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Fundamental Changes Coming to Unemployment Next Year

March 31, 2011

by Eric Hammer | FTMDaily Contributing Writer

TEL AVIV, Mar 31 – In New York, the city’s Metropolitan Transit Authority, which runs the famous New York City subway system is trying to arrange for cheap labor by requiring some people receiving unemployment compensation to work for their benefit checks, mostly by doing janitorial duties in the subway system.

The concept is being hailed as a win-win scenario given that the cash strapped subway system simply cannot afford to continue to pay for workers and the people who end up with these jobs will receive some on the job experience which could potentially lead to full time work opportunities.

Exactly how the mechanics of this would work remain unclear however as the MTA says they want to get people through the city’s “work experience” program but that they also want to do it to save money. Given that they can’t afford to hire people, it’s not clear if these people will actually be able to find work once their unemployment benefits and presumably their temporary job with the MTA run out.

While New York’s approach, to make recipients of unemployment benefits as opposed to more traditional welfare recipients do the work is somewhat unique, most states do have such welfare to work programs on their books as a way to encourage people not to remain too long on the public dole. These were largely instituted in the mid 1990s under the Clinton administration when welfare reform was introduced.

Meanwhile, with all federal extended benefits coming to a close at the end of this year, Michigan decided to take a drastically different approach to moving people off of unemployment as soon as possible: by cutting benefits below the nationwide standard.

Michigan residents who are unemployed will remain eligible through the end of this year for federal extended benefits, which grant up to 99 weeks of unemployment compensation to those in the hardest hit areas of the nation. However, those who lose their job in Michigan in 2012 will face a new incentive to get back to work quickly: starting in January, Michigan will become the first state in the union to offer just 20 weeks of unemployment benefits instead of the usual 26.

Michigan governor Rick Snyder, a Republican, defended the planned cuts, saying that the state was already $3.9 billion in debt to the federal government over its long overdrawn unemployment compensation fund and that the state simply cannot afford to keep raising unemployment taxes in order to provide the full 26 weeks of unemployment benefits.

Other states considering changes to their unemployment compensation plans include Florida, which has proposed dropping the total number of weeks of compensation to just 12 if the state’s unemployment rate drops below 5 percent, Arkansas, which is dropping to 25 weeks and Indiana which recently changed the formula by which unemployment compensation is calculated in an effort to save money.

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