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Ellen Belcher is the Dayton Daily News opinion pages editor. She writes about state government, education, the environment, higher education and all things Dayton.
Martin Gottlieb is an editorial writer and columnist for the Dayton Daily News opinion pages. He focuses on the political process itself and does such national issues as war, the economy, taxes and Social Security, as well as a hodge-podge of local and state issues.Home > Blogs > A Matter of Opinion > Archives > 2010 > February > 10 > Entry
Editorial: Out-of-work Ohioans need Congress to act fast
The way unemployment compensation works, the state pays a laid-off worker’s benefits for 26 weeks from a tax paid by employers. But when unemployment rates are high enough for long enough, the federal government steps in. Congress votes to extend benefits and to fund them.
In this recession, Congress has already provided extensions almost to the point of two years for some people.
That’s as it should be. Not that some people don’t have qualms.
The conservative Heritage Foundation, a Washington think tank, insists that “by reducing the need to look for new work, extended … benefits cause unemployed workers to take longer to find new work.”
More specifically, extending benefits from 26 to 46 weeks increases the unemployment rate by a fifth of a percentage point.
Each 13-week extension has the effect of increasing the average length of unemployment by two weeks, partly because the extended benefits deter people from moving or switching fields, according to the think tank.
“Roughly one-third of workers receiving (unemployment comp) find work immediately once their benefits expire,” says the Heritage’s James Sherk. And he says that’s true whether the unemployment rate is high or low.
And extended benefits also tend to deter the family’s pursuit of other forms of income, the Heritage says.
And, to top it all off, the economy gets no stimulus to speak of.
Anyone who has been around a while knows that some people on unemployment compensation want to take full advantage of its duration (sometimes to go to school).
Somehow, though, it’s hard to believe that a solution to the worst recession in the lives of most people now alive is to cut off unemployment aid. By some estimates, there are six times more unemployed people than there are jobs.
The nonpartisan Congressional Budget Office says unemployment aid is one of the best stimulants for the economy. The purchases that people make with their unemployment checks keep other people working.
Congress now needs to extend unemployment insurance again. Otherwise, about 100,000 unemployed people in Ohio could lose their benefits next month, according to the state.
About half the 400,000 Ohioans on unemployment are on extended benefits and would stand to ultimately be cut off.
Recipients also stand to lose an extra $25 per week that Congress has added to benefits.
The House has passed an extension. The Senate needs to act as quickly as possible, so that people and states can make their plans, and benefits won’t be interrupted.
Ohio has had all it can do to keep its own unemployment compensation system functioning, just paying for the first 26 weeks of aid for all those who have been out of work.
It has been borrowing money from the feds for the last year to do so. So have about half the states, but Ohio was one of the first. It has faced high unemployment rates longer than most places.
Gov. Ted Strickland and lawmakers have shrunk from confronting this problem — and the growing debt to Washington, now pushing $2 billion. Nobody wants to raise business taxes (or cut benefits) during a recession. But something must be done.
First things first, though. Congress has to act.
Permalink | Comments (5) | Post your comment | Categories: Editorials, Martin Gottlieb, National government, Ohio government
Comments
By Kurt
February 11, 2010 6:40 AM | Link to this
It is because of democrat policies, that we have high unemployment. YOu cant threaten a business with phony litagation, you can’t smother them with worthless red tape, you can’t crush them with taxes, and then on top of that, tack on a dumb a*s work force, educated by gov. so called teachers, and then wonder why unemployment is so high.
By joe_mamma
February 11, 2010 8:27 AM | Link to this
If unemployment checks stimulate the economy then the government should extend payments indefinitely. In fact they should just give everyone a check regardless of whether they are working. Of course that is total BS. Me taking a $100 bucks from Martin and giving it to one of my friends to spend does not stimulate the economy.
By drunken orangetree
February 11, 2010 7:32 PM | Link to this
Of course a global wide recession brought on by unregulated banking has nothing to do with people’s being unemployed. But, don’t worry, bankers. joe and Kurt are here to protect your gov. insured bonuses.
By RAW
February 12, 2010 11:26 AM | Link to this
Rather than worry about extending unemployment or borrowing money from the feds to pay people to not work, Ohio should be focused on creating a business-friendly climate. First, we need to drop our state income tax in lieu of an adjusted sales tax on new retail items and services. States that do not have an income tax are experiencing growth and business development. Currently, Ohio is in the top 10 for most taxed. An adjusted sales tax would be the most equitable as it hits those that spend money more than those that make money. The sales tax should be placed on new retail items, excluding food items, and on services. For instance, if you buy clothes at Walmart, you pay the sales tax. If you buy clothes at a consignment or thrift store, you do not pay the tax. If you buy a used car, you do not pay the tax. For those that can least afford it, the tax would be less likely to impact them. Those that spend the most pay the most and it cuts down on tax evasion because you pay it at the point of sale. These systems are attractive to businesses because they keep more of their income. Second, Ohio needs to become a Right-to Work state. This would eliminate the requirement to join a union to work at a unionized facility. Unless this has changed recently, Meijer is a prime example. In order to work at Meijer, an new employee is required to join the union and pay dues. There is no choice. Dues are automatically withheld from the paycheck. This type of environment perpetuates the stranglehold unions already have on many companies. New businesses will avoid states that allow this practice. With the demise of the auto industry in Ohio, we an opportunity to break the grip of the union and pass legislation to disallow the practice. New employees will be able to choose to be part of a union, but their employment would not be conditional upon joining it. This is also a huge problem in the construction industry. Unions oft times direct what work is completed, at what cost, and by whom the work is done. Market forces are unable to work in such an environment, drasctically affecting costs for capital improvements, and steering potential businesses away from relocating to Ohio in preference to states where the competitive bid process is allowed function independently of third party influence such as prevailing wage and material costs. Not only do the two items (income tax elimination and Right-to-Work) increase the potential for outside businesses to locate here, but also encourages local entrepreneurs to start the businesses here. By decreasing the barriers for development, the net effect is increased work and available jobs. The need to extend unemployment and borrow from the feds will be a moot point. These are two realistic solutions but are only part of what needs to be a statewide strategy to market the state of Ohio as a prime business-friendly location. Incentivizing unemployment will also be key to forcing people of of unemployment. One incentive is to enroll in school to increase your employability. I have no problem extending benfits to those attempting to improve their position through education. Also, increasing the standards for allowing extensions. Allow for the taking of temporary work without loss of benfits once the work is completed, such as contract work. Currently many construction workers refuse to take contract work for fear of losing benefits once the work is completed. Our unemployment laws are antiquated and are in nedd of serious reform. Politicians will need to make some very hard choices and potentially unpopulr ones, but come November, voters will be looking for those candidates that can make those choices and do what is necessary for the state to move forward.
By joe_mamma
February 16, 2010 7:33 AM | Link to this
Drunk. Ha, good one. Way to stay on topic and add to the conversation. Thanks for proving my point that transferring money from one person to another does not stimulate the economy.