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In those situations, your only option is to seek work where you can find it, and move. I've moved for a job before. It sucks, and it's hard. But it's an option if all else fails.
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With what money? A huge swath of unemployed people nowadays are young people who don’t have savings. They can’t afford to live on their own, let alone move to another state or whatever.
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As for cutting yourself off from entertainment, my point there is that if you have money for entertainment, you have money to better your position if you save it. And that's what the money you're being given is for. To better your odds of getting a job. The more prep work you've done, the better your odds of getting a job more quickly, and being able to enjoy yourself again.
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Do you honestly begrudge people who receive less than minimum wage the occasional vice? Sure, logically they should be scrimping and scraping, counting every penny and saving as much as possible. But humans aren’t always logical, and life isn’t so simple. We all need some kind of respite to keep us sane, and you can’t expect people to just become emotionless robots if their income is below a certain threshold.
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And just as there are people genuinely looking for work, there are people genuinely happy to not have to work, and live off what the government gives them plus whatever they can get from people they know.
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Yes, and you’re focusing on the latter and demonizing both groups based on the latter’s reputation.