The Welfare System And Unemployment

1. The Welfare System And Unemployment

2. The History of the Unemployment System in America • Definition: Out of work, especially involuntarily; jobless. • The word unemployed acquired its modern definition between 1850 and 1880, term unemployment probably did not appear in print until 1887. • appeared in the United States only in the nineteenth century • Civil War to World War II, unemployment rates ranged from 5 to 15 percent

3. Continued… • labor unions and working-class political parties demanded public works programs, as well as relief, from municipal and state authorities • major political parties adhered to the view that the government neither could nor should assume responsibility for solving the problem. • views began to change early in the twentieth century

4. Continued… • New Deal • Social Security Act of 1935 • Employment Act of 1946 • New Deal + Great Depression = beginning of an era of "managed" rather than uncontrolled unemployment

5. Continued… • Unemployment levels crept upward in the 1970s, and in 1982 the rate exceeded 10 percent for the first time since the 1930s • 3 percent unemployment was no longer on the horizon • 1980s, the American track record suggested that the problem of unemployment might, be growing more severe. • A century after the term first appeared in print, unemployment remained a significant problem for American society.

6. Qualifications For Receiving Unemployment • In order to qualify for this benefit program, you must have worked in Ohio during the past 12 to 18 months • Earned at least a minimum amount of wages as determined by our guidelines. • You must also be able, available and actively seeking work for each week that you are collecting benefits. • Earnings averaging 37 times the Ohio minimum hourly wage. • In certain seasonal occupations, an applicant may qualify for limited benefits with less than twenty credit weeks.

7. Rates, Trends, and Facts for Allen County Ohio

13. Unemployment Percentages for Allen County

14. Positive Effects of the System on the Individual • Allows an individual a chance to get back on their feet • Helps the worker support his family so the children are not effected • Allows time for the individual to seek out new employment options • Rise in unemployment helps lead to the lowering of inflation

15. Positive Effects of the System on the Company • Helps lower interest rates • This in turn will help have a positive impact on the company and the general economy • A tax-paying employer knows the tax rate for the coming year and can project the annual cost based on their taxable payroll • During the past two-three years of unusually high unemployment, paying state taxes has provided good security for agencies that experienced funding cuts and decreased donation dollars.

16. Continued… • Since the national average for nonprofits is $2.20 in taxes for every $1 paid in claims, most 501(c)(3)s will save money by becoming reimbursing employers • Real example: A human service agency in California with a gross annual payroll of $1.6 million has an unemployment tax rate of 4.8 percent. In 2005, their SUI taxes will be more than $45,000 even though their actual claims have not exceeded $12,000 annually. Assuming similar tax rates and claims history, this agency could save more than $300,000 if they decide to reimburse over the next 10 years.

17. Negative Effects of the System on the Individual • Pay-loss (Usually only receive only 80% of pay) • Majority of people on unemployment are just getting by on normal wages let alone 80% • Can be used as a crutch if used to long or improperly • The unemployed person has a strong incentive to take a job without declaring it, which an employer might be content to allow because he does not pay contributions and does not run into regulatory constraints. • People who have “unwelcomed” occupations, such as drug dealers, prostitution, etc. do not receive W2’s or file 1040z. They are receiving an income but still can file for unemployment.

18. Continued… • Many studies show the individual gives up on trying to find work • This leads to a bad sign for the recovery rate of unemployment

19. Negative Effects of the System on the Company • Forces them to pay employees not working with them anymore. • Unemployment taxes currently range from .1 percent to 10.96 percent on each employee's taxable wages, which vary from $7,000 to $31,000 per employee. • Reimbursing employers are responsible for all the unemployment claims paid to their former employees by the state, no matter the amount

20. Continued… • Reimbursing employers do not get "relief of charges • If an employee resigned from your organization, went to work for another company, was terminated, and filed for unemployment, your nonprofit could be charged for a portion of that employee's benefits (even though the employee voluntarily left you).

21. Possible Alternatives • Unemployment insurance benefits– where contributions are paid, or credits provided, to earn entitlements to compensatory income, normally by the state, but possibly by a private agency • Unemployment assistance– means-tested and/or asset-tested assistance. • Labor market policy– state-provided combination of training and/or jobs coupled with income transfers, for both participants and others. This includes “public works” and emergency employment schemes.

22. More Alternatives • Workfare–The unemployed are obliged to take a training course or a job provided or subsidized by the state, in return for an income transfer. • Employment or wage transfers– a sum or money or tax credit paid either to the worker on being hired or, more typically, to the firm hiring the unemployed. These include so-called “in-work” benefits intended to “make work pay”. • Citizenship income grants– an unconditional basic income paid as a citizenship right to all, including the unemployed. • Other areas include stricter guidelines. This would include trying to ensure the unemployed is actually unemployed, faster time finding a new job, and more advanced rules to how money is being used. • Some other ideas given would include money to help further education. This would help the unemployed with qualifications and easier job availability