Good Question: Do Benefits Keep People From Working?

By Jason DeRusha, WCCO-TV

If the Congress and President Barack Obama don’t act, unemployment benefits for 2 million Americans will run out by the holidays. So, the President wants to extend benefits. However, do unemployment benefits discourage the unemployed from finding a job?

“This is a tricky question,” said Hamline University Professor Jack Reardon. “Most people would love to get a job.”

However, simple economics would dictate that if someone can stay home and not work and get a check for $300 a week, they won’t take a job that pays them less than that, which is about $15,000 a year.

On, DB wrote that his unemployed wife got a retail job, “but when she realized she would have to work 15 to 25 hours per week to just equal her unemployment,” she took a pass..

Jennifer Westphal admitted, “I looked a lot less fervently because I had benefits.” She ultimately found a job, but wonders, “If you deduct what I would have got from unemployment and what I pay for child care, my net gain is about $5 an hour. Sometimes, I wonder why I didn’t just stay home on the government dole.”

Many economists acknowledge that unemployment benefits have a slight affect on the length of time people stay unemployed. Of course, the availability of good jobs is the key factor.

“One of the benefits of this cushion is to enable any one of us that is out of work to be looking for the best job out there that will fit us. This is the benefit for all of us in the system. It’s not just about finding a job,” said Reardon.

There’s also a major benefit of having this unemployment insurance money circulating in the economy. Harvard University professor Raj Chetty prepared a research project showing that even in a stable economy, the benefits of having unemployed people spending their benefit money on bills and goods outweighs the potential disincentive towards finding a new job.

So, the question is about how much of cushion is just right to take care of people in a bad time.

“How comfortable should we make this cushion? If we make it too comfortable, people won’t get up and get out of the cushion,” noted Reardon. If it’s not comfortable enough, it hurts the overall economy, he added.

“We don’t know exactly the dimensions to make this cushion. I wish we did,” said Reardon.

WCCO-TV’s Jason DeRusha Reports

More from Jason DeRusha
  • drbmac

    Why doesn’t anyone say up front that this only extends unemployed people from the 6 months basic ui to 86 weeks, after that they are sol

  • Bill

    If your over 40 and unemployed your totaly screwed. Nobody will hire you. Go down to the workforce centers and look at the people. You will see what I mean. Take some film crews and interview people. We have the best work ethic and experience yet were expensive to employ. So much for working hard your whole life.

  • Jadd

    They should allow a person on unemployment to work, what is so wrong about someone applying for a minimum wage job and supplementing that income with unemployment.

    I bet people even put on weight when they draw unemployment, and it’s hard to take a job when you’ll make less than on unemployment.

    Seems like that is a better way to extend Unemployment benefits, and it may stimulate a business or an employer at the same time.

  • Ryan Lee

    Obama may “slam” the GOP for the tax deal made, but don’t let the liberal media brainwash you. Pay attention! The President is finally doing what is right for this country and the economy due to the GOP fight!!

  • Clarke Barr

    The Government Dole is the Taxpayer. The People that work are carrying the Welfare Bums on Their Backs. The Ratio Keeps Getting Worse.

    • jim

      to clarke barr, im bet that if you became unemployed tomorrow, that you dumb ass would be right at the unemployment office, i was laid off and im not too proud to have gotten unemployment, i worked my ass off, and im not lazy, im now employed again, so untill you walk a mile in someone elses shoe’s shut the hell up, dumb ass.

  • Gus

    WOW! What ridiiculously foolish, double-digit IQ comments from Clarke and Ryan.
    “Welfare Bums?” “Liberal Media?” Man, Rush and the big biz lobbyists got their moneys worth from you two geniuses.
    You do realize that workers themselves pay for the bulk of UI in the forms of lower wages, right? You do realize that there is a difference between “welfare” and Unemployment Insurance, right?
    Oops, I’m assuming they passed high school, sorry.
    Time to wake up and smell reality, fellers. There’s actual reality beyond conservo talk radio, you know.

    • V for Vendetta

      You are probably one of the welfare “Bums” Gus.

  • Joe

    Gus. Your part of what is wrong with this country, with that thinking. Pull your head out of the sand once in awhile and stop drinking the kool-aid.

  • momz

    People forget that Unemployment Compensation is like an Insurance policy: employers pay into it, and only those employees whose employers paid into it, receive benefits. If the amount of money paid into the fund is not enough, then the fund cannot pay out benefits. The Federal government has circumvented this problem by throwing (even more) taxpayer dollars into the fund—-that’s everyone’s money—-HOWEVER, there are millions of people who are SELF-EMPLOYED. These people cannot collect one dime of unemployment compensation (unless we paid into it ourselves, and the cost is prohibitive).

  • Carrie

    The people who are finding these low paying jobs should be able to get UI even after taking the job. I’m sure most would rather work, but if you’re getting more from benefits than you’d be getting working, why WOULD you let go of that? UI is enough to survive on, but barely. So can you blame them for preferring to NOT give themselves bigger financial issues?!

  • R III

    As a small business owner former employees looking for work at some future date or some “cash” work contact me. For the most part the future date is when their unemployment runs out. Or the “cash” work is because they are on unemployment. I am not impressed with this type of work ethic. Until I know how much state and federal charges for this nonsense and the new health care crap will cost I will not be creating any new jobs.

  • V for Vendetta

    The American Dollar is history. It’s easy for “Owe”bama to keep paying these people not to work for two reasons: 1) he is creating a voting base loyal to him as long as the money keeps rolling in (watch out when it stops)…this also helps him get reelected (which I hope happens because it will ensure the US collapses sooner rather than later), and 2) he has the Federal Reserve as “Federal” as Federal Express more than happy to accommodate him with this counterfeit operation (printing the Owebama bucks).

