Unemployment Benefits Not the Best System for Jobless

Mercatus Center scholars and staff are weighing in on the need for unemployment-insurance reform.

Eileen Norcross:
"Financially, the current system is poorly structured and prone to insolvency during recessions. It's inefficient and unreliable, and workers deserve better. Extending unemployment insurance makes hiring workers more expensive resulting in lower wages or fewer jobs, because the program is financed by payroll taxes. Unemployment insurance needs to be reformed for the 21st century."

Emily Washington:
"The state-federal unemployment insurance program is a poor safety net for the unemployed. Unemployment Insurance Savings Accounts provide the security of the current system without the incentives to remain unemployed. Under UISAs, individuals contribute to savings accounts and draw from them during periods of unemployment--unused funds roll into their savings upon retirement."

Matt Mitchell:
"Studies suggest that countries with more generous unemployment benefits tend to experience epidemics of long-term unemployment. Ten years ago, Germany looked a lot like the U.S. with little economic growth and nearly nine- percent unemployment. Reforms made it easier to hire someone for a low-paying, temporary job, and reduced the generosity of unemployment benefits. Today, their unemployment rate is 6.2 percent."

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Featured Scholars

Eileen Norcross

Eileen Norcross is a senior research fellow at the Mercatus Center at George Mason University. As program director for the Mercatus Center’s State and Local Policy Project, she focuses on questions of public finance and how economic institutions support or hamper economic resiliency and civil society. She specializes in fiscal federalism and institutions, state and local governments and finance, pensions, public administration, and economic development.

Emily Washington

Emily Washington is a policy research manager for the Mercatus Center at George Mason University. She manages the Spending and Budget Initiative and State and Local Policy Project portfolios.

Matthew Mitchell

Matthew Mitchell is a senior research fellow at the Mercatus Center at George Mason University, where he is the program director for the Project for the Study of American Capitalism. He is also an adjunct professor of economics at Mason. In his writing and research, he specializes in economic freedom and economic growth, public-choice economics, and the economics of government favoritism toward particular businesses.