Posted by
Logical Party on Tuesday, December 22, 2009 5:00:00 AM
Unemployment Vacation
As I enjoy my fourth recession and second market crash since graduating college in 1981 I am reminded of the statement by President Reagan that unemployment is a “prepaid vacation for freeloaders.” Reagan’s recession was made possible by drastic tax cuts with no way to pay for it, resulting in government layoffs and state budget cuts that saw unemployment rise to over 10%.
The unemployment benefit then was $260 a week in the metropolitan area, average rents at $600 a month. Today, the weekly NYC benefit is $435 a week with an additional $25 thanks to the Federal government, yet average rents regardless of borough is $1000, more if you want a bedroom. That’s just under $2,000 a month (slightly below the NYC poverty rate) before one considers utilities, food or public transportation. Add on the cost of a computer and job search materials i.e. resumes, postage, faxing, etc and we get to the real P & L, excluding the realistic costs of healthcare, auto insurance and maintenance.
Oh yeah, one could be married with children, or paying alimony or child support, but I digress. As I experience my fourth recession I know the lifestyle. In addition to the hopefully “breakeven” status thanks to unemployment, a benefit paid because workers, not freeloaders, had an insurance policy whose premiums were paid for by the employer (much like health insurance, but at a lot lower rate) there are all those other costs of daily life which are put on hold or disappear. In the post 9/11 recession I had a car repossessed. We cancel our vacations and terminate our health club memberships. Friends and family gather for dinners, holidays or celebrations and we are AWOL or show up with the miniscule of gifts if any at all. We look at new clothes or jewelry in store windows and divert our eyes. We reuse disposable blades. There is that woman we’d like to date but now can’t approach, concerts, sporting events and weekend getaways we won’t be attending. Let’s not forget those credit card bills manageable as long as we were employed. We struggle with bouts of self worth repeating the mantra “it’s not our fault,” as we watch TV and remember “hey I’m on vacation!”
In 2007 I hedged myself against the oncoming storm and became part of the 7.5% of children in the US over 29 who have moved back home with their parents from a generation when “doing nothing” was considered a vacation. No it’s not as much fun as it sounds.
What are unemployed parents doing for fun when the tuition bill comes? Mr. Reagan is in no position to answer, but I would like to know “when does the vacation start?”
Fortunately I have chased my unemployment with periodic bouts of “temp” work, which is the “better than nothing” alternative. This employment pays one at 60% less than what they previously made with an equivalent hourly rate (the other half of one’s pay) going directly to the agency. Companies now get to test the water before hiring, but that doesn’t help the purchasing power of the temp.
Adding insult to injury, Cato Institute fellow Alan Reynolds has declared the stimulus created extended benefits are the reason unemployment remains high because he believes, much like Reagan, the unemployed are happy with their “time off.” This is an extraordinary, self serving belief in light of an $11 trillion mortgage and housing industry collapse, continued layoffs and the bankruptcies and depression avoided with the extended benefits. No, Mr. Reynolds, the unemployed are merely waiting for a living, deserving wage.
Vacation will end when employers take the chance and rehire workers, paying them a wage to stimulate the economy back to full throttle. Until then the unemployed will be at the local tanning salon….waiting.
David DiBello