Unemployment Benefits Warrant a Second Look

Oregon’s legislature has rushed to approve bills that will extend unemployment insurance yet again. Gov. John Kitzhaber signed the legislation on March 24. But legislators should pause to consider that while it may feel good, the costs may sabotage the effect they seek.

This year, the average payroll tax to support unemployment insurance is $995 for an employee who makes at least $32,300 in Oregon. This is $109 more than it was in 2010. And that doesn’t even include the costs of large federal extensions. Why have these taxes increased so much? Because Oregon’s unemployment is high and our benefits are generous, or at least prolonged. In Oregon, workers can claim benefits for more than two years.

Some will say that $1,000 per worker is a fair price to pay for a popular safety net. Yet, such a hefty price demands that we ask hard questions or at least look for ways to improve unemployment insurance. The current program has repeatedly been shown to increase unemployment. It also indirectly taxes many employees who personally can never benefit from the program if they become unemployed because they, for example, cannot accept full-time work.

Let’s encourage our federal and state legislators to stop rushing through extensions and pause to ask hard questions about unemployment insurance. The cost is too great to continue ignoring its problems.

Christina Martin is Director of the Asset Ownership Project at Cascade Policy Institute, Oregon’s free market public policy research organization.