How Did The Great Depression Affect The Economy
Introduction
The Great Depression shook the nation drastically in the 1930s. Many Americans were excited and wanted to be a part of the “economic boom.” During this period, the nation was on the road to success and prosperity due to new inventions and developments in industrialism. Many people saw a chance to join the wealth. They took all of their savings and invested into the stock market; however, they did not benefit from such a financial decision. The stock market crashed and left everyone devastated. The American people began to lose hope, considering all of their financial means were lost. Can you imagine being a poor farmer and losing everything you have worked so hard for? President Franklin D. Roosevelt realized the detrimental state …show more content…
of America and decided to make a difference. He stepped in and changed America’s outlook the moment he signed the Social Security Act in 1935. This Act contained several programs that were designed to restore hope in our great country. The original act provided unemployment insurance and old age insurance. Unemployment insurance shaped the nation then and continues to shape our nation today.
a. Social Need
Unemployment insurance was established as a result of the Great Depression. During this period, many people lost their jobs and income. People were not able to provide for their families, but this form of insurance stepped in to put them at ease. The purpose of unemployment insurance is to give Americans a form of proceeds. This type of income provided a portion of their income that was lost, due to a time of hardship in their lives. Today, with the money provided, people are able to purchase necessities for themselves and their families, while looking for work. The people targeted for these benefits are regularly employed members of the workforce, who recently became unemployed due to a specific circumstance. This was a social need in the early 1900s, because people were actually struggling. They lacked sufficient food and the level of poverty had been reached, because 25 percent of the working population no longer had employment due to the Great Depression. Many farmers did not own their own land; they were sharecroppers. They rented land to grow their crops and provide for their families, but without the money to pay their landowner, they were left without a place to live or food. Currently, there is definitely a social need for unemployment insurance. According to the United States Department of Labor, the rate of unemployment in Alabama is currently 6.2. These are people that are most likely benefiting from Unemployment Insurance due to their lack of employment.
b. History
Wisconsin was the first state to implement a form of unemployment insurance.
It was used to provide social relief for workers during the Great Depression. Other states decided to follow Wisconsin by helping their own during this economic downturn; however, the unemployment insurance only lasted about sixteen weeks at the state level. This is so, because it lacked organization and the proper funding. There were no limitations, restrictions, or eligibility requirements to maintain order of the funding. Any and everyone was able to receive the benefits, consequently, there was not enough funds left to accommodate everyone, especially those that actually needed the money. The state programs preceded the signing of the Social Security Act and today’s unemployment insurance. The changes did not immediately take effect. It took several months for the various programs to be implemented. First, the Social Security Act organized a national tax for all workers to properly fund the insurance. The federal aspects of unemployment insurance was determined to do things the right way in regards to funding. They learned from the mistakes of the states that attempted a form of unemployment insurance. In July 1937, about 48 states were affiliated with unemployment insurance. The following were later added to the policy: District of Columbia, Puerto Rico, and the Virgin Islands. Unemployment insurance has become a popular phenomenon worldwide. This version was and is still successful due to …show more content…
organization and eligibility requirements as it relates to funding.
c. Scope
Like most social welfare programs, unemployment insurance has eligibilities. To receive unemployment benefits, a person must be actively seeking work and have earned a certain amount of money during the time they were working. An important eligibility requirement is that the candidate must have lost their job without it being his or her fault. This is an important clause, because a person that purposely quit his/her job should not receive the same benefits as someone who was laid off due to budget cuts. If an employee is fired due to misconduct such as: frequent tardiness, sleeping on the job, sexual harassment, or insubordination, he/she does not qualify to receive benefits. The eligibility requirements are in place to identify people that genuinely need help and are looking for employment. The government is not interested in passing out handouts to people that purposely choose to not work. The requirements are different based on the state. For example, the requirements in Alabama include the following: must be an Alabama resident, have worked in the past 12 to 18 months, and be available to work each week that benefits are collected. In most states, people can only receive these benefits for about 26 weeks; this time is used to give people a sufficient amount of time to get back on their feet and back into the world of work. The amount of money each person receives varies. The average unemployment insurance check is a little more than $300 per week; however, it is different for each person due to their previous earnings and amount of time working. This program is funded by tax dollars. A trust fund, called the Unemployment Trust Fund, is used to manage the tax dollars and separate the funds by state. This is similar to the pay-as-you-go process for social security. For example, the money taken out of an employed person’s check is used to pay for someone’s unemployment benefits. The process could also be thought of as the taxes taken out of an employee’s check is used to pay for a time he/she could possibly become unemployed.
d. Causes
The goal of unemployment insurance is to provide temporary monetary funds to workers who have recently become unemployed.
