Analysts debate merits of jobless benefits

Statesman Journal
August 15, 2010By Ruth Liao

Oregon distributed its first unemployment check to James H. Allen of Ontario in 1938, amid the Great Depression.

It was a $15 check. Allen was among the first in the state to receive his check because Ontario, on the eastern border of Oregon, opened an hour earlier because it is in Mountain Time Zone.

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Analysts debate merits of jobless benefits (PDF)

Now, unemployment checks can range from $115 to $493 per week. In 2009, the Oregon Employment Department administered $2.8 billion that was paid out to claimants.

"If unemployment was an industry, we would have been the third-highest industry in the state for p ayroll," said department spokesman Craig Spivey.

So far, more than $1.5 billion have been paid out through June, Spivey said.

As unemployment benefits stretch out even longer, critics increasingly question whether providing unemployment benefits is an actual advantage for the economy. Other say the money directly injects into the economy.

"We know the money goes toward the basics: food, housing and rent," Spivey said. "The money goes directly back into the economy. People don't hoard it."

Some analysts contend that unemployment benefits keep the economy sluggish.

Christina Martin, director of the asset ownership project at Cascade Policy Institute, a free-market research organization, describes providing extended benefits as something that "feels good, but it's not the most logical thing to do."

"Unemployment insurance creates an incentive for less responsible behavior," she said. "Not just for unemployed workers, but for society at large."

Martin said a jobless worker receiving benefits on average takes more than twice as long to find a job, because it discourages workers from getting back to work.

"Unemployment insurance creates an incentive for less responsible behavior by discouraging unemployed workers from finding work, making employers more likely to lay off workers and crowding out private charity," Martin said.

Martin said extending unemployment benefits will just lead to a higher federal deficit.

Cascade Policy Institute is proposing a system of unemployment insurance saving accounts, based on similar system run in Chile. Workers would pay into their own individual accounts. A smaller, reserve unemployment insurance system by the government would provide for benefits once the worker's individual accounts runs out.

"Economists have shown that really the employee pays for unemployment," Martin said. "Even though the employer pays the payroll tax, it's really taken out of what would be paid to the employee."

Martin cited a Heritage Foundation model in a recent essay she wrote that showed for every federal dollar spent on extending unemployment benefits to just 46 weeks, the gross domestic product expands just 17 cents.

"Paying people to do nothing is not exactly the stimulative thing you can do for the economy," she said.

Joy Margheim, a policy analyst with the Silverton based Oregon Center for Public Policy, said extending unemployment benefits directly helps families in need.

"Continuing to provide those benefits through 2010 is really an important way of keeping the still-weak recovery from slipping away from us," she said.

Margheim said benefits passed to families boosts the economy because those families spend the money locally and quickly.

For every dollar spent by extending the unemployment insurance, $1.61 is spent in total economic activity, Margheim said.

"It's holding people together until we hit a time where their chances of actually finding a job and being successful is far more likely," she said.

Without providing unemployment benefits, families in need would rely even more heavily on public assistance programs, she said. The economy is projected to recover — albeit slowly — but those eking out on unemployment insurance can pick up more quickly.

Margheim thought it was baffling that the extensions took so long for Congress to pass, because the unemployment benefits system has been broadly recognized for so long.

"It's one of those universal social programs: employers pay in on behalf of their workers, and everyone who works is able to get unemployment insurance," she said.

J.L. Wilson, vice president of governmental affairs at the business advocacy organization Associated Oregon Industries, said unemployment benefits provide a needed safety net for families, but not much else.

"I think it helps mitigate worse-case scenarios, but to say it amounts to job creation is baloney," he said.

Wilson said he'd like to see more effort toward creating jobs — not just plugging gaps left by jobless workers that need the help.

"We're just stuck — it almost feels like a death spiral," he said. "There's almost no attention to creating jobs. It's just lip service and phony notions."

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Navigating benefits

Interest about the new Unemployment Compensation Extension Act of 2010, signed July 22, has driven up call volume to the unemployment insurance call centers.

"Folks don't have to call," said employment department spokesman Tom Fuller. "There are people with legitimate questions — someone with an outstanding issue — that need to get through."

Claimants are encouraged to check their claims online at The Salem WorkSource center, 605 Cottage St. NE, also provides phone lines to check claim statuses, as well as bank of computers.

For the first time, the call centers also have taken the additional step of contacting all of the claimants who have run out, said Susan Johnson, deputy administrator of the unemployment insurance division. "We're talking to them about community resources, job searching, training," she said.


Question: How do I file for unemployment?

Answer: A claim for unemployment benefits, also known as unemployment insurance, can be filed online at

For people without access to the Internet or with complex claims, calling the unemployment call centers during nonpeak hours can help. The employment department recommends calling on Wednesdays, Thursdays or Fridays, because the unemployment claim call center receives its highest call volume on Mondays and Tuesdays.

Q: What's the best number to reach?

A: All three unemployment insurance call centers in Oregon can now take any call from around the state.

"You don't have to call the one in your area," Spivey said. "With the new system, one call center might be easier to reach in Bend or Eugene."

Portland: (877) 877-1781

Eugene: (877) 728-7970;

Bend: (800) 663-7914

Q: What's a "waiting week"?

A: The waiting week is the first week on your claim in which you meet all eligibility requirements. Every unemployed worker must wait for one week before receiving benefits. Simply filling out an application does not qualify as a waiting week — you must call and report to meet the claim requirements one week after filling out the initial application.

Q: What can delay, stop or reduce my benefits?

A: Common issues that require investigation include: quitting your job, being fired or suspended from work, missing an opportunity for work during a week you claim, refusing work, turning down or not contacting an employer referred to by a WorkSource office; missing a scheduled orientation meeting with a WorkSource office, illness or injury, failing to look for work; school attendance; being out of the area unless you are looking for work; not being willing or ready to take work; receiving retirement pay, vacation pay or holiday pay; skipping a week without restarting your claim.

Source: Oregon Employment Department

State trust fund

Oregon is one of the few states that has not needed to borrow money for its unemployment benefits.

As of last April, 34 of the 53 state trust funds were borrowing from the federal government in order to pay benefits, according to the U.S. Government Accountability Office.

Oregon's unemployment insurance trust fund comes from payroll taxes by employers; each year, the tax rate adjusts in order to ensure that the trust fund has enough money to last 18 months. Employers that have laid off more workers are taxed at a higher rate.

As of July 24, there was $699.21 million in the trust fund. "It's been a real blessing," said Craig Spivey, spokesman for the Oregon Employment Department.

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