For many years Columbus Area Labor-Management Committee provided joint labor-management driven transition services for workers who lost their jobs due to downsizing or plant shutdowns. Fortunately, we have not had to provide that service for several years as the economy improved, but we did learn a great deal about unemployed workers.
I an consistently appalled when politicians complain about how unemployment benefits provided a paid vacation for those laid off and made them lazy about seeking new employment. These arguments are raised whenever there is a move to increase benefits or extend the duration of payments. After all, they argue, these people are still getting paid so they are in no hurry to get jobs.
In our experience, this was complete bunk. This was confirmed by research from the University of Minnesota published in the June edition of the Journal of Applied Psychology. It reported the results of a study done by Dr. Connie Wanberg, a professor in the department of Work and Organizations in the Carlson School of Management. Her study reached several interesting conclusions about unemployed workers receiving benefits.
People offered more generous unemployment benefits — such as a longer time horizon and higher payments – do take longer to find new jobs. and are less pressured to take a job they do not really want. Dr, Wanberg stated, “People who perceive less time pressure don’t prioritize it as much.
“They have less financial strain so they didn’t spend as much time getting their resumé done quickly,” she added. “They didn’t submit job applications as quickly. They weren’t networking as quickly.”
She states even with these findings there is no evidence of unemployed workers slacking off because of better benefits. This confirms our observations when working with displaced workers. Those who earned more money prior to unemployment required a longer time to find a new job that paid similar amounts. The reason is very simple, there are not as many jobs as salaries and benefit levels increase.
Dr. Wanberg’s study also showed an interesting outcome related to this. People with better and longer benefits also ended up with much stronger mental health and better quality jobs.
“People have more time to turn down jobs they don’t want or get jobs that are a better fit,” she said. “There’s more to it than income. Someone might care how far they have to drive to work.” Workers with fewer benefits are under more financial pressure to take jobs that pay less and had lower levels of self-worth.
Her study also examined the benefits received by U.S. workers and those in the Netherlands and Germany. She reports the Netherlands provided the most generous benefits, offering 70% to 75% of gross earnings for a maximum of three years, depending on employment history. In Germany, individuals can collect at least 60% of net earnings for up to a year.
In the United States, unemployment benefits are mandated at the federal level, but states can establish their own limitations. In Ohio, there was recently a push from conservatives in the state legislature to cut the benefits paid, believing they were too generous. Unemployed Ohio workers can receive no more than half of their previous earnings up to a maximum of $598 for up to 26 weeks for a family of four. This is equivalent to an annual salary of $31,086, not far above the federal poverty level of $25,750. The amount received is subject to income tax.
Compared to the other countries, these amounts and the duration of payments are notably less. Certainly, no valid argument can be made that people are getting rich on unemployment.
Unemployment benefits are designed to be a safety net for displaced workers when they need it the most. The study by Dr. Connie Wanberg showed the benefit employees derive from more generous unemployment plans. We hope the economy remains strong enough that we will not be needed to provide worker transition services, but unemployment and other support services certainly have shown their value for workers in this situation.