Tackling The Real Unemployment Rate: 11%

Louis Efron - Forbes

Imagine being served your poolside drinks by a lawyer, or getting your chicken sandwich delivered by an experienced marketing professional. The first is a friend of mine, the second my waitress a few weeks ago. Both lost jobs due to economic downturns at their organizations. Both took available work to pay the bills while looking for new positions in their chosen professions.

My friend and the waitress are victims of a massive but hidden problem called underemployment. Watching falling unemployment numbers being reported at 5.5%, down from nearly 10% four years earlier, is simply misleading.

Despite the significant decrease in the official U.S. Bureau of Labor Statistics (BLS) unemployment rate, the real unemployment rate is over double that at 11%. This number reflects the government’s “U-6” report, which accounts for the full unemployment picture including those “marginally attached to the labor force,” plus those “employed part time for economic reasons.”

U.S. Bureau of Labor Statistics measurements U1, U2, U3, U4, U5 and U6. (Photo credit: Wikipedia)

“Marginally attached” describes individuals not currently in the labor force who wanted and were available for work. The official unemployment numbers exclude them, because they did not look for work in the 4 weeks preceding the unemployment survey. In February, this marginally attached group accounted for 1.052 million people. To put that in perspective, there are currently 8 states in the U.S. with populations smaller than 1.052 million.

302,000 discouraged workers – workers not currently looking for work because they believe no jobs are available for them – are included within the list of marginally attached people. Another 6.635 million were not considered unemployed because they were employed part-time for economic reasons. Those people are also called involuntary part-time workers – working part-time because their hours were cut back or because they were unable to secure a full-time job.

When you look at state populations – using the 6.635 million – the number represents more than the population of all but the 14 states with the highest populations.

These numbers mean the U.S. has over 7 million workers only marginally engaged in their work situation.

They don’t contribute their full potential to their households, the economy or society in general. While reporting a low, declining unemployment number may comfort people, we can’t ignore the millions of workers feeling the pain of the real unemployment number of 11%.

Dan Diamond’s Forbes article, Why The ‘Real’ Unemployment Rate Is Higher Than You Think highlights another disturbing fact that compounds the challenge: The longer you’re without a job, the less likely you’ll get called back for an interview. By the eighth month of unemployment the callback rate falls by about 45%. The article concludes “many employers see these would-be workers as damaged goods.”

These same people could be contributing greatly to the economy. Instead, they are spending their days trying to secure employment or working in unfulfilling part-time jobs while depleting their savings and 401K’s to supplement their income. Or worse yet, living off their credit cards just to survive.

The answer to these challenges is not solely job creation, but creating the right jobs to maximize a labor force.

Here is the solution:

Quality Over Quantity

Getting people back to work is good, but if the quality of their employment is down or the money earned insufficient you create other problems:

• unsatisfied and disengaged workers
• low productivity and work quality
• high turnover and operating costs
• financial, social, and household strain

To create quality jobs there must be an accurate window into the people needing work, not just programs in place to retrain highly skilled and experienced workers for low-skilled jobs. Retraining should be available, but for those truly desiring a new career. There must be an effort by employers to fully utilize and capitalize on the talents their potential employees can bring to their organizations.

When interviewing candidates – or evaluating your current workforce – look beyond the role they are pursuing or filling. Assess what else they can deliver for your organization. What skills and experiences are they not using in their current role? Is there a way to expand their current jobs to include and leverage missed opportunities? Paying attention to what is on a candidate’s and employee’s resume, closely observing their work, and asking good questions about other contributions they feel they can make are effective ways of performing this assessment.

Post assessment, work-sharing and job rotation programs provide employees a chance to apply unused but valuable experience and to contribute at higher levels.


High-Skilled Jobs Promote Healthy Economies

While governments may believe low unemployment is the key to economic success, it has not proven true. In 24/7 Wall St.’s article Nine Countries Where Everyone Has A Job, a highlighted 2012 study concluded: “only a minority of the countries with low unemployment actually have a healthy economy where middle-class jobs are abundant.” These middle-class, higher skilled jobs tend to have a greater impact on innovation, productivity and improved efficiency.

