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Unemployed Are Not the Reason Unemployment Funds Are Broke

11:03 am in Economy, Financial Crisis, Government, Jobs, Media, Unemployment by dakine01

OK. I guess technically the title is not true. If folks hadn’t been laid off and collected Unemployment Compensation, the funds would just be sitting in the various state coffers, unused. But the unemployed are not the reason the economy tanked; the unemployed are not the ones sending jobs overseas; the unemployed are not the ultimate root cause of the problem.

Michigan started things back in March but has since been followed by Missouri and now Florida. (Other states may have done so as well, these three are the ones I know for sure have done this.) Florida’s new law actually goes beyond Michigan and Missouri, as bad as their laws are. Where MI and MO cut the maximum period for collecting state level unemployment compensation from 26 weeks to 20 weeks, Florida ties the benefits to the overall state unemployment rate. Via the Tampa Tribune article linked above:

TALLAHASSEE — Out-of-work Floridians would receive fewer state benefits while businesses pay less tax under a controversial proposal approved Friday by a divided Legislature.

The deal, which Gov. Rick Scott is expected to sign into law, immediately cuts unemployment benefits by 11.5 percent.

Jobless Floridians would continue to receive a maximum payment of $275 per week, among the lowest of any state in the country. But they would be paid for no more than 23 weeks, instead of 26.

…snip…

The bill also creates a sliding scale that cuts and adds weeks of benefits based on the unemployment rate. Unemployment compensation would drop to as low as 12 weeks if the average unemployment rate drops to 5 percent or lower. A week would be added for every 0.5 percent the jobless rate climbs.

I can guarantee you that the newly unemployed person is not going to give two shits to know that the overall state unemployment rate is X percent so the number of weeks of benefits are limited accordingly. All that newly unemployed person is going to see is s/he is out of work and the state supplied safety net is full of gaping holes. Annie Lowrey at Slate on Friday offered this analysis:

In March, Michigan became the first state to take an axe to its standard unemployment benefits, even though the state boasts one of the worst labor markets in the nation. The Republican government cut the number of state-sponsored, initial weeks from 26 to 20, effective in January. It said the state simply could not afford them: It owes the federal government $3.9 billion, borrowed to pay past unemployment benefits, and just cannot go further into the red. (Michigan and 48 other states have mandatory balanced-budget rules.)

For all the other states cutting back, the issue is inaction, rather than fiscal pressure. Some states needed to make a certain simple legislative fix to ensure that the federal government kept on kicking in its share of weeks of benefits—weeks of benefits already budgeted and paid for in Washington. A number of states failed to do so. So, on April 16, North Carolina, Tennessee, and Wisconsin all lost 20 weeks of federal benefits, effective immediately. Missouri did on April 2 as well.
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Washington Post Notices It Is a McJobs Recovery

9:29 am in Economy, Government, Jobs, Unemployment by dakine01

In today’s (Sunday, April 24) Washington Post, Annie Lowrey mentions that maybe the economy might just not be in such great shape if the best jobs news is McDonald’s trumpeting their McJobs Fair this past Tuesday where they were looking to hire 50k workers in one day. For what it’s worth, I’m fairly certain that McDonalds goes through a hiring exercise of this nature most every spring; they just consolidated it all to one day this year and apparently received the hoped for public relations splash.

I actually took a look at the McJobs Fair situation almost three weeks ago when the news first came out of the “big” hiring push by Mickey Ds, so it’s nice of the Post and Ms Lowrey to catch up to the blogosphere. Yet for every point Ms Lowrey gets correct, she still winds up missing the point in the end.

Indeed, the McHiringSpree raises the question: What kind of jobs has the recovery ginned up? The Bureau of Labor Statistics offers a host of month-by-month information on who is working where, for how much and for how long. The data show that a few industries are at or above their level of employment before the recession. The federal workforce is slightly bigger, once you factor out job losses at the Postal Service and ignore Census hiring. Employment is up in some niches, like computer systems design. And health care remains the nation’s strongest growth industry, with tons of new jobs for workers like home health aides and physicians’ office workers.

…snip…

Despite the gains, though, it all adds up to a fairly bleak picture: The jobs we’re adding, for the most part, aren’t great ones. The National Employment Law Project took a closer look at employment and jobs-growth data in February. It says that just 14 percent of recent job growth comes from high-wage industries. About half comes from low-wage industries. Restaurants and food services businesses, “especially” fast-food outlets, made up 7 percent. The picture contributes to a larger story: The country has produced far too few stable, middle-income jobs over the past 20 years, not just the past three.

Given the deficit hysteria and drive for budget cuts, I wouldn’t hold out much hope for that “federal workforce” gain to remain for very long. And only “14 percent of recent job growth comes from high-wage industries” means 86% of the jobs are not in high-wage industries. Growth industries of “home health aides and physicians’ office workers” are also not particularly well paying by anyone’s imagination. I can pretty much guarantee you that the growth in health care costs have not been driven by these types of jobs. Minimum wage or just above minimum wage jobs are not enough to build a long term, sustainable recovery that revitalizes the middle-class.
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