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Unemployment bill questions? Get in line

Is Wisconsin’s unemployment insurance fund really an insurance fund or a welfare program?

By following this LINK, you can learn that Wisconsin adopted its unemployment-compensation law in 1932, making it the first state to do so and putting it three years ahead of the federal government’s adoption of the Social Security Act. The date makes the impetus for the state law obvious: one of the worst, if not the worst, industrial depression to ever befall the world.

This, more than anything else, is the clue to the state’s unemployment insurance fund’s nature. It was born out of the idea that society has a duty to help those who, through no fault of their own, have fallen on hard times and was adopted during one of the greatest expansions of the welfare state to occur in this country.

So by calling it an insurance fund, it seems to me officials have stumbled on a misnomer. How is it not like insurance?

Well, mainly in the fact that the benefits it pays out don’t go to the same people who paid into the system. The money in the unemployment-insurance fund comes from employers but is paid to employees who have been laid off.

Compare that with what happens with most insurance policies. When someone buys homeowners insurance, for instance, he isn’t paying to insure the property of homeowners everywhere; he’s providing protection for his own house.

But ah, you might say, what about car insurance? Doesn’t that often provide protection to someone other than the drive who caused an accident, i.e., the person who was hurt?

True, but then you are assigning blame. The idea behind unemployment insurance is that nobody really is at fault. When workers are laid off, it’s because forces beyond anyone’s control have pushed the economy into a rough spot and it is now society’s duty to help those who have been harmed.

That sounds like the workings of a welfare program to me.

At a committee meeting last week about a bill that would make changes to how jobless benefits are paid in Wisconsin, state Rep. Chris Taylor, D-Madison, estimated there are five people in the state who understand all of the complexities of the unemployment-insurance system.

And she is quite possibly right.

But maybe a good first step toward shedding some light on the inner workings of that unwieldy contraption would be to accurately name what we are really dealing with.

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