by The Real American

Created on: August 16, 2010   Last Updated: August 17, 2010

There have always been numerous misconceptions about Unemployment Benefits and their lasting positive or negative effects upon the economy. There are those who firmly believe that they are a godsend - to generate potential economic growth… and there are those who believe that they are a blatant governmental hindrance, just as strongly. Whereas, the truth is that, neither of these politically extremist views is [in anywise] correct regarding them. Unemployment Benefits are largely economically neutral due to several counterbalancing factors.

Since, under normal circumstances, our employers have been forced to pay them – as a Federal/State mandated condition of employment – employers have already worked them into their Benefit-Pay Scale Equations as a genuine labor expense. Therefore - just like: Paid Vacations, Health Care, and Retirement - they are just another part of an employees true compensation. Employers could have just as easily paid their employees significantly more in cash money and have left these problems up to the individual employees themselves – without any government involvement at all. All things being equal, the accounting and paperwork savings alone - would have benefited them substantially.

And yet, we are no longer living under normal circumstances and Extended Unemployment Compensation doesn’t function under the same rules. Extended Unemployment is paid at the public expense, either through: Federally Borrowed, Publicly Taxed, or Fiat Printed Monies. Consequently, these publicly expended revenues will impact the overall economy to some minimal extent. Governmental borrowing decreases available capital… Higher taxation decreases discretionary income… and Printing More Money devaluates the existent national currency supply. Whichever route the government takes – to offset such necessary spending – the results will be essentially the same.

However, the negative economic effects of Extended Unemployment Compensation must be counterbalanced against the negative economic consequences in not providing these same minimalistic societal supports. For instance:

1.)    People who can’t buy their own groceries will just apply for: Food Stamps, AFDC, and other socially funded programs – which are drawn from the very same national economy.

2.)    People who cannot make their mortgage payments will get foreclosed and add to the ongoing economic confusion.

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