The state of Florida offers less generous jobless benefits for fewer weeks than allotted in most states. The maximum length of unemployment-insurance benefits is tied to the unemployment rate in the state. So this year the insurance benefits last for just 12 weeks, compared to the 14 weeks last year. However, most other states provide the newly unemployed support for 26 weeks (6 months). In addition to the length of support being shorter, the benefit payments are also about 30% smaller. So how is this affecting the people of Florida? They are finding that it is simply a trade off. The unemployed are having to face a lot more hardships in the beginning, but they end up getting back to work more quickly. The JPMorgan Chase Institute released data that shows they are finding jobs faster and those jobs pay as well as positions found by workers in other states. In order to deal with the effects of the shorter duration and smaller payments, after losing their jobs, Florida workers are cutting back their spending by 13%, while people in the other states are only cutting back by 5%. Floridians who had been on unemployment rolls are starting to see their incomes rise again just four months after receiving their first payments. On the other hand, people of other states that receive six months of payments, are not seeing an increase in income until 7 months after their first payments.
We have studied in class how reducing the duration of unemployment benefits affects frictional unemployment. We also said that people tend to wait until the last minute- right before their insurance is going to expire- to start looking for jobs. This statement seems to correlate with the information discussed in this article about how people don't start showing an increase in their income until 7 months later. The fact that the newly unemployed are receiving less benefits and for a shorter amount of time shows that this pushes people a little more and gives them that incentive to go out and start working again.
http://blogs.wsj.com/economics/2016/09/15/more-weeks-of-unemployment-benefits-dont-lead-to-better-paying-jobs/
I think this is a brilliant tactic by Florida. Cutting down on the amount of employee benefits paid plus the duration of benefit receiving relives expenditures taken out of state and federal payroll taxes. An instant method to shorten the duration of job finding because people can't abuse their reception of benefits. I also think this is a great strategy because it prevents people from becoming dependent on unemployment benefits and should hopefully fuel the unemployed to work faster and harder to find a job.
ReplyDeleteI think that other states should implement this tactic used by Florida. It is obviously working because people are finding jobs faster and actually seeing a rise in income faster after there first payment. This policy is forcing people not to wait till the last minute to find a job which by the numbers is less productive then finding a job quicker.
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ReplyDeleteHaving a shorter period of unemployment benefits is an plus for Florida business owners as well; because, they are the ones who pay the unemployment tax and they cannot deduct that amount from their workers' pay. This is from Florida's Department of Revenue: "Florida employers pay for reemployment assistance through a tax managed by the Florida Department of Revenue (Department). It is one of the employer's business costs. Workers do not pay reemployment tax and employers must not make payroll deductions for this purpose."
ReplyDeleteI see the intiative Florida is taking in regards to unemployment benefits. Simply, by decreasing unemployment funds decreases the duration people will spend staying unemployed. It means unemployed citizens cannot rely on the unemployment insurance payments like in other states. Reading up on this if I were to play devil's advocate there is a case to be made that citizens applying for unemployment insurance cannot apply due to the fact they cannot navigate the online system. A lot of people are disqualified for procedural reasons. Florida also requires five new employer contacts each week versus other states which require one.
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