After World War II, Europe’s economy recovered quickly despite its destroyed factories and infrastructure. This was primarily due to maximizing and strategically leveraging the experienced workforce.

Unlike investing in machines – which need replacing over time – human knowledge becomes stronger and more valuable the more it is used and developed. Highly skilled people grow weaker and become less valuable to our economy when they spend their days looking for work or occupied in jobs that don’t further develop and hone their capabilities.

A product designer spending 40 hours a week pondering and developing new products – plus getting additional training – will become more creative, knowledgeable and innovative. He/she will also add further value to their organization the more they work in their job.

An assembly line worker instructed to repeat the same required task over and over has little room to add more value to him/herself or their organization. Except for their own assertively offered suggestions, that worker may only add value when their task alters as a result of innovations from higher-skilled workers. While the product designer can help other product designers around him or her get better; the assembly line worker may again be limited by the job and unable to effect change in the same way.


Innovation First

In the early 1900s, economist Joseph Schumpeter coined the term “creative destruction” – occurring when something new destroys something older. When an organization creates a new product or finds a better way of doing something, it can eliminate its competition. The invention of the personal computer is a great example of this. Many mainframe computer companies became obsolete when the personal computer arrived. On the other hand, that creation allowed new organizations and jobs to develop.

The invention of photography revolutionized the world, eliminating some professions, but creating many new ones. Before photography, some prisons employed “recognizing officers” – people who identified repeat offenders. With cameras obtainable and affordable, photographers replaced the recognizing officer to process mug shots of each prisoner.

Schumpeter asserted that the “process of creative destruction is the essential fact about capitalism.” It is ebb and flow; a recreation or a rebirth sustained by constant innovation. As new ideas come to life, so do new industries, organizations and jobs. To keep innovative people working, organizations and governments must create jobs for them and invest in their progressive ideas.

Governments and organizations that create quality, high-skilled jobs focused on innovation will yield more of the right jobs, engage their entire workforce, and ultimately create a diversity of jobs at all levels. Creating such jobs is key to economic growth and sustainability. This, in turn, will fulfill the needs of the underemployed who desperately want to make a difference to their communities and the world.

If a country loses its most educated and skilled people to other countries due to a lack of fulfilling jobs, that economy will stagnate.


Facing Reality

Technology will change the jobs we do.

While secretaries, telephone operators, word processors and typists were rapidly disappearing between 2000 and 2010, employment in computer systems design and related services grew by a healthy 18% around the same period (BLS). The emerging sector even withstood the recent recession losing only 1% of its workforce during the downturn. From 2003 to 2013, BLS reported 37 percent employment growth in the IT industry.

Highly skilled innovators that dream-up and advance our future will create new jobs and industries. The more high skilled jobs there are, the lower both unemployment and underemployment will become.

Changes in Mean Hourly Wages

One in Three Americans is Poor — And Getting Little Relief

Dollars and Sense
By Jeanette Wicks-Lim

In 1995, a blue-ribbon panel of poverty experts selected by the National Academy of the Sciences (NAS) told us that the “current U.S. measure of poverty is demonstrably flawed judged by today’s knowledge; it needs to be replaced.” Critics have long pointed out shortcomings including the failure to adequately account for the effects of “safety net” programs and insensitivity to differences in the cost of living between different places.

The Census Bureau, the federal agency charged with publishing the official poverty numbers, has yet to replace the poverty line. However, in the last couple years it has published an alternative, the Supplemental Poverty Measure (SPM). The SPM is the product of over two decades of work to fix problems in the federal poverty line (FPL).
This new measure takes us one step forward, two steps back. On the one hand, it has some genuine improvements: The new measure makes clearer how the social safety net protects people from economic destitution. It adds basic living costs missing from the old measure. On the other hand, it does little to address the most important criticism of the poverty line: it is just too damned low. The fact that the poverty line has only now been subject to revision—50 years after the release of the first official poverty statistic—likely means that the SPM has effectively entrenched this major weakness of the official measure for another 50 years.

