Unemployment and Motivation: A Case Study

So, if you’ve been watching the US Senate, lately, you’re probably well aware of the latest drama, with Jim Bunning attempting a one-man filibuster to stop the payment of unemployment benefits.  Although he recently backed down, the reaction to his stand brought out some interesting discussions about politics, budgets, and spending.

Another issue that was brought to surface by this debate is whether unemployment benefits are even good for society as a whole.  The benefits are that it provides a safety net for those who find themselves out of work, enabling them to take time to find another job of their choice, usually in the same field for about the same rate of pay.

Unemployment benefits seek to keep us out of here...
Unemployment benefits seek to keep us out of here...

The downside, though, is that such benefits may actually aggravate the level of unemployment.  If you don’t have to work to get money, after all, aren’t you going to be less motivated to do so?  Nina Easton, among others, notes that studies have found that the unemployed people tend to stay unemployed as long as the benefits keep coming, using the benefits as an excuse to put off taking lower paying jobs to survive.

So, who’s right?  It’s hard to say exactly how unemployed people are affected by having unemployment benefits available; there are currently millions of people out of work, and as with any group, different people will react in different ways.  Luckily (or unluckily, I suppose) I happen to have a perfect subject to gauge just how unemployment benefits can distort incentives right here: me.

A Case Study in Myself

Yes, in the past year or so, I’ve found myself out of work on two separate occasions.  (Technically, three, although the third was for a brief period after I ended a temp position but before I started another one, so I didn’t take unemployment benefits, and thus, I’m not counting that.)  As a result, I’ve been collecting unemployment benefits for much of the last year, so much so that I’ve actually exhausted the normal amount of benefits available to me and am only still receiving unemployment due to the many extensions that have been passed over the past few years.  (Just like the one Jim Bunning was filibustering against, to tie everything back in.)

So, how did unemployment benefits affect me and my desire to gain a job?  Well, the critics of unemployment do have a point; I HAVE been pickier about possible jobs than I might be otherwise.  Since my most recent job loss in November, I’ve been focused more on trying to regain a job at my previous level of employment, rather than ‘settling’ for a lower income job as I might have been forced to without unemployment.  From an economic stand point, the existence of unemployment has demotivated me in my job search, exactly what critics fear would happen.

HOWEVER, that’s not the whole story.  While it’s true that I haven’t been working in a paid position during that time, I haven’t exactly been idle during this period, either.  In addition to continuing to search for a job in my field of study, I’ve also taken the GRE in preparation for going to grad school, continued the work on this very blog, and looked into other possibilities for making money outside a typical nine-to-five position.  What is often left out of the debate over unemployment benefits is exactly this kind of transformation; having a period of time after losing your job to re-evaluate your life and make changes for the better (without needing to take any job that will have you just to put a check in your account and food on the table) is one of the greatest advantages of unemployment as it currently exists.

(While we’re on the subject, I’m a little leery of the argument that society as a whole is better off if I take a low-paying job, at least in the short run.  Yes, in the long run, my work will help the company to expand, provide money for me to spend or invest, and generally help the economy to keep growing; far be it from me to argue with any of that.  However, in the short run, I’m shorting myself of time to building my skills or work on an entrepreneurial endeavor, taking a job that could be filled by someone else, and causing the company I’m working for to spend money training someone who’ll leave at the first opportunity that presents itself.)

Even with the possible demotivational effects, I tend to think that the pros of unemployment benefits far outweigh the cons.  Yes, they might have the adverse effect of keeping unemployment higher that it might be otherwise, but the advantages offered to the unemployed more than make up for that fact.  At least, they do in the case of this one guy I know…

What do you think about unemployment benefits?  Are the cons enough to outweigh the pros?  Is it better to encourage people to take a job, any job?  Do you think that employment status makes it hard to think about this issue objectively?  (I.E., I’m currently unemployed and like the unemployment system.)

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