The primary objective of the American unemployment system is to maintain a worker’s standard of living while they look to find new employment after becoming involuntarily unemployed. This system also helps stabilize the economy during recession periods and is the barrier between homelessness and hunger for a lot of unemployed Americans. The average unemployment recipient receives 40% of their previous wages, which is typically the amount spent on rent and food. This means that Americans cannot pay their water, electric, phone, or internet bills on the current unemployment system, which places an unnecessary burden on those that are already facing the struggle of finding a new job. At the current average unemployment payment rate of $370, any household of three or more people falls below the poverty line, which means the current unemployment program puts 2 out of every 5 households into poverty if they were not already at or below the poverty line. Since the 1990s, the duration of unemployment has also increased from an average of 12 weeks in 1990 to an average of 22 weeks in 2019. Two flaws in the current system are assumptions that unemployment is going to be short term and that people will be able to find new jobs quickly, and that unemployment stress will be absorbed by a second earner in the home.
Friends of Intelligent Democracy supports:
- ● Removing eligibility requirements that exclude the self-employed, student employees, and employees in the agricultural and domestic work industries.
- ● Creating and subsidizing training programs for those unemployed because of skills mismatches and automation
Social Security and Retirement
Social Security was created as a program to prevent senior citizens from risking poverty when it came to exiting the workforce. Now, Social Security has become the lifeline for many seniors and has been gutted by Republicans for years. Ideally, a senior would use a combination of personal savings, employer-sponsored retirement plan, and Social Security to pay their bills and enjoy retirement. However, with a dropping savings rate and an ever-shrinking pool of workers that qualify for employer-sponsored plans, the number of Americans that depend on Social Security has skyrocketed. This problem stems from employers who have prioritized costs over employees and can leave employees without enough to safely retire. In 2016, the median balance of 401(k) plans was about $17,000, which equals out to about $1,400 a month for one year. Right now, Social Security will not be able to pay out full promised benefits starting in 2035 unless legislators pick between cutting benefits or raising the payroll tax. Cutting benefits would further disadvantage at-risk communities and drastically harm disabled Americans that start collecting Social Security at a younger age. In all areas of fiscal policy, we need reforms that recognize the causes of economic insecurity, many of which Americans have no control over. Friends of Intelligent Democracy supports:
- ● Removing the cap on the payroll tax that is collected for Social Security
- ● Incentivizing employers to provide defined benefit retirement plans instead of defined contribution plans that ensure an employee can safely retire without having to worry about becoming financially unstable in retirement.
- ● Requiring that employers who provide defined contribution plans like 401(k)s also provide employees with in-person or virtual resources that help employees manage their accounts and have a fiduciary responsibility to maximize a person’s retirement fund.
- ● Requiring employers to auto-enroll employees that do not qualify for a direct benefit or 401(k) pension plan into an IRA.
Many Americans struggle with finding new jobs that hire them at a similar pay to their previous job. This can lead to extended unemployment because of “reservation wages”, which is when an applicant rejects jobs that do not meet the previous salary earned. A way to reduce the likelihood of this and encourage the unemployed to apply for more or different jobs would be to create a national wage insurance program in the United States. Right now, wage insurance only applies to workers over age 50. Friends of Intelligent Democracy supports creating a wage insurance program that covers 50% of the difference in wages between a previous job and new job up to $400/week or $20,800 a year for up to two years after finding a new job on the condition that the employee spent at least two years at their previous employer.
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