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Unemployment Compensation: Advantages and Disadvantages

Updated on November 28, 2012

The advantages of unemployment compensation for the employee is the obvious safety net that it can provide. The disadvantages for employees is that the income is taxed like any other income and the rules of receiving unemployment can be a hassle. A certain amount of wages must be earned within an 18 month period, as well as the way in which you leave a company. Since quitting will disallow the employee from receiving unemployment benefits, companies will take tactics to make a person quit.

Benefits of unemployment compensation are few for the employers, maybe even non-existent. The disadvantages though are many, including the fact that it is just another tax that a company will have to pay. It has changed the way companies do business because they know every time they fire someone, their rate may go up. They can make their rating go down with less claims, but at what cost. A company that does not have many claims, could mean that they push employees out, instead of being a good place to work. I think that the merit or experience rating may be ethical, but the side effects of the law seem to be quite negative. The bigger side effect seems to be that people who receive unemployment may drag their feet to find other employment. In the economy now, we have one of the highest and longest standing unemployment rates, at the same time there are so many lower paying jobs that stay unfilled. If a person is receiving more in unemployment than they can working, it seems impossible to think that those jobs will be filled until unemployment runs out.


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