UNEMPLOYMENT BENEFITS: INSURANCE, WELFARE OR ENTERPRISE?

Unemployment benefits have become a first-page, news headliner issue since Sen. Bunning put a hold on benefits payments. He insisted that the Senate find $10 billion in cuts elsewhere in the budget to pay for a new round of benefits -- so that the Senate wouldn’t violate Congress’ renewal of “Pay as you Go” legislation.

The more basic problem, however, is that repeated extensions of benefits turn the unemployment “safety net” from an insurance to a welfare program. The unemployment insurance funds have already been exhausted in many states We know the dangers of welfare -- creating a dependency culture rather than encouraging self-reliance and enterprise.

Many years ago, some successful experiments were mounted in some American states (e.g., Massachusetts) and some foreign countries (e.g., France). These showed that unemployment funds could be used to seed new businesses. Many unemployed people were helped to “be your own boss” and create their own job(s). The potential of this is great now, as the “Great Recession” continues and long-term unemployment grows. The Director of the New Hampshire’s SBA program reports that his office has been swamped with requests for assistance from unemployed people who can’t find jobs, so they are turning to self-employment as an option. They need help to establish new enterprises.

Thus, Congress should build on past experiments to revise the unemployment benefits program so that it can help enable enterprise rather than encourage dependency. Receipt of benefits to be paid out to someone unemployed over a year should be contingent on a choice of either self-employment or public employment. The latter implies that Congress should also be prepared to authorize temporary public employment on an emergency basis -- to enable some useful work to be provided to people unemployed more than a year. The guiding rule is just what guided welfare reform: Beyond a certain point, no welfare without work.

Studies show that nearly two-thirds of net new jobs are generated by new or young (up to 5 years old) enterprises. To the maximum extent possible, let’s see that unemployment funds are used to help build job-creating businesses.

PETER BEARSE, Ph.D., International Consulting Economist and Candidate
for Congress, NH CD 1.