UNEMPLOYMENT BENEFITS:

INSURANCE,WELFARE OR ENTERPRISE?

By Peter Bearse

Unemployment benefits have become a first-page, news headliner issue

since Sen. Bunning put a hold on benefits payments. He insisted that

the Senate find $10 billion in cuts elsewhere in the budget to pay for

a new round of benefits -- so that the Senate wouldn’t violate

Congress’ renewal of “Pay as you Go” legislation.

The more basic problem, however, is that repeated extensions of

benefits turn the unemployment “safety net” from an insurance to a

welfare program. The unemployment insurance funds have already been

exhausted in many states We know the dangers of welfare -- creating a

dependency culture rather than encouraging self-reliance and

enterprise.

Many years ago, some successful experiments were mounted in some

American states (e.g., Massachusetts) and some foreign countries

(e.g., France). These showed that unemployment funds could be used to

seed new businesses. Many unemployed people were helped to “be your

own boss” and create their own job(s). The potential of this is great

now, as the “Great Recession” continues and long-term unemployment

grows. The Director of the New Hampshire’s SBA program reports that

his office has been swamped with requests for assistance from

unemployed people who can’t find jobs, so they are turning to

self-employment as an option. They need help to establish new

enterprises.

Thus, Congress should build on past experiments to revise the

unemployment benefits program so that it can help enable enterprise

rather than encourage dependency. Receipt of benefits to be paid out

to someone unemployed over a year should be contingent on a choice of

either self-employment or public employment. The latter implies that

Congress should also be prepared to authorize temporary public

employment on an emergency basis -- to enable some useful work to be

provided to people unemployed more than a year. The guiding rule is

just what guided welfare reform: Beyond a certain point, no welfare

without work.

Studies show that nearly two-thirds of net new jobs are generated by

new or young (up to 5 years old) enterprises. To the maximum extent

possible, let’s see that unemployment funds are used to help build

job-creating businesses.

       PETER BEARSE, Ph.D., International Consulting Economist and Candidate

for Congress, NH CD 1.