Jim @ Bargaineering recently brought up some things with his article: Your Take: Does Unemployment Insurance Reward Laziness? and I thought I would respond to snippets of his article that would be too long at his site.

"However, unemployment benefits do act as a disincentive. You get unemployment benefits when you are unemployed, you don’t get them when you are employed."

I see unemployment benefits as an emergency savings of sorts because the the employer and I have paid into it and when I can't find a comparable job to replace the one I lost, I like to know that I have some money coming in to pay bills. True I SHOULD have 3-6 months living expenses stashed away, but I don't and this will help.

In my state of Colorado the pay can be as small as $25 a week to a max of $487 a week, depending on any other money coming in. Since I have 4 weeks of severance coming that will delay any unemployment check by 4 weeks, definitely not incentive to stop looking for a job and live off the unemployment checks.

"If I lost my job and was on unemployment, my initial sense of urgency at finding another job would be much lower than if I didn’t have unemployment benefits (once I got over the sting of being fired). If I just need to meet the job hunting requirements to receive unemployment benefits, I’ll do that while I search for the “right” job and not the “right now” job."

My sense of urgency is still there to find a job, I don't want to not have money for rent, food and utilities. However being laid off does bring me to a crossroads that with assistance I may be able to go back to school and get a degree or certification to get a better paying job or open up an opportunity to work for myself.

The job hunt requirements for my state are 5 contacts a week, however that can be waived or cut back if I am taking classes. However, if I decide to go back to school, and even if I get paid the full $487 a week I would still have to cut back considering schooling takes longer than 6 months.

That really is the only incentive to me to stay on unemployment, is to go to school and get a degree that makes me more marketable. Otherwise, I want to get up in the morning and know that I have done something challenging, bettering myself and paid for my room and board by myself and not relied on government assistance. To me anything less would mean a breakdown in my personal integrity.

You can respond to my thoughts by clicking on the comments link or read Jim's article and respond over at his site.


  1. JD // Wednesday, March 10, 2010 1:34:00 PM  

    There is some truth to the notion-- what you subsidize you get more of. I'm not arguing that unemployment benefits are a living wage, but for a few they can be incentive not to work. I think the real issue is how long should those benefits last and are there appropriate incentives to get people motivated to find a job. But a better overall economic environment is needed to create jobs.

  2. Bobbi // Wednesday, March 10, 2010 4:52:00 PM  

    I have a 'sort of' related question. If you and an employer pay into the unemployment system, why do employers get upset when an employee files for unemployment, and they (employer) try to get out of paying it. EVERY employer I have worked for has tried to get out of paying or complained when someone they "let go" applied. I never understood why if they have already paid into it. Sorry it is not on track exactly, but I have always been curious. :) Hopefully, you or someone else knows the answer. :) Thanks.

  3. Orchid64 // Wednesday, March 10, 2010 5:33:00 PM  

    The question isn't about whether unemployment benefits make people less likely to look for work. The bottom line is that it is a form of insurance like any other form of insurance. You pay into it and when you need it, it is there to bridge the gap. People are talking about this as if it makes people lazy, but the truth is that no one feels comfortable being unemployed for long. The benefits only last so long and you can choose to look for a job sooner or later, but you paid for those benefits and deserve to receive them.

    To me, this is like saying health insurance provides an incentive to get sick or car insurance provides an incentive to drive recklessly. It's absurd to assume that people will default to the least desirable state (in this case, unemployment) simply because there is a safety net to catch them if they fall.

    I don't know what it is with Americans (and I'm American, too) that makes them think that anyone who isn't working and gets some sort of social benefit prefers not to work. Most people prefer to work, but can't find decent jobs or jobs that provide as well as welfare when all of the benefits of social programs are added up (health care, food stamps, cash subsidies). Having a national health care plan would remove some of the incentives to be on welfare as a big part of being part of the very poor is your health care is covered and that's a huge incentive not to take a job at a place which doesn't provide insurance but may offer pay which is greater than the sum of food stamps and cash welfare benefits.

  4. Dawn // Wednesday, March 10, 2010 5:38:00 PM  

    I liked the analogy you gave -
    "..this is like saying health insurance provides an incentive to get sick or car insurance provides an incentive to drive recklessly."

  5. Orchid64 // Wednesday, March 10, 2010 5:38:00 PM  

    Sorry to leave two comments, but the answer to why employers fight unemployment is here:


    and here:


    The bottom line seems to be that it affects their taxation so they want to do as little of it as possible, on principle if for no other reason.

  6. Dawn // Wednesday, March 10, 2010 5:42:00 PM  

    I guess I have yet to find someone who views unemployment as incentive not to work, but I understand what you are saying.

    Thanks for searching for those links

  7. Maire // Wednesday, March 10, 2010 6:33:00 PM  

    One of the issues, I see, about removing unemployment benefit is that you end up creating a sub-optimal market. (sorry for the jargon, its been a long day and I'm not sure how to make it jargon free) Essentially, if you have someone highly trained as a dentist and they were made unemployed - should they accept the first job they come across or look for one suited to their talents? Should someone who is qualified as a dentist work in MacDonalds if that is the first job they can find? The economy loses out here because people can't fully switch jobs (the market doesn't clear in the short term), being employed elsewhere in a low paying job means they have less time to look for a suitable job - the up shot of this is that they will take longer to find a suitable job and the economy in both the supply and demand of goods and in terms of taxes loses out. I hope I've been clear!

  8. Dawn // Wednesday, March 10, 2010 6:35:00 PM  

    I heard you very clearly. I think about that as well in regards to going back to school and getting unemployment or picking up the same type of job and not having time to go to school or taking longer.

  9. Brandi @ Frugal Farmhouse // Wednesday, March 10, 2010 6:52:00 PM  

    I have been out of work for a long time. I am truly blessed with unemployment benefits. I don't just do the minimum requirements for getting my benefits, I can honestly say I have looked for a job 8 hours a day since I got laid off. even saturday and sunday. I want a job, I miss my job.. thank you for writing this. I really like your blog.

  10. Jerry // Friday, March 12, 2010 9:21:00 AM  

    Unemployment insurance may reward laziness and it may not. It completely depends on the person. I used it one time and I was out there actively trying to find work and was grateful to have it. If it leads to some peace of mind and comfort while you're out of a job, it's worth it.