Income Security When Temporarily
Away from Work
STEPHEN D. SUGARMAN
Suppose that you are ill or injured and temporarily unable to work. Or suppose that you are temporarily laid off or temporarily between jobs. Or suppose that you need to be away from work to care for a relative, or want to be away from work to go on a vacation. What do you do for income during periods like these? Assume that you get no income from either your employer or the government during such periods. Because you would have to engage in self-help, what might you do?
You could save money in advance to draw upon when your income temporarily stops. You could borrow money in times of temporary need and repay it later. You could seek gifts from friends, family, and/or charities. You could purchase private insurance that provides income when you are temporarily in need. In some families, if one earner is temporarily without income, perhaps another can start earning or can earn more. But this is less likely in today’s world in which both adults in a two-adult household are often already working in as highly paid jobs as they can reasonably find.1
In the real world, all of these self-help strategies are problematic. Too many people fail to save significant sums for “rainy days”;2 most can at best cover only a couple of missed paychecks.3 In some cases, the lack of savings is the result of short-sighted thinking that they won’t ever be away from work and hence without income. Others would like to save, but have reluctantly concluded that spending on essentials eats up all of their regular income. Still others make foolish choices to spend for immediate pleasure and have nothing set aside for times of need.4
Relatively few buy insurance against specified risks of short-term income needs.5 Besides, private insurance is not available to deal with several common