Politicscongress-unemploymentOrrin HatchPolitics

Unemployment Benefits: Why Some People Don't Collect Even Though They're Eligible

Why Some People Don't Collect Unemployment Even Though They're Eligible
Open Image Modal
By 

Senior Reporter, HuffPost

Open Image Modal
FILE - In this Oct. 17, 2012 file photo, Sen. Orrin Hatch, R-Utah awaits the start of the Utah Senate Debate with Democratic challenger Scott Howell, in Provo, Utah. When the results are counted this Tuesday, Americans are poised to resoundingly rehire roughly 350 of the 535 members of the House and Senate despite railing for months about an ineffective, bitterly divided legislature. The once-in-a-decade redrawing of congressional districts is one of the main reasons why so many lawmakers will return to Washington _ and the first election after that politically driven process is typically a high point _ but redistricting isnt the only reason. The power of incumbency with its name recognition and cash advantage also is responsible. (AP Photo/Rick Bowmer, File)

Matthew Egerton applied for unemployment insurance as soon as he lost his health care administration job at the very end of 2010.

The Virginia Employment Commission approved Egerton's benefits, but Egerton balked when he learned that unemployment claimants in Virginia are required to give the government names and phone numbers of their job search contacts.

"I did not want to do this as I did not want the negative impression of the VEC checking with employers while they were considering my application," Egerton, 35, told The Huffington Post in an email. "I did not want the risk of seeming like a bad candidate and hurting my chances of being accepted."

Congress is currently deciding whether to keep federal unemployment insurance for the long-term jobless next year, which would cost $30 billion. Democrats want to keep the benefits, while Republicans haven't given an official stance. But concern that unemployment insurance is wasted on people not even trying to find jobs often colors the debate among rank-and-file Republicans on Capitol Hill.

"It's easier for them to stay on unemployment than it is to work," Sen. Orrin Hatch (R-Utah) said recently, adding that he suspected some people game the system to collect benefits for which they're not eligible.

But while stories of waste and fraud in the unemployment system often dominate headlines, fewer people are gaming the system than avoiding it altogether, according to a recent study for the Federal Reserve Bank of St. Louis. On average, the study found, savings from unpaid benefits are seven times larger than the cost of improper payments over the past 22 years.

The Labor Department paid $13.7 billion worth of improper benefits in fiscal year 2011, the Government Accountability Office reported this year. The National Employment Law Project, a worker advocacy group, says federal data show actual fraud accounts for less than 30 percent of improper payments. The most common type of fraud involves continuing to collect benefits after returning to work.

David L. Fuller, professor of economics at Concordia University and a co-author of the report for the St. Louis Fed, said it's difficult to know why people laid off through no fault of their own might not collect benefits for which they're eligible.

"The most natural reason that people tend to come up with is that if you expect your unemployment duration to be relatively short, you may not claim," Fuller said. In other words, people figure they won't need the money, so they don't want to put up with the hassle of filling out forms.

But some people might have less practical reasons for not collecting benefits. Jen Bennett of Cottonwood Heights, Utah, lost her job as an event planner in August 2010 and said she just didn't want to rely on unemployment compensation. (Bennett and Egerton both contacted HuffPost in response to an earlier story that solicited reader input on this topic.)

"I feel that I have more of an independent spirit," Bennett, 48, said. "I don't want to rely on anyone. I don't want to rely on the government. I don't want to rely on those benefits."

What followed in Bennett's case is probably unusual: Rather than search for a new job similar to the one she lost, Bennett, 48, said she sold her house and rented a farm. Now she grows her own food.

She said she resented Orrin Hatch's comment and admired J.K. Rowling, the Harry Potter author who remained a British citizen despite high taxes, partly out of gratitude for a government safety net that had helped her survive.

"That's the attitude people really should have, and not this attitude that people on welfare or taking food stamps are happy for the free ticket," Bennett said.

As for Egerton, he wound up unemployed for an entire year before finding a health care administration job in Baltimore similar to the one he'd lost in Virginia. If he had spent that time collecting benefits, which he said would have been roughly $200 per week, Virginia's unemployment trust fund would have nearly $10,000 less in reserve.

"If I hadn't found a job after too much longer," he said, "I probably would have started applying for it."

Our 2024 Coverage Needs You

As Americans head to the polls in 2024, the very future of our country is at stake. At HuffPost, we believe that a free press is critical to creating well-informed voters. That's why our journalism is free for everyone, even though other newsrooms retreat behind expensive paywalls.

Our journalists will continue to cover the twists and turns during this historic presidential election. With your help, we'll bring you hard-hitting investigations, well-researched analysis and timely takes you can't find elsewhere. Reporting in this current political climate is a responsibility we do not take lightly, and we thank you for your support.

to keep our news free for all.

