17 January, 2007

Down And Out In Brentioch, Tennessee

I'm lucky, I guess. I've made it for 36.5 years without having to file unemployment. For obvious reasons, that's one of the things on Hubs' to-do list, and I have to say that I'm speechless.

I have car insurance. If the car is damaged, the insurance pays to fix it, less a deductable. If the car is totalled, I get the value of the car at the time of the accident.

I have homeowners' insurance. If my house is damaged, the insurance pays the cost of replacing the house, minus the land. (We're assuming here that land neither burns down nor is blown away, ruined forever by floods or stolen from under the house.)

I have health insurance. If I go to the doctor, the insurance pays the bill, less my deductable.

That, my friends, is how insurance is supposed to work. It is supposed to replace or nearly replace what you've lost.

Not so with Unemployment Insurance in the state of Tennessee. According to the rulebook you are supposed to receive weekly benefits equal to half your weekly pay amount for up to 26 weeks. That doesn't sound so bad, right?

Hah! Fooled ya! Here in Tennessee, we cap that weekly amount at $275.00. For the record, that's the equivalent of a salary of $28,600. The median household income for the State of Tennessee is $38,945. I think I've found my new political crusade. I personally believe that the cap on Unemployment Benefits needs to more realistically reflect the earnings "insured" by the program. The cap should be raised at least to $375.00 per week. That's half the weekly earnings for the median income within the state.

Granted, I'm up in arms about this right now because it's affecting me personally, but I really am thinking about the larger picture. The number of personal bankruptcies filed in Tennessee is legendary. We usually have the highest number of filings per year. Among the top reasons cited for filing is "loss of job." Clearly our unemployment insurance is inadequate for the majority of Tennesseans.

When a person has a job, they take on financial obligations. Mortgages, utlities, car payments, credit card debt. The higher a person's income, the greater their capacity for financial committment. If a job is lost, there is no way to meet those committments. The original thinking behind unemployment insurance was that it would be good for the community as well as the individual. If Joe has a credit account at your store and he loses his job he can't pay you. So your store suffers and your creditors suffer as well. Next thing you know, everybody's bankrupt--which means nobody else gets their money. And the cycle continues.

By keeping the unemployment benefits capped at a ridiculously low amount, Tennessee is keeping itself behind the financial 8-ball.

We personally are fortunate in that we have no credit cards, no car payment and some savings. We should be able to weather the storm without too much damage. But change one element of that equation--toss in a few credit cards or a car payment--and things would be bound to get ugly fast.

I'm a fan of bankruptcy in that it beats Debtor's Prison hands down. It's better for the economy because it encourages people to take risk and it's better for society in that it offers us a fiscal safety net when life spirals out of control. But I'm sure most people who file bankruptcy would rather have had a little bit better coverage from their Unemployment benefits.


At 8:43 AM, January 17, 2007, Anonymous Lesley said...

I understand your position at this time, I really do. I have received unemployment payments three times in just 11 years and have felt the pinch of the compensation not matching the salary I made. But as it was explained to me the first time I filed, it's meant to help, not be a way of life.

Additionally, the other types of insurance you listed are paid for by you. Unemployment insurance is paid for by the employer. Raising the compensation will raise the rates for employers which will contribute even more to the burden of small businesses. The system does (fairly) require more payments from organizations that have terminated employees that have made approved claims. But raising the rates overall will cripple small business owners who frequently fill in the gaps left by large employers who terminate employees.

Additionally, there's a glaring omission from your facts about bankruptcies in Tennessee. Shelby County (where Memphis is located) leads the entire nation in bankruptcies. The rate in Shelby county has soared dramatically in the last 12 years and has been directly linked to the Tunica, Mississippi casinos. People may cite "loss of job" as the reason for their bankruptcy, but in Memphis it's likely because they spent hours in a casino. I've seen it firsthand.

The first time I lost a job, I was 23 years old and just a year and a half out of college. I got $175 per week and for the first (and only) time in my life, I had to carry a balance on a credit card so I could pay rent until I could find another job. I learned a tough lesson then that I have kept with me for the last 13 years--that is, always have at least a six-month cushion in savings. It's scary to lose a job and not be prepared, but raising the unemployment compensation rate is not the answer.

At 10:31 AM, January 17, 2007, Anonymous nm said...

Well, some of the unemployment insurance is paid for by the employer. Some is paid for by the employee: that's the FICA that's taken out of the paycheck. The way to make payments higher is to raise both.

At 8:38 PM, January 17, 2007, Anonymous Roger Abramson said...

"Brentioch"? I thought you lived in Hermitage. I live in Brentioch.

At 8:41 PM, January 17, 2007, Blogger Kat Coble said...

I do. This was bad writing on my part, because what I was aiming for was the irony that unemployment insurance benefits are harder on those who live in, say, Brentioch. Because the payments are nowhere near an approximation of what they were earning beforehand.

This would then lead to greater hardship, in my opinion.

Of course, common sense would be that those in a higher income bracket would have more discretionary income to put toward savings. But given the high rate of personal debt we've got in this country, I don't think that's necessarily so.

At 8:47 PM, January 17, 2007, Anonymous Roger Abramson said...

OK. I was kind of hoping you'd moved near me.

Anyway, you could always get a job at McDonald's. Not much money in it, but you get the nontaxable thrill of getting berated by a newspaper writer.


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