The 2011 official poverty rate is 15.1%. The new poverty measure presented—and missed by a wide margin—the opportunity to bring into public view how widespread the problem of poverty is for American families. If what we mean by poverty is the inability to meet one’s basic needs a more reasonable poverty line would tell us that 34% of Americans—more than one in three—are poor.

What’s in a Number?

The unemployment rate illustrates the power of official statistics. In the depths of the Great Recession, a new official statistic—the rate of underemployment, counting people working part time who want full-time work and discouraged workers as those who have just given up on looking for work—became part of every conversation about the economy. One in six workers (17%) counted as underemployed in December 2009, a much higher number than the 9.6% unemployment rate. The public had not been confronted with an employment shortage that large in recent memory; it made political leaders stand up and pay attention.

The supplemental poverty measure had the potential to do the same: a more reasonable poverty line—the bottom line level of income a household needs to avoid poverty—would uncover how endemic the problem of economic deprivation is here in the United States. That could shake up policymakers and get them to prioritize anti-poverty policies in their political agendas. Just as important, a more accurate count of the poor would acknowledge the experience of those struggling mightily to put food on the table or to keep the lights on. No one wants to be treated like “just a number,” but not being counted at all is surely worse.

With a couple of years of data now available, the SPM has begun to enter into anti-poverty policy debates. Now is a good time to take a closer look at what this measure is all about. The supplemental measure makes three major improvements to the official poverty line. It accounts for differences in the cost of living between different regions. It changes the way it calculates the standard of living necessary to avoid poverty. And it accounts more fully for benefits from safety net programs.

Different Poverty Lines for Cost-of-Living Differences

Everyone knows that $10,000 in a small city like Utica, New York, can stretch a lot farther than in New York City. In Utica, the typical monthly cost of rent for a two-bedroom apartment, including utilities, was about $650 during 2008-2011. The figure for New York City? Nearly double that at $1,100. Despite this, the official poverty line has been the same regardless of geographic location.The supplemental poverty measure adjusts the poverty income threshold by differences in housing costs in metropolitan and rural areas in each state—a step entirely missing in the old measure.

We can see how these adjustments make a real difference by simply comparing the official poverty and SPM rates by region. In 2011, according to the official poverty line, the Northeast had the lowest poverty rate (13.2%), the South had the highest (16.1%), and the Midwest and the West fell in between (14.1% and 15.9%, respectively). With cost-of-living differences factored in, the regions shuffled ranks. The SPM poverty rates of the Northeast and South look a lot more alike (15.0% and 16.0%, respectively). The Midwest’s cheaper living expenses pushed its SPM rate to the lowest among the four regions (12.8%). The West, on the other hand, had an SPM rate of 20.0%, making it the highest-poverty region.

Updating Today’s Living Costs

Obviously, household expenses have changed a lot over the last half-century. The original formula used to construct the official poverty line used a straightforward rule-of-thumb calculation: minimal food expenses time three. It’s been well-documented since then that food makes up a much smaller proportion of households’ budgets, something closer to one-fifth, as new living expenses have been added (e.g., childcare, as women entered the paid workforce in droves) and the costs of other expenses ballooned (e.g., transportation and medical care).

The new poverty measure takes these other critical expenses into account by doing the following. First, the SPM income threshold tallies up necessary spending on food, clothing, shelter and utilities. The other necessary expenses like work-related child care and medical bills are deducted from a household’s resources to meet the SPM income threshold. A household is then called poor if its resources fall below the threshold.

These non-discretionary expenses clearly take a real bite out of family budgets. For example, the “costs of working” cause the SPM poverty rate to rise to nearly doubles that of the official poverty rate among full-time year-round workers from less than 3% to over 5%. Bringing the Social Safety Net into Focus

