Reforming unemployment assistance

The government provided an unprecedented amount of assistance to unemployed workers during the recession. As a result, there’s been talk about changing the system, perhaps by reducing the number of weeks an unemployed person can receive cash help. Have economists thought about some other approaches? N.C. State University’s Mike Walden responds.

“And, of course, … we’ve had this debate in North Carolina about the state unemployment compensation system. North Carolina is actually owing the federal government large amounts of money, and some changes were passed. What I’m talking about here, though, is maybe some fundamental changes to the whole system, how we operate it. And these discussions have really gone on for the last 30 years, and what they come down to is this: The current system says, alright, if you’re unemployed, the state is going to give you so much cash for a certain number of weeks, and hopefully during that time period you’ll get a new job.

“A different system might be to say, alright, if you’re unemployed and certify that you are unemployed, here’s what we’re going to do. We’re going to give you a large amount of cash up front, a big amount – maybe in the five figures amount of cash. We’re going to give it to you one time. It is going to have strings attached. You can only use a part of that to support yourself and your family, and the other part you’re going to have to use to either pay to go back to school, community college – some kind of training – so that you get new skills so that you can get a job or potentially to move.

“This would be a radical departure with how we help unemployed folks. And the notion here is that it would give unemployed folks a big incentive to immediately try to do something to improve their chances of getting a new job, either in terms of changing their skills or moving to a location that has better jobs.

“So this is something, while we are thinking about the unemployment compensation system, we might want to throw this new idea that’s really been around for 30 years into the mix.”