[IMGCAP(1)]As our economy continues to struggle, one issue that seems to have escaped a solution is the unemployment of so many of our fellow citizens. 

The latest data indicates over 6 million people are receiving unemployment benefits out of over 13 million unemployed.  For the unemployed 13 million, 7.6 million have been unemployed for 15 or more weeks. Congress has repeatedly extended the term of unemployment benefits from 26 weeks to 99 weeks for those unemployed, who filed claims between May 2006 and September 2008.

How about a simple solution: an out-of-the-box and practical solution that helps not only the unemployed but specific organizations and saves the economy many millions of dollars?

Here’s the concept:

Let’s have the state (for example New York State) pay 70 percent (jointly state and federal funded) of the unemployment benefit to a not-for-profit entity that hires a currently unemployed person who is receiving benefits.  We have a chance with this concept to help the unemployed obtain a good job, assisting a NFP that has seen philanthropy decline, and last but not least reduce state and federal unemployment outlays while increasing both state and federal withholding monies.

Here’s the scorecard:

1. That NFP would supplement the new hire’s salary by paying the new hire the difference between the 70 percent of the unemployment benefit being received by the NFP for hiring the individual and the going compensation for an individual in a similar position in the NFP.

2. The NFP wins because:
   a. They will be paying less in wages for a needed employee and
   b. Will partially offset the loss of philanthropy occasioned by the declining economy.

3. The state wins because:

   a. Their unemployment payout will be reduced by 30 percent and
   b. The additional withholding taxes paid by the NFP will go to the state treasury.

4. The federal government wins by receiving additional payroll withholding monies.

5. Our fellow citizen wins because she or he will be gainfully employed and relieved of the stress occasioned by unemployment.

Here’s an example: in New York State $405 is the weekly maximum amount of unemployment benefits available to an individual.  Let’s say for purposes of our concept that a person is receiving $300 a week in unemployment benefits; 70 percent, or $210 a week, would be paid to a NFP to hire that individual. If the NFP paid the new hire a total of $800 a week, their net out-of-pocket cost would be $590 (i.e. $800-$210), not including the employer’s share of FICA and Medicare.

We recognize that implementation is always the harder partner between concept and implementation, but is it not worth the effort?

Charles J. Pendola, CPA, ESQ, FHFMA, FACHE, CMC, CFE, CFF, is an assistant professor in the Department of Business Administration and Accounting at St. Joseph's College in Patchogue, N.Y.

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