Today’s largest national anti-poverty programs operate in the blind spot of the official poverty line. These include programs like Supplemental Nutrition Assistance Program (SNAP) and the Earned Income Tax credit (EITC). The supplemental measure does us a major service by showing in no uncertain terms how our current social safety net protects people from economic destitution. The reason for this is that the official poverty measure only counts cash income and pre-tax cash benefits (e.g., Social Security, Unemployment Insurance, and Temporary Assistance to Needy Families (TANF)) towards a household’s resources to get over the poverty line. The supplemental poverty measure, on the other hand, adds to a household’s resources near-cash government subsidies—programs that help families cover their expenditures on food (e.g. SNAP and the National School Lunch program), shelter (housing assistance from HUD) and utilities (Low Income Home Energy Assistance Program (LIHEAP))—as well as after-tax income subsidies (e.g., EITC). This update is long overdue since the 1996 Personal Responsibility and Work Opportunity Reconciliation Act (a.k.a., the Welfare Reform Act) largely replaced the traditional cash assistance program AFDC with after-tax and in-kind assistance.

Here are some figures for 2011 that illustrate the impact of each of twelve different economic assistance programs. Social Security, refundable tax credits (largely EITC but also the Child Tax Credit (CTC)), and SNAP benefits do the most to reduce poverty. In the absence of Social Security, the supplemental poverty rate would be 8.3 percentage points higher, shooting up from 16.1% to over 23.8%. Without refundable tax credits, the supplemental poverty rate would rise 2.8 percentage points, up to nearly 19%, with much of the difference being in child poverty. Finally, SNAP benefits prevent poverty across households from rising 1.5 percentage points. The SPM gives us the statistical ruler by which to measure the impact of the major anti-poverty programs of the day. This is crucial information for current political feuds about falling over fiscal cliffs and hitting debt ceilings.

A Meager Supplement

Unfortunately, the new poverty measure adds all these important details to a fundamentally flawed picture of poverty.

In November 2012, the Census Bureau published, for only the second time, a national poverty rate based on the Supplemental Poverty Measure: it stood at 16.1% (for 2011), just one percentage point higher than the official poverty rate of 15.1%. Why such a small difference? The fundamental problem is that the supplementary poverty measure, in defining the poverty line, builds from basically the same level of extreme economic deprivation as the old measure.

In an apples-to-apples comparison, the new supplemental measure effectively represents a poverty line roughly 30% higher than the official poverty income threshold for a family of four. For 2011, the official four-person poverty line was $22,800, an adjusted SPM income threshold—one that can be directly compared to the FPL—is about $30,500. Unfortunately, the NAS panel of poverty experts appears to have taken an arbitrarily conservative approach to setting poverty income threshold. Reasonably enough, NAS panel uses as their starting point how much households spend on the four essential items: food, clothing, shelter, and utilities. A self-proclaimed “judgment call,” they choose what they call a “reasonable range” of expenditures to mark poverty. What’s odd is that their judgment leans back toward the official poverty line – the measure they referred to as “demonstrably flawed.”

To justify this amount they show how their spending levels fall within the range of two other “expert budgets” (i.e., poverty income thresholds) in the poverty research. What they do not explain is why, among the ten alternative income thresholds they review in detail, they focus on two of the lower ones. In fact, one of these two income thresholds they describe as an “outlier at the low end.” The range of the ten thresholds actually spans between 9% and 53% more than the official poverty line; their recommended range for the threshold falls between 14% and 33% above the official poverty line.

Regardless of the NAS panel’s intention, the Inter-agency Technical Working group (ITWG) tasked with the job of producing the new poverty measure adopted the middle point of this “reasonable range” to establish the initial threshold for the revised poverty line. This conflicts with what we know about the level of economic deprivation that households experience in the range of the federal poverty line. In a 1999 book Hardship in America, researchers Heather Boushey, Chauna Brocht, Bethney Gunderson, and Jared Bernstein examined the rates and levels of economic hardship among officially poor households (with incomes less than the poverty line), near-poor households (with incomes between the poverty line and twice the poverty line), and not poor households (with incomes more than twice the poverty line).

As expected, they found high rates of economic distress among households classified as “officially poor.” For example, in 1996, 29% of poor households experienced one or more “critical” hardships such as missing meals, not getting necessary medical care, and having their utilities disconnected. Near-poor households experienced these types of economic crises only a little less frequently (25%). Only when households achieved incomes above twice the poverty line did the incidence of these economic problems fall substantially—down to 11%. (Unfortunately, the survey data on which the study was based have been discontinued, so more up-to-date figures are unavailable.) This pattern repeats for “serious” hardships that include being worried about having enough food, using the ER for health care due to lack of alternatives, and falling behind on housing payments. So if what we mean by poverty is the inability to meet one’s basic needs, then twice the poverty line—rather than the SPM’s 1.3 times—appears to be an excellent marker.

