is true.

My former room mate / business partner (see: iStoleYourStartup) was laid off of his iPhone game dev job and started collecting unemployment (while illegally trying to bootstrap iZenStudent).

They extended his unemployment benefits, so he continued to not look for a job and continued not tell the Texas Workforce Commission that he was trying to run his own business.

I had half a mind to turn him in because my tax dollars was funding his "start up."

marcusbooster• 17 years ago

As a counterpoint, my old man builds stores and new construction has dried up and not come back. In the meantime he's had to completely retool by getting certified for inspection work for the state. This takes time and these classes are crowded.

The economy is changing and there seems to be a big disconnect between the people reading this board and the large majority of our population.

gojomo2• 17 years ago

I'm glad you didn't act on your resentments. It's healthier to move on.

I've got mixed feelings about the legitimacy of someone collecting unemployment while attempting a bootstrap. For the startup-minded, trying to get a project to self-sufficiency is in a way "searching for a job". I'm not sure either they or the public treasury would be better served by them aggressively seeking a W-2 job, even though that may be the ostensible requirement of the unemployment compensation program.

(Unless the abuse is really blatant -- drawing a consistent documented salary-like payment -- I also doubt most state bureaucracies would or could do anything to cut off payments.)

alttab2• 17 years ago

I can only speculate why my initial comment here was voted up - then down.

The issue here wasn't that he was collecting unemployment while bootstrapping -- its that he simply didn't tell the Texas Workforce Commission.

If you have a start up, and you tell the unemployment office, they may still give you the full compensation (although I wonder if we would have received the maximum allowed benefit).

When you sign up for unemployment they ask you if you are current self-employed. He had his name on a DBA, had a fully functioning website up describing his business - and withheld this information from TWC.

This is illegal.

mtrichardson• 17 years ago

Just want to point out that if you're finding yourself unemployed and wanting to bootstrap your own business, your state might have something called the Self Employment Assistance program - it's federally funded but managed by the states.

After meeting with business counselors and ensuring that your idea is sound, you file your business plan with the state (they don't share it) and can start receiving your normal unemployment benefits.

Here's the awesome part: they're giving you the benefits to work on your business full time. No need to do job searching. It's six months of runway. Pretty awesome.

m_eiman• 17 years ago

The same ting is also available in Sweden, here it's called "Starta eget-bidrag". Info at: http://www.arbetsformedlingen.se/admin/Documents/faktablad/s...

mahmud• 17 years ago

What you call a social safety net in Sweden, we call a golden-parachute in the U.S. Or at least it's perceived as such: I have little knowledge about Sweden's local governance, but from what I gather, you have an aggressive wealth redistribution system there. High taxes on earners, and fat paychecks for the unemployed.

bruin4tw• 17 years ago

Out of control government entitlements will be the end of California (my state) and possibly America.

mustpax• 17 years ago

The article contains a single anecdote about someone not looking for work due to unemployment benefits. How does it follow from this that such benefits are extending the recession?

Is the author saying that unemployment benefits keep consumer spending down? If the person's take home pay is about the same, as the article suggests, this should not be an issue.

Maybe the author is suggesting that unemployment benefits create a shortage of labor by discouraging workforce participation? This would be an even harder argument to make given the continued layoffs across all sectors of the economy.

Unemployment Benefits Extensions are Extending the Recession?

Related Stories