Taxes to pay higher unemployment-benefit costs are rising for U.S. businesses. States are raising unemployment-insurance taxes as they struggle to repay federal loans that have covered the higher costs. Friday is the deadline for states to pay more than $1 billion in interest on the loans. (From SmartBrief for CFO’s – cfo@smartbrief.com )

Business as well as laid off employees in the US are now suffering from high unemployment. To reduce costs, some American states are looking to reduce unemployment benefits duration and scope. However, this is becoming a vicious cycle. It is not just about higher regulatory costs, “Obamacare” health program or uncertainty.

While one segment has fared relatively well during this last crisis and recession, a very substantial segment has more directly borne he brunt by being out of work and reduced public sector services. The gap between the haves and have nots in America is the greatest in almost half a century. There are millions of working Americans who are working, but below the poverty line. (READ - diplomaticallyincorrect.org/films/blog_post/poverty-in-us-the-working-poor-by-ambassador-mo/35135 ).


“Contagion” though is not just a term or risk for global finance or banks. It appears to be a consideration within states and communities and at the level of individual citizens. Employers and the employed may face at least in part the costs of prolonged high unemployment levels, in reduced consumer confidence and activity but also taxes.


This may also have a greater impact on the political debate as the US approaches next year’s elections. While Europe is seen by some as a welfare state trap, there are also limits upon American laissez-faire economics – nothing is disconnected. While some undoubtedly will propose that unemployment benefits be further curtailed along with “safety net” public service as a response, will they be prepared to also bear the costs of public unrest largely absent from the US in the last four decades? (See Greece,Spain etc). Are they prepared to build more prisons? (Even privatized prisons would have to be paid for by public funding with the only difference that such has also profit/bottom line consideration).

The US prides itself in being different. It is. In the end though whether it is Europe, Asia, Africa or America there is a consideration of community - unemployment is a cost to all of society, directly as well as implicitly.

The "Alternative Jobs Program" - diplomaticallyincorrect.org/films/movie/chain-gang-government-job-program/28079


By Ambassador Muhamed Sacirbey



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