Collecting unemployment benefits is necessary for people who lost their jobs. It helps them get through the tough times and allow them to keep their homes and possessions. However, the same as everything else, unemployment benefits also has certain disadvantages and worst, could make a welfare cycle that has negative effects on both people and business and the nation as a whole.

One of the disadvantages of unemployment insurance is it is not free money since it is money that you have already paid while still working and given back to you when you lost your job.  In order to continue receiving unemployment benefits, you must look for a job everyday and make a report of your searches. The money you get from the benefit is smaller than the salary you received before. A person receiving unemployment insurance experience loss of a paycheck, personal identity and sometimes could lead to crime, mental illness and even heart problems.

For a business in times of recession, the qualified people can only find a job offering less than their current unemployment benefit. This puts business into disadvantage because quality workers will naturally ask for higher salaries. These people often choose unemployment insurance and this could affect business because of the lack of workers. For society as a whole, the more people receiving unemployment insurance, the lesser the money there is in the account of the unemployment insurance. People with jobs and paying taxes will carry the burden of the increase in taxation to cover the cost of people filing for unemployment benefits.

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