Tags: Obama | Wage | Insurance | Workers

Obama's Wage Insurance Is Taxing Proposition for Businesses and Workers

Obama's Wage Insurance Is Taxing Proposition for Businesses and Workers

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Tuesday, 08 March 2016 08:35 AM Current | Bio | Archive


As the owner of a lumberyard in Colorado, Andy Curry is finding workman's compensation increasingly overwhelming. "There's information over load, laws changing and when a new president is elected, the transition creates all kinds of new laws," Curry said.

President Barack Obama has introduced new wage insurance specifications into his budget, which will could ease Curry's frustration when hiring new workers. If passed, wage insurance is a federal program that provides financial incentives to workers who lose their job and are willing to accept a new, lower paying job.

"We shouldn't just be talking about unemployment; we should be talking about re-employment," Obama said in his weekly radio address.

What could impact employers and business owners is how this new insurance will be funded. Some $4 billion is being allocated to the program until 2021 compared to $11 billion that's being allocated to improve the way unemployment insurance works at the state level.

"This new re-employment wage insurance will probably be funded with an increase in unemployment-insurance tax, which is paid by firms," said Marco Di Maggio, a professor of finance at Columbia Business School in New York.

But other than paying slightly higher taxes, employers, human-resource professionals and business owners might find a silver lining.

"Employers could bargain to pay less money to a job applicant whom they know is a candidate for the federal supplement," said Di Maggio, author of the Unemployment Insurance as an Automatic Stabilizer study that was released in 2015 by Columbia Business School. "It's a good thing for the firm but not for the unemployed person."

In other words, employers could offer a slightly lower wage for a particular position if they know that a portion of a new hire's salary will be paid by the government.

"All workers will find this helpful but older workers in particular might benefit from accepting a pay cut in exchange for learning new skills because people over 50 years old often have trouble finding a new job after being laid off especially if they have been at the same job for a while," Di Maggio told Newsmax Finance.

However, there is a time and financial limit to wage insurance. It only pays half of the difference between the previous wage and the new wage up to a maximum of $10,000 over a period of 24 months and it only covers salaries up to $50,000.

The clock starts ticking not from the start date of the new job but from the date of unemployment, which creates a strong incentive for people who have lost their jobs to find a job as soon as possible.

Juliette Fairley is an author, lecturer and TV host based in New York. To read more of her work, Click Here Now.

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As the owner of a lumberyard in Colorado, Andy Curry is finding workman's compensation increasingly overwhelming.
Obama, Wage, Insurance, Workers
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2016-35-08
Tuesday, 08 March 2016 08:35 AM
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