A Reason Not to Get a Job?

Posted on | March 30, 2010 | No Comments

The fragile and slow recovery has caused many employers to be cautious about hiring full-time workers.  Instead, they are hiring part-time and temp-to-hire workers.  There are currently 8.8 million involuntary part-time workers–workers who work part-time because they can’t find full-time work.  Part-time work is not a replacement for full-time work but it’s the best solution for workers who cannot find full-time work but want to keep their skills sharp, stay active and earn a little money.  It’s also employers’ best solution given the uncertain economy.  They get to test-run talent before committing payroll funds.  But, if part-time work is so great, why are federal and state unemployment laws discouraging workers from seeking part-time work?

A new article from the Christian Science Monitor reveals a little known fact about the Emergency Unemployment Compensation (EUC) program, the federal program to help those who have exhausted their state unemployment benefits.  After a worker has collected 52 weeks of unemployment benefits, states are required to review the worker’s benefits claim to see if s/he has re-qualified for state benefits.  If the worker has worked a part-time or temporary job during the period, s/he will re-qualify for state benefits and his/her EUC benefits will be cut off.

This may not sound like a big deal.  Benefits are benefits, right?  Except that most workers receive considerably higher payments via the federal program than they do from the state programs.  In some cases, workers receive as much as six times more via the federal program than the state programs.  Needless to say, this is a disincentive for many workers to seek out part-time or temporary work.

So, why would the federal or state governments want to discourage workers from finding new work, especially at time when so many are out of work?  The effect is actually unintended.  Both the Fed and state governments need workers to get back to work so they can reallocate funds and generate new tax dollars.  And, state governments have a greater incentive to get workers off EUC and it’s higher benefits because they are borrowing those funds from the Fed.  The states also need workers to receive the smallest possible unemployment payments because they are operating in the red due, in part, to the large increase in unemployment claims.

The law to prevent the unemployed from being penalized for taking up part-time work recently expired, and the new law is currently in limbo in Congress.  Increased visibility and focus on this provision of the EUC, especially now that many workers have reached the 1-year mark on their unemployment claims, may force Congress to accelerate approval of the law, if for no other reason than to rescue the fragile economic progress we’ve made.

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