Unemployment Benefits May Be Disincentive for Job Seekers: Study

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Politicians who want to cut unemployment benefits just got some ammunition from a new Rutgers University study -- but there may be a catch.

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The study followed 1,200 people who lost their jobs during the Great Recession.  It found that people who did not receive unemployment insurance were more likely to obtain a job in less than a year. People who did receive unemployment insurance and eventually exhausted their benefits took more than a year to find a job. 

Simply put, it took people with unemployment benefits longer to find jobs than those without benefits. That alone may indicate that unemployment insurance is a disincentive to find work, but the study’s author, Dr. Carl Van Horn, says that is not exactly accurate. 

“Younger workers with limited labor experience are much less likely to be eligible for unemployment benefits” said Dr. Van Horn, and they don’t even apply for benefits.

The study found that unemployed workers who had not received unemployment insurance in the past year were somewhat younger and had lower incomes to begin with than unemployed workers who had received benefits.  

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Dr. Van Horn says those younger workers tend to, “…earn slightly more than minimum wage, they are high school graduates, they cycle through jobs very rapidly and don’t stay in them for long periods of time.  They are the working poor they are struggling to get a job and move on.”  He went on to say, “The middle class are more likely to be eligible for unemployment insurance and for them to find a replacement job that is at or near their previous earnings is much more difficult in this recession.”

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Other findings indicate just how hard it is to get back on your feet in this economy. Forty three percent of the people in the study found full- or part-time jobs and just over half them took pay cuts in their new positions, while 41% were still trying to find jobs and 16% gave up and dropped out of the work force.  

“What we found is that number one most of them have been unemployed for so long that receiving unemployment insurance is not sufficient to stave off the financial crisis they are experiencing” said Dr. Van Horn.

He hopes the study will dispel what he calls myths about unemployment such as “everybody gets unemployment insurance.”  Dr. Van Horn says that’s not true, only a third of unemployed Americans right now actually receive benefits.  He points out that some, like those younger workers, are not even eligible, others have exhausted their benefits and some never apply.  

“The most important thing (about the study)  is that a large number of people who don’t get unemployment insurance and even if you get unemployment insurance, it’s not a vacation, not a picnic. It doesn’t solve the  financial problem they have.”

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