Another glaring problem with the Indiana Unemployment system
Posted by Mike Sylvester - 4/20/09 @ 7:30 am - Filed Under Uncategorized
In my earlier posts about the Indiana unemployment system I had several “seasonal workers” post comments telling me that seasonal workers “deserve” unemployment benefits.
Let’s consider my business. My wife and I run a public accounting business here in Fort Wayne called Small Business Services CPA Group; SBS CPA Group for short.
We provide a lot of services including bookkeeping, tax planning and preparation for individuals and small businesses, QuickBooks support and training, Assurance services including compilations, reviews, and audits, and Business Valuations.
We employ three CPA’s year around and hired two interns from IPFW who worked for us part time this year during our busy season. This year our busy season ran for the first 15 weeks of the year. Now we will slow down and we will work a lot less hours. Our three CPA’s worked an averageof 61 hours per week the first fifteen weeks of the year.
In summary the three of us worked about 2750 hours the first 15 weeks of the year. The next 37 weeks of the year we will likely work about the same number of hours; however, they will be relatively evenly split over those 37 weeks. We currently plan on having one of us work an average of 32 hours a week, one 24 hours a week, and one 16 hours a week.
By any definition we run a seasonal business.
My wife and I are the owners and I plan on working 24 hours a week the rest of the year and she plans on working 16 hours a week the rest of the year. This will allow us to not have our children in daycare the rest of the year; I get the kids each Tuesday and Thursday and Karena gets them the rest of the week!
Per the current rules in place by the Indiana Department of Workforce Development I am almost certain the I could “lay my wife off” and she could actually draw unemployment for the rest of the year.
If we went this route Karena could likely draw about $400 a week in Unemployment benefits and I could cover all of her hours at our business. This means she would likely draw about $15,000 in Unemployment benefits if she qualified for the program for 37 weeks (Which I am pretty sure she could).
Based on the rules currently in place I believe that we could do this every year and that in most years she could draw unemployment benefits for at least six months!
This is 100% absurd and is one of the fundamental problems with the Indiana Unemployment system.
In my example Karena could draw $15,000 this year in Unemployment benefits and it would not cost us another dime in Unemployment taxes this year. Next year our rate would increase and eventually we would hit the maximum rate. Once we did we would pay in an extra almost $1000 a year in unemployment taxes.
We own and operate a public accounting firm. We work a lot of hours the first 15 weeks of the year and do not have to work as hard the rest of the year because our work slows down after the tax filing deadline of April 15th.
I think it would be wrong for us to lay Karena off and for her to collect Unemployment benefits.
What do you think?
P.S. We obviously are not going to draw unemployment benefits; however, I am curious how many of your think that we SHOULD be able to draw them!
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7 Responses to “Another glaring problem with the Indiana Unemployment system”
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Mike,
As you know I am opposed to companies that game the system in this way. It is 100% unfair for companies to use the unemployment system to subsidize their workers’ salaries at the expense of everyone else.
And that’s exactly what’s going on when businesses are shutting down for a month (or longer) every year. It’s scheduled and they know their employees will draw unemployment and it won’t cost them nearly as much in unemployment taxes.
They are paying in much less than their employees are taking out and it isn’t because of some hardship - it’s by design
That is unsustainable and is why we are where we are…
I don’t think it would work for the employees that you hire for just 15 weeks. The way I read the rules, you have to work 7.5 months out of a 12 month periond in order to collect unemployment. I guess technically you could do that with multiple employers, but that seems unlikely to me. I bet you are right about your wife for the first year, but after that I think it would become more difficult.
Justin,
I did not include my interens in the example for the reasons you mentioned…
Why would it be more difficult in future years, because of the 7.5 month rule maybe?
In that case I could bring her back for 7.5 months and lay her off for 4.5 months…
This has got to be changed.
Mike
I’ve got another twist on the unemployment issue. The Census Bureau is hiring and training now in preparation for the 2010 census. I know two people, who I have told about the census work, who said they have no intention of applying because they would be hired, and lose their unemployment. They see the unemployment check as *FREE* money, and there is no reason to go get a job when they can sit home and collect a check without having to work at all. Then they can run around town doing whatever they want, including driving to Hoosier Park to play slot machines. They even joked to me one day that I needed to work some overtime so they could get a bigger assistance check (though that isn’t really how the system works). It just irks me that these lazy a$$es are gaming the sytem, and getting away with it!
The unemployment office should match these jerks with Work One or some other jobs organization in order to get them off their butts and back to work!
I have one better for you. Talk about our messed up unemployment system. I know a person who is retired receives a check everymonth and works for a seasonal tax office from Jan 1 Until April 15. He collects the maximum unemployment after he is done with his seasonal work at the tax company. He was even intitled to an extension last year.
There are people out there like you who don’t milk the system Then there are people who do. No wonder our country is in the shape it is in.
Morality is stupidity; at least in terms of business. In your line of work surely you are aware that only a fine line separates tax avoidance (legal) and tax evasion (illegal). Would you advise a client to take advantage of federal tax law that helps him avoid a substantial amount of tax every year even if the client thought the law was morally dubious at best? If not, you have to ask yourself how well you are serving your clients’ best interests. If so, then why wouldn’t you take advantage of similar laws when they benefit you?
Secondly, you are making an assumption that the legislature was too dumb to foresee this problem and legislate around it. That is certainly a possibility, but it is not necessarily a concrete fact. I fully support your right to use the legislative process to get any unsustainable laws changed to better suit your politics. In this case, I more than likely agree with you. But why would you let your perception of Indianapolis politics color your otherwise sound personal financial outlook?
Cheers,
Steve
Without this system to get roads paved it would cost the taxpayer 75 dollars an hour per worker instead of 40, it would cost people 10k for landscaping instead of 5k. It’s fundamentally wrong but so is China owning 1/8 of the U.S.
Maybe I’m just a laymen but you can’t enjoy $600 flat screens and want them built in the U.S. by folks that make 30 dollars and hour.
With the major issues that surround the extensive problem with unemployment benefits, I think energy should be spent on the big cracks and not the small ones. You would be smart to get your wife on unemployment, you’re either along for the ride or pushing the cart.