Support HuffPost

Before You Go

Do These Things, Don't Cut Entitlements
Prison Reform(01 of10)
Open Image Modal
The U.S. incarcerates its citizens at a rate roughly five times higher than the global average. We have about 5 percent of the world's population, but 25 percent of its prisoners, according to The Economist,. This status quo costs our local, state and federal governments a combined $68 billion a year -- all of which becomes a federal problem during recessions, when states look to Washington for fiscal relief. Over the standard 10-year budget window used in Congress, that's a $680 billion hit to the deficit.Solving longstanding prison problems -- releasing elderly convicts unlikely to commit crimes, offering treatment or counseling as an alternative to prison for non-violent offenders, slightly shortening the sentences of well-behaved inmates, and substituting probation for more jail-time -- would do wonders for government spending. (credit:AP)
End Of The Drug War(02 of10)
Open Image Modal
The federal government spends more than $15 billion a year investigating and prosecuting the War on Drugs. That's $150 billion in Washington budget-speak, and it doesn't include the far higher costs of incarcerating millions of people for doing drugs. This money isn't getting the government the results it wants. As drug war budgets balloon, drug use escalates.Ending the Drug War offers the government two separate budget boons. In addition to saving all the money spending investigating, prosecuting and incarcerating drug offenders, Uncle Sam could actually regulate and tax drugs like marijuana, generating new revenue. Studies by pot legalization advocates indicate that fully legalizing weed in California would yield up to $18 billion annually for that state's government alone. For the feds, the benefits are even sweeter. (credit:AP)
Let Medicare Negotiate With Big Pharma(03 of10)
Open Image Modal
The U.S. has higher health care costs than any other country. We spend over 15 percent of our total economic output each year on health care -- roughly 50 percent more than Canada, and double what the U.K. spends.Why? The American private health care system is inefficient, and the intellectual property rules involving medication in the U.S. can make prescription drugs much more expensive than in other countries. Medicare currently spends about $50 billion a year on prescription drugs. According to economist Dean Baker, Americans spend roughly 10 times more than they need to on prescription drugs as a result of our unique intellectual property standards. These savings for the government, of course, would come from the pockets of major pharmaceutical companies, currently among the most profitable corporations the world has ever known. They also exercise tremendous clout inside the Beltway. President Barack Obama even guaranteed drug companies more restrictive -- and lucrative -- intellectual property standards in order to garner their support for the Affordable Care Act. (credit:Alamy)
Offshore Tax Havens(04 of10)
Open Image Modal
The U.S. Treasury Department estimates that it loses about $100 billion a year in revenue due to offshore tax haven abuses. Sen. Carl Levin (D-Mich.) has been pushing legislation for years to rein in this absurd tax maneuvering, but corporate lobbying on Capitol Hill has prevented the bill from becoming law. (credit:Alamy)
Deprivatize Government Contract Work(05 of10)
Open Image Modal
In recent years, the federal government has privatized an enormous portion of public projects to government contractors. Over the past decade, the federal government's staffing has held steady, while the number of federal contractors has increased by millions. This outsourcing has resulted in much higher costs for the government than would be incurred by simply doing the work in-house. On average, contractors are paid nearly double what a comparable federal employee would receive for the same job, according to the Project On Government Oversight. (credit:Alamy)
Print More Money(06 of10)
Open Image Modal
There's an old saying in economics: You have to print money to make money. Okay, there's no such saying. Nevertheless, the great boogeyman of many conservative economic doctrines -- inflation -- isn't such a bad idea during periods where much of the citizenry is drowning in debt.Inflation is by no means a perfect remedy: it's a stealth cut to workers' wages. But it also has many benefits that are often unacknowledged by the Washington intelligentsia. Inflation makes housing debt, student loan debt and any other private-sector debt more manageable. Today, when 10.8 million homes are underwater -- meaning borrowers owe banks than their houses are worth, moderate inflation could ease that debt burden. By effectively reducing monthly bills, moderate inflation could actually put more money in the pockets of these homeowners to spend elsewhere, thus stimulating the economy. Moderate inflation -- 5 percent or so -- could also help alleviate the $1 trillion in student debt currently plaguing America's graduates.Make no mistake -- hyperinflation of 20 percent, 30 percent or more -- is bad. But the U.S. has ways to crush inflation when it gets out of hand, as proven by the Federal Reserve under then-Chairman Paul Volcker in the early-1980s. (credit:Getty Images)
Print Less Money(07 of10)
Open Image Modal
The government prints a lot of $1 bills. But it turns out that minting $1 coins is much, much cheaper. Over the course of 30 years, the government could save $4.4 billion by switching from dollar bills to dollar coins. Here's looking at you, Sacagawea. (credit:Alamy)
Immigration: Less Detention, More Ankle Bracelets(08 of10)
Open Image Modal
The government spends $122 per person, per day detaining immigrants who are considered safe and unlikely to commit crimes. The government has plenty of other options available to monitor such people, at a cost of as little as $15 per person.For the first 205 years of America's existence, there was no federal system for detaining immigrants. The process began in 1981. (credit:Alamy)
Financial Speculation Tax(09 of10)
Open Image Modal
Wall Street loves to gamble. In good times, financial speculation is the source of tremendous profits in America's banking system, but when the bets go bad, the government picks up the tab, as evidenced by the epic bank bailouts of 2008 and 2009. Unfortunately, this speculation is difficult to define in legalistic terminology and even more difficult to police. One solution? By taxing every financial trade at the ultra-low rate of 0.25 percent, the U.S. government can impose a modest incentive against gambling for the sheer sake of gambling. If there's an immediate cost to placing a bet, a lot of traders will choose not to bet.What's more, this tax could raise about $150 billion a year for the federal government. (credit:Alamy)
Carbon Tax(10 of10)
Open Image Modal
Taxing greenhouse gases would generate $80 billion a year right now, and up to $310 billion a year by 2050, according to an analysis by the Brookings Institution. It would also help avert catastrophic ecological and economic damage from climate change. (credit:Alamy)
Suggest a correction
|
Submit a tip