  • V for Vendetta

    Here is a good example (before I fled the US with my business and money…I am now living in Northern Europe)….I had rent that was only $500 (knew I was leaving the USSA and didn’t want to buy anything…would have lost tens of thousands if I would have bought), and I had electricity and internet bills of about $50 and a cellphone (Pay as you go) for about 10-15 per month. Food maybe $50 and entertainment maybe 50 and gas 30-45 per month. I don’t remember a single month where I paid more than $700 for anything. This means I could be paying all of my bills and still saving $6,000 yearly with the healthy Owebama benefits. Why work?

    • me

      you stay there, please!!!! cause for the little food you eat I’m sure my health insurance would rise thanks to you being sick in the hospital..

    • Al

      Wow, so cynical. Since you don’t want to be an American, why don’t you shut the hell up. There will always be abusers of the system, and people who really need and deserve the benefit of unemployment. Just remember, it is a benefit.

      • Rich

        thumbs up for you AL

  • linda

    no one wants to sit on unemployment, believe me. try being 55 yrs old, no teeth, heart trouble, knee problems. looking for a job that would allow someone to sit and stand through out the day, doesn’t hold their looks against them (teeth), and age also is very hard.


    Recently, the media did a story on that some of the incarcerated are able to get illegal tax returns from the feds. I am curious on if or how many of the prison/jailed population are collecting or continuing to collect unemployment benefits.

  • Sharon Simpson

    Unemployment benefits don’t apply to those graduating from college and not finding work… so they have college loans to pay, living expenses, and NO MONEY!

    What are those young people supposed to do?????

  • Mary

    I am very surprised that most of these comments sound like playground arguments to me. Just ask yourself a few questions: What would I do if I lost my job tomorrow? If I was to get 300 hundred a week what bills could you actually pay? If my rent/mortgage is 1000 a month and I make only 1200 a month how will I feed my family? How will you pay the rest of your bills? Then beyond yourself how will the loss of money in your pocket affect the people in your community? Will the person at the hair salon lose their job, because my family no longer can afford a hair cut? These are simple what if’s, but are all possible, anyone could lose their job tomorrow.
    People have to realize that everyone has some effect on the people around them, even if you never see it. I wish you all a happy holiday season and hope the economy turns around soon, because I believe it has touched us all in some way.

  • mac

    The economy is not getting any better, factory’s are not hiring, retail stores at this time of years are basically empty and have laid off people, another big round of foreclosures is on the horizon. the government is just trying to stop the diaster of what happened in the 30’s. Good thing all these people who live in glass houses can donate soup for all the soup lines that will start popping up again.
    “there is no service pack for stupid”

  • unemployed with kids

    We work all these years and a bunch of rich media fools decide they want to take away our only last chance to live. (Benefits remember) Nice going!!!
    This is a bad story.

  • Gary R

    Well, you CAN work and still collect UI. It depends on how much you get per week for UI and how many hours per week you work. The wage also factors in. So, anyone want to hire a mainframe systems analyst with 39.5 years experience? I also have 5 years of sit-down forklift and Bobcat skid-steer experience.

  • Gary R

    A number of us went to a ‘jump start your career’ company in Edina. I was told to leave 13 years of experience off my resume because it would ‘date’ me. My WorkForce counselor confirmed that age discrimination exists – although I suspected it did. Gee, that’s illegal? But you will never hear an employer admit it. They will say that you are ‘over qualified’

  • Lisa W.

    I thank God every day for UI! I have been unemployed since 2008, and have exhausted all my savings, 401K, etc. I just found a job; and for those that may ask why did it take so long, I say that I applied for most everything that I could do. I was told I was overqualified. Without UI, me and my children would have lost everything!

  • Brad

    No mention in the report of the indignity of not having a job? That alone drives people to job search aggressively. And consider the alternative: telling people (and their kids) to just go ahead and starve.

  • Canadian unemployment rate falls to 7.6 per cent | NEWS

    […] Good Question: Do Benefits Keep People From Working? If the Congress and President Barack Obama don’t act, unemployment benefits for 2 million Americans will run out by the holidays. So, the President wants to extend benefits. However, do unemployment benefits discourage the unemployed from finding a job? Read more on WCCO Minneapolis – St. Paul […]

  • People Science

    The largest challenge to an employment recovery is the reluctance of the unemployed to accept the current state of their own employability. This is not surprising since these are not small acceptances which could include:

    • Acceptance of a lower salary for like work
    • The need for total re-training into a growing field of employment
    • The desire and hunger for re-training
    • The realization that “their” work is not in demand

    46 percent of candidates on unemployment informed us they would consider the position we offered if their unemployment insurance was running out.

    In fact many suggested they would be very interested but wanted to take some time for themselves. Many others had been looking for sometime but were going to wait and see what opportunities arose while they collected.

    What’s more, we often see marketed increases in new candidate inquiries when the press announces the possibility of discontinued unemployment benefits.

    From our perspective, if the government must become involved in the unemployment security then the focus should be on guiding the unemployed towards their next opportunity.

    See our blog post on this topic:

  • Do Benefits Keep People From Working? | Us Girls..Our Views

    […] Here is the story. I’m always fascinated how people look at this and how some jobs are just beneath them. If it means taking a handout from the government and receiving food stamps and going to food shelves, some people I know don’t seem to have a problem doing that. If they can’t make what they were when they were working, or what they make while unemployment, they’d rather sit home. […]

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