Secretary-Treasurer's Department

Across the country, labor activists and their allies spent much of February and March demanding that members of Congress stand up for jobless Americans. This mobilization came about as millions of Americans faced the threat of losing access to federal unemployment insurance benefits if Congress failed to act.

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(05/22/12) APWU locals and state organizations are reminded that resolutions for consideration at the 21st Biennial National Convention must be submitted online no later than June 1 to be printed in the official convention resolutions book. Locals and state organizations also are encouraged to register their delegates to the 2012 convention online. [read more]

The argument is simple. Instead of legislating from the security of their elected term and/or accumulated personal wealth, legislators should relate to the thousands of their constituents who must sell their labor to support their families.

The activists asked the elected officials to place themselves in the situation of workers, who through no fault of their own, were without a job.

In more than a dozen states, they came together to organize Walk in My Shoes: A Day of Action in Support of Jobless Americans. In some cases, they delivered old shoes to congressional district offices and asked legislators to literally walk in those shoes.

Some of the lawmakers argued that unemployment benefits were a giveaway to unemployed workers. Some even suggested that benefits discourage the unemployed from finding work. These legislators do not know their history or American economics.

Supports the Economy

Unemployment insurance is not a giveaway; it is an economic escape valve.

Unemployment insurance is not a giveaway; it is an economic escape valve.

The unemployment compensation system was created for two reasons: to lessen the burden of people unemployed through no fault of their own; and to stabilize the economy during times of recession. From their inception, these benefits were considered a way to shore up the American economic system during the boom-and-bust cycles of the economy.

Workers who receive unemployment benefits pay rent, mortgages, utility bills and transit costs. They buy groceries, shop for clothes, pay taxes, buy gas, and pay for other services. The money they receive is injected directly into the economy, which benefits all of us. Imagine what the condition of the economy would be without any spending by the millions of workers who currently receive these benefits.

The Origins

In the darkest days of the Great Depression, President Franklin D. Roosevelt convinced Congress and the American people, through his “Fireside Chats” of the necessity of a federal-state unemployment compensation system. The framework for the Unemployment Insurance Act is contained in the Social Security Act of 1935, Title III. It wasn’t a coincidence that Title III was a part of the Social Security Act of 1935. This law enabled older workers to retire, thereby giving younger workers an opportunity to find work.

The law provided a $4 million grant to assist the states in establishing state unemployment insurance commissions as well as a continuing annual grant of $49 million. The purpose of Title III, “Grants to States for Unemployment Insurance,” was to establish an Unemployment Insurance Trust Fund and a governing board to certify that each state complied with certain standards. The secretary of the treasury administered the trust fund and dispersed funds to the states deemed to be in compliance with established standards for administering and paying funds to unemployed workers.

Funding comes from general government revenues and from employer taxes. Title III provided for payment to states for administrative costs and the payment of compensation for unemployed workers. Eventually, the U.S. Department of Labor was designated as the administrator of the unemployment insurance program.

Presently, the Federal Unemployment Tax (FUTA) is collected from employers. This tax has been sufficient in the past to pay benefits to millions of unemployed workers. The national union and the larger local unions pay into this fund as well.

The U.S. economy has experienced the greatest recession since the 1930s. With millions of workers without jobs, unemployment insurance is the only financial assistance the unemployed can depend upon until they can find another job or until they are rehired at their old jobs.

What About Us?

Why is the issue of unemployment benefits important to APWU members? The reason is simple: An end to the unemployment insurance benefits would threaten our economic recovery, and the future of the Postal Service is dependent upon America’s economic recovery. Employed consumers buy products, which companies advertise through the mail. An economic recovery improves the likelihood of a postal recovery.

Across the board, economists agree that unemployment benefits are one of the most important counter-cyclical economic policies we have. Over the past few years, according to a detailed study by Wayne Vroman for the Department of Labor, benefits for the long-term unemployed led to the creation of about 700,000 new jobs each quarter.

Some legislators in Congress have proposed to fundamentally alter the unemployment insurance system as we know it by stigmatizing workers who receive this benefit. They want to place restrictions on which unemployed workers can receive benefits.

The richest 1% — who wrecked the economy — should not be allowed to deprive the 99% of the benefits they need to live.

Unemployment benefits, just like Social Security, were a good idea when they were created, and they are a good idea now. Postal workers are urged to stand with their laid off brothers and sisters to protect unemployment insurance benefits.

The next time you hear members of Congress threatening unemployment insurance, remember that the United States established unemployment benefits as a means to preserve the American economy.

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