Here is a depressing report from the National Employment Law Project: States Made Unprecedented Cuts to Unemployment Insurance in 2011
NELP’s new analysis shows that in 2011, six states cut the maximum number of weeks that jobless workers can receive unemployment insurance to less than 26 weeks—a threshold that had served as a standard for all 50 states for more than half a century, until this year. Michigan, Missouri, and South Carolina cut their available weeks down to 20; Arkansas and Illinois cut down to 25; and Florida cut to between 12 and 23 weeks, depending on the state’s unemployment rate. Double-digit unemployment in Michigan, South Carolina, and Florida did not discourage lawmakers there from making the cuts.
… Indiana changed the formula it uses to calculate weekly benefit amounts so that the average unemployment check will drop from $283 to $220 a week.Ouch.
This makes things worse. It increases the risk of another drop in GDP. See, when people who have been getting unemployment benefits have their benefits cut, they cut their spending. That means some businesses are selling less stuff. Those businesses in turn layoff more workers, or at best case avoid hiring new ones.
As for the argument that people who get unemployment benefits avoid working just to get the benefits, there’s two responses. First, even by the micro-economic models and theories so beloved by conservatives, it’s totally irrational to do so. I mean, do you really believe people pass up opportunities to have $48,000 a year or more (median household income) in order to collect $8,000 (maximum unemployment benefits for 26 weeks)? No, it’s totally irrational. Second, cutting unemployment benefits to try to get people to have jobs is essentially punishing the unemployed. If there are no jobs to be had, it makes no difference how much we punish them. They can’t get a job. The beatings will continue until morale improves.