Universal
Programs
Unemployment Compensation
Brian Clarke
Ms. West
11/4/2012
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Unemployment is probably one of the major factors that play a huge role in bringing
down our economy in America. Today in our economy, poverty has reached its all-time high of
12.7 million Americans living either below or just above the poverty line and of those 12.7
million Americans 25 percent of them receives Unemployment Benefits. Unemployment
Compensation is funds that are paid by the government to people who have been laid off by
their jobs due to unexpected problems or just moving the company overseas. In order to
receive Unemployment Compensation he or she must have worked for their job a certain
amount of years plus they have to also be looking for work as well. Unemployment
Compensation provides an income for only a certain amount of time, or until the person finds
work, whatever comes first. In this draft we are going to explain a little bit more about
Unemployment Compensation and break it down, so I can inform you a little bit more about the
unemployment situation.
Historical Background
Unemployment Compensation dates all the way back to the Great Depression when
Franklin D. Roosevelt was in office. His plan to decrease unemployment was called the New
Deal. From 1921 to 1929 more than 600 hundreds banks failed during this time period, so FDR
came up with the Federal Deposit Insurance Cooperation (FDIC). (Cooperation, 2007). Due to
the bank failures people were losing money which caused them to become broke; no one was
using banks to hold their money, this in turns used banks to close down. FDR and Congress
closed all the banks for four days and came up with the Emergency Bank Act to find a stable
program for the system. The FDIC was formed under the Emergency Bank Act to create the
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deposits up to a sufficient amount which helped put trust into the banking system.
(Cooperation, 2007)
The Federal Emergency Relief Administration (FERA) was created in 1933 to help turn
around the Great Depression. FERA was a program that was granted 500 million dollars from
the Reconstruction Finance Cooperation to help the unemployed. (Cooperation, 2007). Harry
Hopkins was the leader under FDR’s funded programs for the public; Hopkins believed that men
should earn the cost of living not to be aided by the government. (Cooperation, 2007).
The Civil Works Administration (CWA) was created in the late 1933 early 1934 to help
unemployed people find work in public programs. CWA provided jobs such as cleaning parks,
waterworks, cleaning airports, sewer treatments, raking leaves, and plow the snow to help cut
back on unemployment. (Cooperation, 2007). The Civilian Conservation Corps (CCC) was
created for the men in 1933. FDR purposed the CCC Act to go out to the unemployed and
recruit them into the army and send them to battle. The CCC brought jobs to the unemployed
as well as teaching them how to become more independent individuals. (Cooperation, 2007)
The National Industrial Recovery Act (NIRA) was created in June 1933 was to promote
recovery and reform. The NIRA helped workers obtain the maximum the hours plus minimum
wage to help people gain profit. NIRA was effective until costs started to rise and people
weren’t buying any goods, so overproduction occurred which caused businesses to close down.
The Works Progress Administration (WPA) was created in 1935, and it employed 8.5 million
people. The WPA was similar to the CWA, but WPA employed people to build bridges, roads,
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public buildings, and public parks. Even though WPA ended in 1943 about 11 million dollars
was spent in employment relief. (Cooperation, 2007)
The Fair Labor Standards Act (FLSA) was created in 1938 to help service the unemployed
for adults and teens. FLSA provided minimum wage, overtime pay, and youth employment
standards which was full-time and part-time. The rules applied to state and local employment
which had protection for volunteer service, time off, and cash for people who worked for
overtime. (Cooperation, 2007)
Social Problem!
Did you know in the last couple years this has been the longest and the worst recession
that has ever occurred in America? The reasons why people are becoming unemployed are
because businesses are closing down, layoffs or cut backs occur, and jobs are being shipped
overseas. The causes of these problems result in people being unemployed, which leads the
government to aid the people who can’t find work. Emergency Unemployment Compensation
(EUC) is a federal program that allows people who are unemployed who already receive
benefits have an extension on the benefits they receive. (Emergency unemployment
compensation and long-term unemployment, 2011)
In 2008, when the recession started, the Emergency Unemployment Compensation
(EUC) was put into effect, but the program was broken down into tiers. The first tier took
action within the first couple months of the recession period by adding an extension of 13
weeks. As the time went on states were still struggling, so the first tier added another extra 7
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weeks. (Emergency unemployment compensation and long-term unemployment, 2011).
Unemployment was still upon a rising during the extended benefits with tier 1, so tier 2 came
into play, but tier 2 only extended benefits to the states that had unemployment rates over 6
percent. Tier 2 was in place for almost a year until it extended its benefits by one week, and
started giving states extensions based on states by their unemployment rates. (Emergency
unemployment compensation and long-term unemployment, 2011)
In 2009, states still found themselves in a hole with unemployment; therefore they
decided to come up with 2 more tiers. Tier 3 gave states extra benefits which lasted up to 13
more weeks. Tier 4 gave states the option of extension of 6 more weeks to the states that had
unemployment rates over 8.5 percent. (Emergency unemployment compensation and longterm unemployment, 2011). If you were to total of federal benefit costs up, they would equal
up to 53 weeks of maximum benefits. States would also add an extra 26 weeks of benefits, and
an extra 20 weeks of extended benefits as well totaling up to 99 weeks of benefits, which
amounted to nearly 2 years’ worth of total benefits. (Emergency unemployment
compensation and long-term unemployment, 2011). All in all, the tiers were put in place to
help provide benefits to the people who lost their jobs during the recession and to help people
have some type of income while they searched for jobs.
