Experts: Suspend benefits, motivate jobless

July 18, 2010 at 12:00a.m.

Sun Sentinel

FORT LAUDERDALE, Fla.

Unemployment benefits are a lifeline, but some economists contend they can give job-seekers a reason to turn down work.

A stormy debate among politicians is likely to heat up in the U.S. Senate. Senators declined, for the fourth time, to act on an unemployment insurance extension before its July 4 break. A new bill quickly passed by the House still faces obstacles, including its $33 billion price tag.

Economists and think tanks on the right say extending benefits can make the unemployed less motivated to look for work. Proponents counter that any incentive to skip work in order to collect benefits is minimal and that unemployment benefits keep people from permanently dropping out of the labor force.

Some unemployed workers have refused jobs because the pay is too low to give up unemployment payments, some staffing companies say. Other workers have declined jobs because they couldn’t afford or didn’t want to commute from their homes to a job, for example.

“We have positions open, and we can’t sell them,” said Sue Romanos, president of staffing firm CareerXchange, which has offices in Florida’s Broward and Miami-Dade counties. Her firm has offered some workers customer service jobs at $10-$15 an hour and been turned down.

“The reason is, they’re collecting unemployment,” Romanos said. “By the time you take off taxes, it’s the same amount they’re getting from the government.”

Unemployment extensions tend to be a disincentive to those in lower-paying jobs, agrees Marilyn Durant, a career coach who has her own firm, Durant Resources Group in Boca Raton.

Still, Durant supports extending unemployment benefits. “It’s still the right thing to do, because it’s bad out there,” she said.

Unemployment payments normally are 26 weeks, but were temporarily extended in the recession to up to 99 weeks for hardest-hit states.

Legislation in the Senate would provide relief for jobless workers who had not yet exhausted all available extended benefits. Their benefits lapsed when federal emergency authority expired June 2.

More than 2.5 million unemployed workers who have since lost benefits hope their payments will soon resume.

Mark Magula, 55, of Plantation, Fla., is selling assets such as his lifelong guitar collection to make ends meet. Magula, a former loan officer for a mortgage company, said he has been trying to find a job, especially since his wife Cindy, 56, and son Matthew, 28, lost their jobs last year when their employer, a local research company, closed its doors.

Any unemployment benefits the family was drawing expired June 2. Magula has been offered commission-only jobs. But sales prove tough to generate, and the jobs end up costing him money. “It’s like working for free,” he said.

Even critics of the unemployment extensions agree that nobody’s getting rich off of unemployment benefits.

Some of the unemployed have working spouses or other sources of income, while others rely on jobless benefits as their sole financial support while unemployed.

There are different reasons why some workers collect long-term benefits, from returning to school to upgrade skills to not being able to find a job in their field.

But, generally, every 13 weeks of additional benefits adds one more week to the length of unemployment, said Alex Brill, an economist and research fellow at the American Enterprise Institute, a nonprofit research group.

The steep drop in construction has contributed to the large numbers of long-term unemployed in South Florida, said Mason Jackson, president of Broward County career center WorkForce One.

Inadequate pay may be another factor in some workers not taking jobs. Raquel Alderman, 42, of Coral Springs, Fla., was unemployed for 18 months. She turned down one job that would have paid half her salary but landed a better job as marketing director at the Miami Children’s Museum. “The salary was less than I had before, but it wasn’t the 25 percent to 30 percent cut some people are taking.”

Proponents of the unemployment extension say some U.S. senators are not considering the consequences of the nation’s jobless numbers, which could include more foreclosures, homelessness and less consumer spending.