Comments on: Unemployment Benefits and Moral Hazard http://www.nicholls.edu/bastiatsbastions/2006/03/21/unemployment-benefits-and-moral-hazard/ What is seen and what is unseen. Fri, 19 Feb 2010 03:23:56 +0000 http://wordpress.org/?v=2.9.2 hourly 1 By: Aaron Ayme http://www.nicholls.edu/bastiatsbastions/2006/03/21/unemployment-benefits-and-moral-hazard/comment-page-1/#comment-174 Aaron Ayme Mon, 27 Mar 2006 01:35:11 +0000 http://www.nicholls.edu/bastiatsbastions/2006/03/21/unemployment-benefits-and-moral-hazard/#comment-174 Statistics, like pictures, speak volumes louder than words. There is no question that increasing unemployment benefits will nurture increasing unemployment rates, a man-made moral hazard. As vividly noted by the Bureau of Labor Statistics, from 1999 through 2003, U.S. unemployment rates for age 16 years and older ranged from approximately 4% to 6% nationwide. During that same period, France’s unemployment figures were in the ballpark of 9.7% to 11%. Are these stats a mere coincidence, noting that European countries are considerably more generous in unemployment length of time and pay proportions than the U.S.? Certainly unemployment insurance is a necessity, especially in our volatile workforce. My mom, an NSU grad, was employed by a healthcare company where she received outstanding raises and performance ratings for seven years. Yet, due to the economy and downsizing, she was terminated and re-employed three times before she decided to refuse re-employment and seek a more “secure” job. In the interim she did, of course, draw unemployment benefits for some months until she was hired by her present employer of 12 years. Realistically, there are certainly hard-working high school and college grads that are having a rough time securing gainful, good paying, long-term career positions. However, for those looking for a free ride, European unemployment services certainly are accommodating. Why pay for a first-class ticket when you can ride coach for free? I certainly hope that the French take a look at the “American way”, at least when it comes to hard core facts relating to unemployment benefits and unemployment rates. Statistics, like pictures, speak volumes louder than words. There is no question that increasing unemployment benefits will nurture increasing unemployment rates, a man-made moral hazard. As vividly noted by the Bureau of Labor Statistics, from 1999 through 2003, U.S. unemployment rates for age 16 years and older ranged from approximately 4% to 6% nationwide. During that same period, France’s unemployment figures were in the ballpark of 9.7% to 11%. Are these stats a mere coincidence, noting that European countries are considerably more generous in unemployment length of time and pay proportions than the U.S.? Certainly unemployment insurance is a necessity, especially in our volatile workforce. My mom, an NSU grad, was employed by a healthcare company where she received outstanding raises and performance ratings for seven years. Yet, due to the economy and downsizing, she was terminated and re-employed three times before she decided to refuse re-employment and seek a more “secure” job. In the interim she did, of course, draw unemployment benefits for some months until she was hired by her present employer of 12 years. Realistically, there are certainly hard-working high school and college grads that are having a rough time securing gainful, good paying, long-term career positions. However, for those looking for a free ride, European unemployment services certainly are accommodating. Why pay for a first-class ticket when you can ride coach for free? I certainly hope that the French take a look at the “American way”, at least when it comes to hard core facts relating to unemployment benefits and unemployment rates.

]]> By: Jim Heney http://www.nicholls.edu/bastiatsbastions/2006/03/21/unemployment-benefits-and-moral-hazard/comment-page-1/#comment-162 Jim Heney Thu, 23 Mar 2006 14:05:44 +0000 http://www.nicholls.edu/bastiatsbastions/2006/03/21/unemployment-benefits-and-moral-hazard/#comment-162 I feel that unemployment benefits are a great tool for one to utilize in times of need when unemployed. The problem I have though is when people selectively choose not to work and then rely on this benefit. After reviewing the unemployment rates for 2004 between France and the U.S., it proves that people are less likely to find employment when receiving a 'fat handout' over an extended time. The unemployment rates in 2004 for France and the U.S. came in at: 10.1% and 5.5%, respectively. We as a society have created this problem and surely can remedy this issue by capping the time frame in which one can collect benefits. People do need help at various times of their adult working careers, and that is the intent of the welfare/unemployment system. Lets not encourage people to stay out of work because it pays, afterall, if the milk is free why bother buying the cow! I feel that unemployment benefits are a great tool for one to utilize in times of need when unemployed. The problem I have though is when people selectively choose not to work and then rely on this benefit.

After reviewing the unemployment rates for 2004 between France and the U.S., it proves that people are less likely to find employment when receiving a ‘fat handout’ over an extended time. The unemployment rates in 2004 for France and the U.S. came in at: 10.1% and 5.5%, respectively.

We as a society have created this problem and surely can remedy this issue by capping the time frame in which one can collect benefits. People do need help at various times of their adult working careers, and that is the intent of the welfare/unemployment system. Lets not encourage people to stay out of work because it pays, afterall, if the milk is free why bother buying the cow!

]]> By: Sterling Mack http://www.nicholls.edu/bastiatsbastions/2006/03/21/unemployment-benefits-and-moral-hazard/comment-page-1/#comment-52 Sterling Mack Wed, 22 Mar 2006 16:17:59 +0000 http://www.nicholls.edu/bastiatsbastions/2006/03/21/unemployment-benefits-and-moral-hazard/#comment-52 All I could say about moral hazards are that people respond to incentives. Like the article said, "a person with fire insurance is more likely to commit arson on his own property than someone who does not have fire insurance". The unemployment rates are just normal if you think about it. Technology is the reason for that. This relates to the Industrial Revolutions of 1848 of our Western Civiliation. Many people are drawn out of work because of inventions and such. But as much money we, our nation, is using to create such technology, we, our nation, should be able to provide much more money to the unemployed who has been driven away from their job because of revolutionary times. All I could say about moral hazards are that people respond to incentives. Like the article said, “a person with fire insurance is more likely to commit arson on his own property than someone who does not have fire insurance”. The unemployment rates are just normal if you think about it. Technology is the reason for that. This relates to the Industrial Revolutions of 1848 of our Western Civiliation. Many people are drawn out of work because of inventions and such. But as much money we, our nation, is using to create such technology, we, our nation, should be able to provide much more money to the unemployed who has been driven away from their job because of revolutionary times.

]]>