The Mission of Policy/Act and Underlying Philosophy!
Unemployment is way too high; it is time to cut back on the people who are just trying
to manipulate the system. The mission of unemployment is to try to cut down on the people
using unemployment benefits and emergency benefits as well. We all know the social
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problems caused people losing jobs, but still the mission is trying to get people off
unemployment benefits.
In 2011, over five million people were jobless for at least a year or more, receiving
benefits up to 99 weeks. (Dewan, 2012). Congress renovated unemployment benefits in
February, but added some limits on the maximum benefits people could receive. In 23 states
benefits were cut back 4 to 5 months. (Dewan, 2012). In a couple of months the states tend to
cut off 70,000 people who are using these benefits. In most states government tends to crack
down on people who receive benefits. (Dewan, 2012). In order to qualify for benefits from the
federal or state level states have added a drug test, a state demonstration project, and a
federal job search requirement. (Shaw & Stone, 2012). Federal government wants to cut back
on the people using benefits, and states want to increase the qualifications to access the
program.
Funding!
In today’s society unemployment rates have reached its all-time high since the Great
Depression. Since 2002, the unemployment rate was at least 5.7 percent, and in early 2012
unemployment reached up its highest level of 8.3 percent. In October, 2012 President Obama
was able to drop the unemployment rate down to 7.9 percent, which is a step but America
needs to see more improvement. (Russo, 2012). A problem Unemployment Compensation will
face is that between federal and state government. The increase in federal tax payments in
certain states has resulted in some states that are having trouble paying off the unemployed
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compensation benefits. The cause of the lower employment levels from the states left the trust
funds empty, so now states had to borrow money from the XII loans program also known as the
Federal Unemployment Trust Fund account. States who couldn’t pay their loans off by a certain
time had to deal with credit deductions by the Federal Unemployment Taxes Act (FUTA).
(Russo, 2012). “FUTA was a penalty of 0.3 percent would increase the net FUTA tax rate to 0.9
percent, resulting in an additional payment of 21 dollars per employee, based on the current
federal wage base of 7,000.” (Russo, 2012). FUTA was also increasing the federal taxable wage
base from 7,000 to 15,000 at the federal level. “A change in the federal taxable wage base
would result in individual states, with current wage bases below 15,000, following suit and
increasing their state wage bases to match the proposed new federal base. Since 2012, a
majority of states (33) had taxable wage bases below the proposed 15,000 figure.” (Russo,
2012).
If you were an employer in a certain state, your unemployed tax rate would be four
percent under a tax wage base of 7,000. Your cost of every employee would increase from 280
dollars to 600 dollars. (Russo, 2012). States are reducing the amounts of benefits paid which
could result in people finding employment quicker. Some states have cut back on the weeks to
receive unemployment benefits so they can cut down the cost of the loans from the trust funds
states have barrowed. States have committed a 23 percent cut back in the number of people
receiving benefits. (Russo, 2012). Arkansas has proposed a law stating that there should be
only 25 weeks for benefits while Florida has cut back as well to a range of 12 to 23 weeks,
depending on the rate of unemployment. Also, Michigan, South Carolina, and Missouri have
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decided to cut back on the amount of 20 weeks to receive benefits. (Russo, 2012). The cut
backs on the weeks of unemployment benefits are to help people to find jobs, and to bring
down the use of Unemployment Compensation and the Extended Benefit Program. (Russo,
2012).
Who Are The Unemployed?
Unemployment is a nation struggle but, only a couple of races experience the worse of
unemployment. Unemployment targets the communities of African American, Hispanic, and
young workers. The African American community is a big target towards unemployment being
that the African American community is 6 points over the unemployed rate. (Mlakar, 2011). In
the African American community, 1 and 5 people are faced with unemployment in America.
Did you know that in the labor force, African Americans make up 11.5 percent of the work
force? Twenty-two percent of the Unemployment rate is African Americans who have been
unemployed for a year or more. African American men who are unemployed made up 9
percent unemployment rate in 2007-2008, but also sky rocketed to 19 percent in 2010.
(Mlakar, 2011)
African American women have also had a high unemployment rate as well. From 20072008, women had a 7 percent unemployment rate this sky rocketed to 13 percent by 2010.
