Essay on Detrimental Effects of Extended Unemployment Compensation

Essay on Detrimental Effects of Extended Unemployment Compensation

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Detrimental Effects of Extended Unemployment Compensation
Most every individual, family, and even the nation as a whole experience lean times and periods of great prosperity. During seasons when the economy is not doing well, unemployment rises, causing individuals and families to face unplanned financial hardship. President Franklin D. Roosevelt recognized the need for a temporary financial bridge for those facing the dilemma of lost income and led the way in establishing unemployment insurance in the 1930’s. The intent of temporary unemployment insurance was to provide a safety net benefit for individuals seeking a permanent income source. However, extended unemployment benefits also produce detrimental consequences for the unemployed worker.
Ensuring unemployed workers have access to sufficient finances to satisfy minimum daily needs is a noble endeavor. By providing this financial bridge, the unemployed have an opportunity to embark on a course to fiscal recovery. However, benefits should not compromise their purpose by diminishing the employment incentive of recipients, or causing other adverse effects.
According to Feldstein, the current system of unemployment benefits “. . . provides an incentive to inappropriately long durations of unemployment” (39). He goes on to say, “. . . it provides both employers and employees with the incentive to organize production in a way [that makes] casual and temporary jobs all too common” (39). In other words, oftentimes the current system encourages workers to stay unemployed. It also stimulates employers to create jobs, which are short term and financially inadequate, rather than permanent and lucrative in nature. By having a system, which encourages temporary employment, an unintended co...

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...fluences temporary layoffs, and the myth of unemployment compensation as an inadequate income replacement.
As an expert on the topic of unemployment, his article contains a wealth of peer-reviewed information for this paper.

Heinemann, Friedrich. "Is The Welfare State Self-Destructive? A Study Of Government Benefit Morale." Kyklos 61.2 (2008): 237-257. Business Source Complete. Web. 1 Dec. 2013.
As head of the Corporate Taxation and Public Finance department for European Economic Research (ZEW) in Mannheim, Dr. Heinemann is an expert on welfare state phenomenon and government benefit programs.
Dr. Heinemann’s writings have been published in dozens of refereed journals, discussion papers, and elsewhere.
His article cited in this paper contains 20 pages of information to draw from as a reviewed source and adds significant validation to the arguments contained herein.

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