This is one of the most important programs that will benefit everyone in some way. The second primary goal is to turn around the negative impacts on the national economy. If millions of people are unemployed and cannot find work, then this will greatly affect the overall economy. For example, businesses would be forced to shut down due to lack of consumers. The federal law is used as a form of enforcement. It requires all state governments to enforce a tax on all employers of at least 0.8 percent of their employees. This provides order and keeps each state properly funded so that the overall goals can be
met.
e. Consequences
The law is very serious about unemployment fraud. Unemployment fraud is defined as knowingly collecting unemployment benefits based on submitting false information. The consequences of misusing state and federal funds include the following: criminal prosecution, fines, forfeiting future income tax refund, and ineligibility to collect benefits in the future. If an employee returns to their job, but continues to collect unemployment benefits then he/she has committed unemployment fraud. It is required for all employees to report all earnings to the state his/she resides in. When unemployment fraud is detected, the funds must be paid back to the state. This can result in check garnishments and being in debt with the state.
Summary
In conclusion, unemployment insurance is a positive force that provides relief to workers. Losing your job and only form of income is one of the most stressful situations. I have learned that income is one of the major factors that can cause a family to breakdown and experience a form of entropy in my Social Work 235 course. This could result in a strain in marriage and other interpersonal relationships. Unemployment insurance was designed to make a time like this less difficult and provide security. The purpose of this program is to give employees a sufficient amount of time to get their finances back on track by finding another form of employment. The most interesting aspect of this policy is the history. It is amazing to know that it took various states like Wisconsin to try to help their people, before the federal system stepped in and made this a policy for everyone. I feel as if the federal system should have been more concerned and the first to react to such a negative economic shift. It is awful to know that the states had to fail at providing structure for their own programs before the federal system adjusted their original idea and made it their own. Before completing this assignment, I was not aware that unemployment insurance was a federal program, but run at the state level. I assumed that it was a federal program, similar to the rest of welfare programs offered and everyone’s benefits were similar despite your location. This program is not one that you have to pay into. For example, instead of employees paying directly into this program, a tax is taken out on their employers, or company. I have been employed for over three years now and I am now curious about my potential benefit calculations thus far, considering it is based on the amount of time spent working. Learning about various programs and policies offered in the United States will greatly impact my social work career. Knowing the financial aspects of unemployment insurance and other programs genuinely makes me feel like a real citizen. Before, I went to work and collected my check without knowing where the tax deductions were going, but now I have knowledge about the process of taxation and how it influences the lives of everyone.
The Great Depression shook the nation drastically in the 1930s. Many Americans were excited and wanted to be a part of the “economic boom.” During this period, the nation was on the road to success and prosperity due to new inventions and developments in industrialism. Many people saw a chance to join the wealth. They took all of their savings and invested into the stock market; however, they did not benefit from such a financial decision. The stock market crashed and left everyone devastated. The American people began to lose hope, considering all of their financial means were lost. Can you imagine being a poor farmer and losing everything you have worked so hard for? President Franklin D. Roosevelt realized the detrimental state …show more content…
of America and decided to make a difference. He stepped in and changed America’s outlook the moment he signed the Social Security Act in 1935. This Act contained several programs that were designed to restore hope in our great country. The original act provided unemployment insurance and old age insurance. Unemployment insurance shaped the nation then and continues to shape our nation today.
a. Social Need
Unemployment insurance was established as a result of the Great Depression. During this period, many people lost their jobs and income. People were not able to provide for their families, but this form of insurance stepped in to put them at ease. The purpose of unemployment insurance is to give Americans a form of proceeds. This type of income provided a portion of their income that was lost, due to a time of hardship in their lives. Today, with the money provided, people are able to purchase necessities for themselves and their families, while looking for work. The people targeted for these benefits are regularly employed members of the workforce, who recently became unemployed due to a specific circumstance. This was a social need in the early 1900s, because people were actually struggling. They lacked sufficient food and the level of poverty had been reached, because 25 percent of the working population no longer had employment due to the Great Depression. Many farmers did not own their own land; they were sharecroppers. They rented land to grow their crops and provide for their families, but without the money to pay their landowner, they were left without a place to live or food. Currently, there is definitely a social need for unemployment insurance. According to the United States Department of Labor, the rate of unemployment in Alabama is currently 6.2. These are people that are most likely benefiting from Unemployment Insurance due to their lack of employment.
b. History
Wisconsin was the first state to implement a form of unemployment insurance.