Let’s consider what the implied new poverty income threshold of $30,500 feels like for a family of four. (This, by the way, is about what a household would take in with two full-time minimum-wage jobs.)

This annual figure comes out to $585 per week. Consider a family living in a relatively low-cost area like rural Sandusky, Michigan. Based on the basic-family-budget details provided by the Economic Policy Institute, such a family typically needs to spend about $175 on food (this assumes they have a nearby grocery store, a stove at home, and the time to cook all their meals) and another $165 on rent for a two-bedroom apartment each week. This eats up 60% of their budget, leaving only about $245 to cover all other expenses. If they need childcare to work ($180), then this plus the taxes they have to pay on their earnings ($60) pretty much wipes out the rest. In other words, they have nothing left for such basic needs as telephone service, clothes, personal care products like soap and toilet paper, school supplies, out of pocket medical expenses, and transportation they may need to get to work. Would getting above this income threshold seem like escaping poverty to you?

For many federal subsidy programs this doesn’t seem like escaping poverty either. That’s why major anti-poverty programs like that National School Lunch program, Low Income Home Energy Assistance Program (LIHEAP), State Children’s Health Insurance Program (SCHIP) step in to help families with incomes up to twice the poverty line.

If the supplementary poverty measure tackled the fundamental problem of a much-too-low poverty line then it would likely draw an income threshold closer to 200% of the official poverty line (or for an apples-to-apples comparison, about 150% of the SPM income threshold). This would shift the landscape of poverty statistics and produce a poverty rate of an astounding one in three Americans.

Now What?

The Census Bureau’s supplemental measure doesn’t do what the underemployment rate did for the unemployment rate—that is, fill in the gap between the headline number and how many of us are actually falling through the cracks.

The poverty line does a poor job of telling us how many Americans are struggling to meet their basic needs. For those of us who fall into the “not poor” category but get struck with panic from time to time that we may not be able to make ends meet—with one bad medical emergency, one unexpected car repair, one unforeseen cutback in work hours—it makes us wonder, if we’re not poor or even near poor, why are we struggling so much? The official statistics betray this experience. The fact is that so many Americans are struggling because many more of us are poor or near-poor than the official statistics lead us to believe.

The official poverty line has only been changed—supplemented, that is—once since its establishment in 1963. What can we do to turn this potentially once-in-a-century reform into something more meaningful? One possibility: we should simply rename the supplemental poverty rates as the severe poverty rate. Households with economic resources below 150% of the new poverty line then can be counted as “poor.” By doing so, politicians and government officials would start to recognize what Americans have been struggling with: one-third of us are poor.

Sources: Kathleen Short, “The Research Supplemental Poverty Measure: 2011,” Current Population Report, U.S. Bureau of the Census, November 2012 (census.gov); Constance F. Citro and Robert T. Michael (eds.), Measuring Poverty: A New Approach, Washington D.C.: National Academy Press, 1995; Trudi Renwick, “Geographic Adjustments of Supplemental Poverty Measure Thresholds: Using the American Community Survey Five-Year Data on Housing Costs,” U.S. Bureau of the Census, January 2011 (census.gov).

Shrinking Expectations in the New / Old America

The Great Restructuring
by DAVID ROSEN


A series of recent reports from the Bureau of Labor Statistics (BLS), the Pew Foundation and Urban Institute detail how more and more Americans are adjusting to the new old America.

The BLS report for March 2013 was pretty bleak. Nearly 12 million (11.7 million) Americans were unemployed, roughly the same as in February. It distinguishes between a “broader” measure (at 13.8%) and a “standard” measure (at 7.6%) of unemployment. The unemployment rates were as follows: for blacks, 13.3 percent; Hispanics, 9.2 percent; whites, 6.7 percent; and Asians, 5.0 percent; and for adult women, 7.0 percent;adult men, 6.9 percent; and teenagers, 24.2 percent.