(Mlakar, 2011). Another high rate of unemployment is with women who are heads of their
households trying to support a family. All women who are unemployed have a rate of 8.5
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percent. Of those women, the single mothers have an unemployment rate of 11.6 percent, and
of those single mothers. African American women have a rate of 15 percent. (Mlakar, 2011)
The Hispanic population makes up one seventh of our labor force. It had an
unemployment rate of 19 percent in the year 2010. (Mlakar, 2011). Also, because some
Latino’s where in bad areas where had like Florida, California, Arizona, and Nevada, housing got
hit this led to a lot of problems. In 2009 the unemployment rate for Hispanic workers was 13
percent, which was 10 percent of the overall unemployment rate. (Mlakar, 2011). During the
recovery, some of the states would take advantage of the Hispanics in the industrial industry by
not giving them what they worked for. In March of 2007 and 2010 the unemployment rate for
Hispanics sky rocketed a whole 7 percent reaching to a 14 percent, unemployment rate. In
2007 the unemployment rate for Hispanic women was 5 percent and reached its all-time high
by 2010 to 12.5 percent. (Mlakar, 2011)
In addition to unemployment targeting the African Americans and the Hispanics, our
young workers have taken a fall as well. It has been shown that young workers today can not
find a job. Over a half a million jobs were created, but still the young workers had an
unemployment rate of 20 percent in 2010. (Mlakar, 2011). Since 1947, the unemployment
rate for young workers today has reached its all-time high dated back. Young workers today
make up at least 13 percent of the labor force, and 25 percent of the total unemployed are the
young workers, in 2010, ranged from 16 to 25 years of age. (Mlakar, 2011)
The unemployment rate for college graduates who have received a degree is 8 percent,
while the young workers with a high school diploma have an unemployment rate of 33 percent.
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Also, the unemployment rate for young African American college graduates is 16 percent which
is twice the average of the young workers who are unemployed. (Mlakar, 2011).
Unemployment benefits are a little different for young workers because statistically, they find
work easier than older people, so their benefits only last up to 12 weeks, with an extended
benefit of 25 weeks. Young workers who have no type of education are the biggest
unemployed group out of all the young workers their unemployment rate has reached an alltime high of 33 percent. (Mlakar, 2011)
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http://0-
ehis.ebscohost.com.library.acaweb.org/eds/ebookviewer/ebook/nlebk_396011_AN?sid=1831d
366-ff85-4ca9-aa7b-e63fd13be39d@sessionmgr104&vid=63
•
As explained in the last paragraph this shows the unemployment rate in the black
communities.
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(Mlakar, 2011)
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http://0-
ehis.ebscohost.com.library.acaweb.org/eds/ebookviewer/ebook/nlebk_396011_AN?sid=1831d
366-ff85-4ca9-aa7b-e63fd13be39d@sessionmgr104&vid=6
•
Also explained in the last paragraph this is a comparison from black men to all men
unemployment rate
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(Mlakar, 2011)
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http://0-
ehis.ebscohost.com.library.acaweb.org/eds/ebookviewer/ebook/nlebk_396011_AN?sid=1831d
366-ff85-4ca9-aa7b-e63fd13be39d@sessionmgr104&vid=6
•
This is also a comparison of black woman to all woman unemployment rate further
explained in the paragraph above.
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(Mlakar, 2011)
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http://0-
ehis.ebscohost.com.library.acaweb.org/eds/ebookviewer/ebook/nlebk_396011_AN?sid=1831d
366-ff85-4ca9-aa7b-e63fd13be39d@sessionmgr104&vid=6
•
The chart explain the single mother unemployment rate which is further explained in
the paragraph above
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(Mlakar, 2011)
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http://0-
ehis.ebscohost.com.library.acaweb.org/eds/ebookviewer/ebook/nlebk_396011_AN?sid=1831d
366-ff85-4ca9-aa7b-e63fd13be39d@sessionmgr104&vid=6
•
Explains the unemployment rate for young adults with degrees, high school diploma, or
some college experience.
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(Mlakar, 2011)
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Debate!
In 2012, President Barack Obama told America that he will increase the taxes for the
wealthy people and businesses to help put forth progress in the recession. (The washington
post, 2012). American Recovery and Reinvestment Act were provided to supply a cut from 400
to dollars on the middle class and low income families. President Obama created the stimulus
bill which helped the economy with health, education, and energy. (The washington post,
2012). Also Obama increased President Bush’s tax cut in 2012, to reduce the payroll for
President Obama has put a deduction on the oil-industry by at least four billion dollars a year.
In 2012, Governor Romney wants to invest in past President Bush’s tax cuts, but he
wants to lower cooperate taxes. Also, Governor Romney’s plan was to present tax free
retirement funds for the middle class. (The washington post, 2012). Governor Romney wants
to use the same method he discovered in Massachusetts by increasing the wage base in taxes,
which would put a stop on cooperate tax and state loopholes. (The washington post, 2012).
The Stimulus Work Group is what Governor Romney proposed to put money back into the
economy by sending it to tax payers or by spending it. (The washington post, 2012).
Unemployment is a nationwide struggle, but people can not depend on the government
to supply them services for the rest of their lives. The government has enough problems on
their hands, but to be deal with people who do not have any ambition to provide for
themselves is ridiculous. Unemployment is going to continue unless we erase the social
problems and make changes in some of our policies.
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