Rep. Holt Decries Opponent's Call for Lowering Unemployment Benefits to Below Minimum Wage

Press Release

September 14, 2010 - 12:00pm

Opponent Believes Unemployed Lack Motivation to Find Work

TRENTON: U.S. Representative Rush Holt today decried Wall Street Hedge Fund Manager and congressional opponent Scott Sipprelle for proposing to lower unemployment benefits to below minimum wage as a means to force people to look for work. Economists recognize that unemployment benefits help not only the individuals that receive benefits but also help society at large by preventing those laid off from becoming burdens on social services. Unemployment benefits also create, dollar for dollar, the greatest positive benefit on the economy in the short term.

“Essentially, Mr. Sipprelle thinks people on unemployment are making too much money,” said Representative Holt. “My opponent thinks people who lose their job won’t be motivated to look for work unless we cut their unemployment benefits to an unlivable amount. The contempt that Mr. Sipprelle has for the people he claims to want to represent is staggering.”

On July 19th of this year, Mr. Sipprelle wrote in his campaign e-newsletter that we should “set the level of unemployment benefits at a modest discount to the minimum wage so that no one receives more for not working than they do for working. This will accelerate the adjustment of laid-off workers to the reality of today's labor markets without pulling a prop out from under the truly needy who cannot find work.”

Joining Representative Holt were Dr. Keith Dewey of Lawerenceville and Mr. Gavin Brown of Ewing, residents of the 12th district who are currently seeking full time employment. They each shared their own individual story with regard to unemployment and benefits, discussing how they have been actively seeking work and do not need a reduction in benefits to motivate them.

Many of the nation’s leading economists have stressed the importance of unemployment benefits and how they actually stimulate economic growth. Mark Zandi, economic advisor to John McCain and Chief Economist for Moody's, stated earlier this year that, “No form of the fiscal stimulus has proved more effective during the past two years than emergency UI benefits, providing a bang for the buck of 1.61—that is, for every $1 in UI benefits, GDP one year later is increased by an estimated $1.61…”[i]

Zandi has also pointed out that "…UI benefits are among the most potent forms of economic stimulus available…Most unemployed workers spend their benefits immediately; and without such extra help, laid-off workers and their families have little choice but to slash their spending. The loss of benefits is debilitating not only for unemployed workers, but also for friends, family, and neighbors who may have been providing financial help themselves." (See Blinder and Zandi paper “How the Great Recession was Brought to an End at http://www.economy.com/mark-zandi/documents/End-of-Great-Recession.pdf)

Nobel Prize-winning economist Paul Krugman has stated that “Helping the unemployed, by putting money in the pockets of people who badly need it, helps support consumer spending. That's why the Congressional Budget Office rates aid to the unemployed as a highly cost-effective form of economic stimulus.”[ii]

Heather Boushey, Senior Economist for the Center for American Progress, has stated that “…These benefits help unemployed workers and their families cope with abruptly lost incomes until they can find a new job while also aiding the economic recovery by helping families maintain spending in their communities, which in turn preserves jobs for employed Americans…”[iii]

Representative Holt also discussed his efforts to assist those on unemployment and create jobs. These include introducing the Online Job Training Act (H.R. 146) to bolster the availability of home-based training programs, supporting the enactment of up to 99 weeks of unemployment benefits for 3.5 million Americans – 230,000 New Jersey residents – who are looking for work and who have exhausted their 26 weeks of regular unemployment benefits, and supporting $40 million to help workers enter careers in emerging green industries.

For more information regarding Representative Rush Holt and his fight for the people of the 12th district, please call 609-799-0800 or log on to www.rushholt.com.