From
Capitol Report New Mexico -
We’ve reported about how
New Mexico has racked up more than $200 million in overpayments in unemployment checks in the last two years. On top of that, there’s been plenty of discussion about how
the state’s unemployment fund may be in jeopardy if the economy stays flat. Maybe it’s time to rethink how unemployment is structured — not just in New Mexico but across the country. This week, a study from the
Tax Foundation, a think-tank based in Washington DC, released a detailed look at unemployment compensation and among some of the highlights of the report was a call for changing the system so that taxes are lowered (for employees as well as employers) and workers can actually access their unemployment contributions — even if they never lose their jobs. How would that work? By instituting what’s called “Individual Unemployment Benefit Accounts.” In essence, these accounts have employers and employees combine to build up a fund for each individual worker. One chronic problem with the current system states use (through federal government oversight) is that since every state posts how long it will pay unemployment benefits (in New Mexico, it can range from 26 weeks to 86 weeks — and in some states the duration is as long as 99 weeks), there’s an incentive for an unemployed worker to sometimes wait until the “perfect” job comes along. That drives up costs. But under an individual account system, the worker looking for a job has an individual account he or she can draw from for up to five months. If the unemployed person finds work after, say, a month, the balance of the account remains and is carried over should the worker lose his or her next job. On top of that, once workers retire, they can access their individual unemployment account and place it into their own retirement portfolios.
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An idea to revamp the way unemployment works — and how you could enhance your retirement at the same time
From Capitol Report New Mexico - We’ve reported about how New Mexico has racked up more than $200 million in overpayments in unemployment checks in the last two years. On top of that, there’s been plenty of discussion about how the state’s unemployment fund may be in jeopardy if the economy stays flat. Maybe it’s time to rethink how unemployment is structured — not just in New Mexico but across the country. This week, a study from the Tax Foundation, a think-tank based in Washington DC, released a detailed look at unemployment compensation and among some of the highlights of the report was a call for changing the system so that taxes are lowered (for employees as well as employers) and workers can actually access their unemployment contributions — even if they never lose their jobs. How would that work? By instituting what’s called “Individual Unemployment Benefit Accounts.” In essence, these accounts have employers and employees combine to build up a fund for each individual worker. One chronic problem with the current system states use (through federal government oversight) is that since every state posts how long it will pay unemployment benefits (in New Mexico, it can range from 26 weeks to 86 weeks — and in some states the duration is as long as 99 weeks), there’s an incentive for an unemployed worker to sometimes wait until the “perfect” job comes along. That drives up costs. But under an individual account system, the worker looking for a job has an individual account he or she can draw from for up to five months. If the unemployed person finds work after, say, a month, the balance of the account remains and is carried over should the worker lose his or her next job. On top of that, once workers retire, they can access their individual unemployment account and place it into their own retirement portfolios. Read more
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