President Obama mentioned a proposal to change the United States unemployment insurance system. Recently, he made a statement saying he would like to offer more security for those who are without a job. The president added that he would also like to encourage experienced employees to join the workforce again even if it meant taking a pay cut.
Many economists backed the idea of wage insurance as a way to address decreasing wages among the middle-class. Obama said instead of talking about unemployment rates, the focus should be talking about re-employment. Such a proposal would mean that states would have to provide wage insurance to cover all of their employees in the event of unemployment or under employment. The proposed insurance plan would cover 50% of any lost income or up to $10,000 over the span of two years. It would be eligible for all employees who worked a minimum of three years at their former position and will be bringing in under $50,000 in their new position.
Obama had also talked about this plan before in 2011 and a year later in the 2012 State of the Union address. In this year’s State of the Union Address, he brought up the plan again, providing a sense of assurance that he didn’t forget about it. The proposed plan would also make it a requirement for states to make this new form of insurance available to various low-income and part-time employees. It would also mandate that all states give a minimum of 26 weeks worth of unemployment insurance.
Currently, the White House stated that all but nine states are caught up with this plan. North Carolina is one state that will provide only up to 13 weeks. The proposal would even make the extension of unemployment benefits more seamless during periods of economic turndowns. Currently, congress would have to approve it first during each and every recession, which runs the risk of benefits coming too late for some employees. With the plan that the president has in mind, it can automatically provide 52 weeks of federally funded benefits.
The government mentioned that from 2008-2013, extended unemployment benefits successfully helped about 25 million American workers. It also credited the benefits with helping about 2.5 million people out of poverty back in 2012. They said the proposal is expected to be completely paid for in the budget, but didn’t say how much the plan is expected to cost them. One likely possibility that will get used to cover the expenses would be to increase workers’ unemployment insurance tax slightly. The president did mention that he would like to grow job training programs, which includes a plan that could make “career navigators” that may assist workers in locating new jobs.
A recent government unemployment report released that employers added over 290,000 in the month of December while the unemployment rate remained at a steady 5%. During the statement, the president also claimed some credit for the progress it’s taking and hopes to push back against Republican presidential candidates he fervently believes does nothing but talk down on the economy.
The White House stated that things have been looking bright on the road to recovery. However, due to the fact a lot of the newer jobs are lower paying, many people in America don’t see the wage growth they want or expected. Obama stated in the speech that he believes the new idea would be able to provide a higher level of security to employees that want to switch jobs and change careers. On average, experienced workers may notice a pay cut equal to about 10% whenever they lose their jobs. According to the White House, employees work than two decades of working at the same job see an average of 25% in pay cuts. The president’s proposal is expected to get included in the budget proposal for the following month.