A Closer Look

US Unemployment System – A Bad Employment Policy

…Between 2008 and 2011, $174 billion in unemployment taxes was collected while $450 billion was paid out in benefits, a gap of $276 billion. Thirty-four states blew through their unemployment insurance trust funds and borrowed from Washington — and 22 of those still owe the feds a total of more than $30 billion, according to the Tax Foundation. The foundation’s study concluded that some states will not fully repay those loans for years.

The unemployment benefits system was built on a combination of wishful thinking, generosity, and skimpy funding during good times. In the first quarter of 2008, just before the recession hit, only 17 states had sufficient reserves to cover a year of benefits — and 20 states couldn’t even cover half a year, according to Tax Foundation calculations.

The new costs of hiring come just as the National Federation of Independent Business has published a gloomy survey of small companies showing negative job creation and pessimism about the future. “There was no good news in the June survey” released last week, the trade association said. “NFIB members didn’t add a lot of jobs and don’t plan to in the coming months.”

A combined 40% of those surveyed cited “taxes” and “government regulation/red tape” as the most important problems facing small business, compared with 23% who cited “poor sales.” That’s a pretty loud shout to lawmakers…


via The silent job killer: Our unemployment system – The Term Sheet: Fortune’s deals blog Term Sheet.


Monetary and fiscal policies will never suffice to reduce long term unemployment


One of the main policies to reduce long-term unemployment is an active labor market policy. The OECD publishes each year data on Government investments in labor market programs like training and wage subsidies.
Gemany and the Scandinavian countries are champions of active labor market policies. This is well known. But, less known is the fact that the US are not. US investment in active labor market programs before the Great recession wasbelow the OECD average, nearly 4 times lower: 0.13% of GDP vs 0.48%.

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