More telling, it reported that the number of people classified as “long-term unemployed” (i.e., jobless for over 27 weeks) is 4.6 million, thus accounting for approximately 4 out of 10 ten unemployed persons. Adding to this, it noted that 7.6 million people are underemployed. These are people taking part-time positions because they can’t get full-time work.

Adding these three categories, 23.9 working-age Americans are less-than-full employed. The BLS estimates the total U.S. workforce of those 16-years and older at 154 million. These people illustrate how the Great Recession is becoming a way-of-life.

Much of the media discussion about the BLS findings focused on whether the current “economic revival” has stalled or reversed. Stepping back from the immediacy of the findings suggests a more pessimistic caution, one that suggests that the U.S. may well be witness an historic restructuring.

A recent report from Pew Research, A Rise in Wealth for the Wealthy; Declines for the Lower 93%: An Uneven Recovery, 2009-2011, begins to place the BLS data in a larger context. Its findings are pretty damning with regard to current “revival”: “During the first two years of the nation’s economic recovery, the mean net worth of households in the upper 7% of the wealth distribution rose by an estimated 28%, while the mean net worth of households in the lower 93% dropped by 4%.” Pew’s findings are based on recently released Census Bureau data.

Pew goes further and details the financial consequences of restructuring of “wealth distribution”: “the mean wealth of the 8 million households in the more affluent group rose to an estimated $3,173,895 from an estimated $2,476,244, while the mean wealth of the 111 million households in the less affluent group fell to an estimated $133,817 from an estimated $139,896.”

Making matters structurally worse, the wealth-gap divide is only getting greater. Pew reports: “the 8 million households in the U.S. with a net worth above $836,033 saw their aggregate wealth rise by an estimated $5.6 trillion, while the 111 million households with a net worth at or below that level saw their aggregate wealth decline by an estimated $0.6 trillion.” (Household wealth is calculated by adding up personal assets like a home, car, real property, a 401(k), stocks and other financial holdings and subtracting all debts, including mortgage, car loan, credit card debt and student loans.)

The Urban Institute’s study, Less Than Equal: Racial Disparities in Wealth Accumulation, adds further resonance to the Pew findings. It warns, “in 2010, whites on average had two times the income of blacks and Hispanics, but six times the wealth.” It found, “wealth disparities have worsened over the past 30 years.” “High-wealth families (the top 20 percent by net worth) saw their average wealth increase by nearly 120 percent between 1983 and 2010, while middle-wealth families saw their average wealth go up by only 13 percent. The lowest-wealth families— those in the bottom 20 percent—saw their average wealth fall well below zero, meaning their average debts exceed their assets.”

In no uncertain terms, the Urban Institute’s argues, “there is extraordinary wealth inequality between the races. In 2010, whites on average had six times the wealth of blacks and Hispanics. So for every $6.00 whites had in wealth, blacks and Hispanics had $1.00 (or average wealth of $632,000 versus $103,000).” Making matters worse, it point out “the racial wealth gap grows sharply with age.” The older a person, the poorer s/he will likely be, especially a person of color.

And the big losers in the Great Recession? “Between 2007 and 2010, Hispanic families saw their wealth cut by over 40 percent, and black families saw their wealth fall by 31 percent,” it reflects. “By comparison, the wealth of white families fell by 11 percent.”

* * *

The Great Recession of 2008-2010 fulfilled its historic mission. It legitimized the restructuring of social and economic relations, sanctioning the unquestioned rule of the corporate plutocrats. In response, a sense of doom seeps through America not unlike that spreading through much of Europe.

The 2008 and 2012 elections of a corporatist moderate enshrined the tyranny of global financial capital and the militarist policies of a failing imperialist power. Pres. Obama’s elections formally ended the American Century.

Over the last quarter-century, the U.S. has been witness to the systematic destruction of the grand liberal moment. This was the half-century or so known as “the American Century,” from the New Deal thru the Great Society that shaped the U.S. during much of the mid-20th century. Ironically, both saw domestic “progress” intimately linked to foreign military engagement.

