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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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More Jobs Yet Falling Further Behind

11:45 am in Economy, Financial Crisis, Jobs, Unemployment by dakine01

I am afraid I may be starting to think like an economist. Now why would I be afraid I’m becoming an economist? Because I was surprised when the March Jobs Report came out from the Bureau of Labor Statistics and showed 216K new jobs for March, an increase of 15K even over the ADP report from Wednesday. From Reuters:

(Reuters) – U.S. employment recorded a second straight month of solid gains in March and the jobless rate fell to a two-year low of 8.8 percent, underscoring a decisive shift in the labor market that should help to underpin the economic recovery.

Nonfarm payrolls rose 216,000 last month, the largest increase since May, the Labor Department said on Friday. The gain built on the 194,000 new positions added in February.

David Dayen at Firedoglake News did his standard excellent job of dissecting this report. And as he does, he manages to puncture the coming cheereladers, even before they get started:

And where did these new jobs come from? About 1/2 of the total came in the service sector. 29,000 hires came from temp work. Professional and technical services increased by about 35,000, and manufacturing and mining increased slightly. Health care was also a continued strong sector.

The public sector continues to be a drag on growth. It edged downward again, as $10 billion in budget cuts for the year, enacted in two stopgap spending bills, took effect. Since the peak in September 2008 (notice the time frame), public sector jobs have decreased by 416,000. And with expected cuts coming at the state and federal level, more layoffs are on the way.

I would like to reinforce a couple of his points here. Out of 216K new jobs, nearly half are in the services sector. 29K are in temp work. It is the expected cuts in public sector jobs at all levels that had me anticipating a far lower number of new jobs for March. The complete BLS News Release is here.

Of course, it didn’t take long for a White House response to the BLS report. From Reuters:

White House economist Austan Goolsbee said on Friday the March jobs reports showed signs of an improving U.S. economy but that surely there will be bumps in the road ahead.

Today’s NY Times had a few articles on some of those “bumps in the road” Mr Goolsbee mentions. First up is this one on people struggling to get ahead because of the low wage jobs:

Hard as it can be to land a job these days, getting one may not be nearly enough for basic economic security.

The Labor Department will release its monthly snapshot of the job market on Friday, and economists expect it to show that the nation’s employers added about 190,000 jobs in March. With an unemployment rate that has been stubbornly stuck near 9 percent, those workers could be considered lucky.

But many of the jobs being added in retail, hospitality and home health care, to name a few categories, are unlikely to pay enough for workers to cover the cost of fundamentals like housing, utilities, food, health care, transportation and, in the case of working parents, child care.

These would be the jobs in the service sector. From the BLS News Release linked above:

In March, employment in the service-providing sector continued to expand, led
by a gain of 78,000 in professional and business services. Most of the gain
occurred in temporary help services (+29,000) and in professional and technical
services (+35,000).
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Democrats shoot themselves in foot!

11:38 am in Uncategorized by dakine01

Michigan giveth, Michigan taketh away!

Emptywheel has a nice post about how some Michigan County Clerks are working to make sure that college students away from home can vote, even though they are being opposed by the state attorney general.

Unfortunately however, not all the news from Michigan is as positive. It seems from this AP story via MSNBC that the Michigan Democratic Party needs to hire some quality control folks:

DETROIT – A flier sent by Michigan Democrats — featuring a photo of presidential contender Barack Obama and urging voters to submit an absentee ballot application — includes a telephone number connecting callers to a phone sex line.

A party spokeswoman has apologized. But why do the Democrats keep making stupid errors like this. Totally preventable. And I will be honest, my first thought when I saw this was somebody at the printer’s shop did a nasty trick.

Once again, however, it is clear that we should never ascribe to underhanded deeds those actions that can also be explained by stupidity