It was used to provide social relief for workers during the Great Depression. Other states decided to follow Wisconsin by helping their own during this economic downturn; however, the unemployment insurance only lasted about sixteen weeks at the state level. This is so, because it lacked organization and the proper funding. There were no limitations, restrictions, or eligibility requirements to maintain order of the funding. Any and everyone was able to receive the benefits, consequently, there was not enough funds left to accommodate everyone, especially those that actually needed the money. The state programs preceded the signing of the Social Security Act and today’s unemployment insurance. The changes did not immediately take effect. It took several months for the various programs to be implemented. First, the Social Security Act organized a national tax for all workers to properly fund the insurance. The federal aspects of unemployment insurance was determined to do things the right way in regards to funding. They learned from the mistakes of the states that attempted a form of unemployment insurance. In July 1937, about 48 states were affiliated with unemployment insurance. The following were later added to the policy: District of Columbia, Puerto Rico, and the Virgin Islands. Unemployment insurance has become a popular phenomenon worldwide. This version was and is still successful due to …show more content…
organization and eligibility requirements as it relates to funding.
c. Scope
Like most social welfare programs, unemployment insurance has eligibilities. To receive unemployment benefits, a person must be actively seeking work and have earned a certain amount of money during the time they were working. An important eligibility requirement is that the candidate must have lost their job without it being his or her fault. This is an important clause, because a person that purposely quit his/her job should not receive the same benefits as someone who was laid off due to budget cuts. If an employee is fired due to misconduct such as: frequent tardiness, sleeping on the job, sexual harassment, or insubordination, he/she does not qualify to receive benefits. The eligibility requirements are in place to identify people that genuinely need help and are looking for employment. The government is not interested in passing out handouts to people that purposely choose to not work. The requirements are different based on the state. For example, the requirements in Alabama include the following: must be an Alabama resident, have worked in the past 12 to 18 months, and be available to work each week that benefits are collected. In most states, people can only receive these benefits for about 26 weeks; this time is used to give people a sufficient amount of time to get back on their feet and back into the world of work. The amount of money each person receives varies. The average unemployment insurance check is a little more than $300 per week; however, it is different for each person due to their previous earnings and amount of time working. This program is funded by tax dollars. A trust fund, called the Unemployment Trust Fund, is used to manage the tax dollars and separate the funds by state. This is similar to the pay-as-you-go process for social security. For example, the money taken out of an employed person’s check is used to pay for someone’s unemployment benefits. The process could also be thought of as the taxes taken out of an employee’s check is used to pay for a time he/she could possibly become unemployed.
d. Causes
The goal of unemployment insurance is to provide temporary monetary funds to workers who have recently become unemployed.
This is one of the most important programs that will benefit everyone in some way. The second primary goal is to turn around the negative impacts on the national economy. If millions of people are unemployed and cannot find work, then this will greatly affect the overall economy. For example, businesses would be forced to shut down due to lack of consumers. The federal law is used as a form of enforcement. It requires all state governments to enforce a tax on all employers of at least 0.8 percent of their employees. This provides order and keeps each state properly funded so that the overall goals can be
met.
e. Consequences
The law is very serious about unemployment fraud. Unemployment fraud is defined as knowingly collecting unemployment benefits based on submitting false information. The consequences of misusing state and federal funds include the following: criminal prosecution, fines, forfeiting future income tax refund, and ineligibility to collect benefits in the future. If an employee returns to their job, but continues to collect unemployment benefits then he/she has committed unemployment fraud. It is required for all employees to report all earnings to the state his/she resides in. When unemployment fraud is detected, the funds must be paid back to the state. This can result in check garnishments and being in debt with the state.
Summary
In conclusion, unemployment insurance is a positive force that provides relief to workers. Losing your job and only form of income is one of the most stressful situations. I have learned that income is one of the major factors that can cause a family to breakdown and experience a form of entropy in my Social Work 235 course. This could result in a strain in marriage and other interpersonal relationships. Unemployment insurance was designed to make a time like this less difficult and provide security. The purpose of this program is to give employees a sufficient amount of time to get their finances back on track by finding another form of employment. The most interesting aspect of this policy is the history. It is amazing to know that it took various states like Wisconsin to try to help their people, before the federal system stepped in and made this a policy for everyone. I feel as if the federal system should have been more concerned and the first to react to such a negative economic shift. It is awful to know that the states had to fail at providing structure for their own programs before the federal system adjusted their original idea and made it their own. Before completing this assignment, I was not aware that unemployment insurance was a federal program, but run at the state level. I assumed that it was a federal program, similar to the rest of welfare programs offered and everyone’s benefits were similar despite your location. This program is not one that you have to pay into. For example, instead of employees paying directly into this program, a tax is taken out on their employers, or company. I have been employed for over three years now and I am now curious about my potential benefit calculations thus far, considering it is based on the amount of time spent working. Learning about various programs and policies offered in the United States will greatly impact my social work career. Knowing the financial aspects of unemployment insurance and other programs genuinely makes me feel like a real citizen. Before, I went to work and collected my check without knowing where the tax deductions were going, but now I have knowledge about the process of taxation and how it influences the lives of everyone.