Reforming Unemployment Insurance: Towards Greater Employment

Abstract

The purpose of this paper is to argue the need for unemployment insurance reform. At a minimum the system needs to be tightened in such a way that it results in fewer layoffs. Beyond this, however, the system needs to be able to offer greater assistance to the growing population of the long-term unemployed. These are the ones who have been permanently displaced from their jobs because of either plant or company closure or changing technologies. And if they aren't the victims of plant closure, they are likely to be the victims of corporate restructuring or "downsizing." In the last decade, this population has more than doubled. These people are part of a growing class of chronically unemployed for whom a policy response is essential. The logic of UI rests on the premise that individuals need to be afforded the opportunity to search and that given the opportunity they will find a job which best matches their skills and experience. But those who receive assistance longer than the norm call into question the underlying assumption that during this period an appropriate fit will emerge. Ultimately I argue that something other than merely extending long-term benefits needs to be done. To continue extending long-term benefits is to merely apply some of the same assumptions commonly made about the short-term unemployed to the long-term unemployed when the realities may in fact be different.