This period shared a kind of quasi-utopian fervor not unlike that found during the Revolution and the Civil War eras. For all their respective shortcomings, these were historical moments defined by a moral sensibility that defined the country as seeking to be a more egalitarian, more inclusive nation. As Lincoln would have said, these moments demonstrated America’s better angles. One can’t say that of Obama’s America.

Since Pres. Nixon, and with the collusion of both Republican and Democratic presidents, the utopian pendulum has steadily moved to the right, giving way to the increased tyranny of those with privilege. Pres. Obama is putting the final nails in the coffin of the vision of an egalitarian America. He is returning the nation to the worst impulses that characterized the Gilded Age, the last grand era of corporatist tyranny. On one side is the gluttony and elitism regally displayed by the well-to-do and, on the other side, a deepening hopelessness among a growing number of Americans.

As the BLS, Pew and Urban Institute reports remind us, a growing proportion of the new underclass lives a furtive existence. They can be broadly dubbed the lost souls of America, those who have essentially given up on the American dream. Many are among the new dispossessed if not homeless and have essential lost all hope. What keeps them going is one of the unasked questions of today. Among them is the growing army of vets, throw-a-ways of the military-industrial complex.

But these lost souls of America also include a growing segment of the U.S. population. A recent Associated Press-GfK poll found, for the third year in a row, only 1 in 4 Americans now expects his/her financial situation to improve over the next year.

The deeper, darker questions that these and similar reports fail to raise is: (i) what will it take to turn personal despair into political rage? and (ii) can Americans reclaim the once-inspired utopian legacy of its past for a better 21st century?

Myths About Job Creation and the Private Sector

Trickle-Down Redux

by MARK VORPAHL

 

The issue of unemployment and underemployment loomed above the hype of both the Republican and Democratic Party conventions with the cold stare of a harsh judge. Many promises and dubious claims were made from the respective party podiums, but no real solutions were put forward.

Despite the antagonistic posturing between Obama and Romney, both stand by the “free market” commandment that it is the business of the private sector to create jobs, not the government. That is, the effects of the Great Recession will not be reversed until the big business owners invest in job creating ventures that they can make a profit from. In order to encourage them to make these investments it is necessary to fatten their financial reserves with bail outs, low interest loans, minuscule tax rates, and so on.

In short, the policies emanating from the belief that the private sector will rescue workers from the jobs crisis are variations of the discredited trickle down theory where the wealth built up at the top through government funded corporate welfare will somehow find its way into the pockets of working Americans.

Romney is an unapologetic supporter of this discredited scheme. While candidate Obama criticizes such an approach in order to get votes, nevertheless, as President, this has been the guiding philosophy of his actions. He has provided trillions of dollars in bailouts and loans to Wall Street, declared himself open to cuts to Social Security, Medicare, and Medicaid, supported the privatization of public schools through the “Race to the Top” program of charter schools, extended the Bush tax cuts for the rich, and the list goes on.

What have been the results? Ninety three percent of the economic growth that has occurred since the economic crisis went into the pockets of the top 1%.[i] Big business is sitting on $2 trillion in profits without reinvesting them.[ii] Side by side with this enrichment, high unemployment and underemployment persist and 58 percent of new jobs pay under $13.83 per hour.[iii]

The private sector is not coming to the economy’s rescue. Rather, those in the private sector are taking advantage of the crisis to enrich themselves at the expense of workers. Neither Romney or Obama are proposing an alternative course, only variations of the same failed approach.

The private sector did eventually help to lead the nation out of the deep recessions of the 1970s and 1980s. However, the Great Recession is much more profoundly structural in its nature. Conditions are worse today, and policies that depend on the private sector to create good jobs will only exacerbate the fundamental problems that led to the Great Recession and allow its results to continue to devastate the lives of tens of millions.

One difference is that today wealth is vastly more concentrated into fewer hands. The top richest 400 individuals have more net worth than the bottom 60 percent of all Americans.[iv] Six members of the Walton family behind Walmart have, by themselves, as much wealth as the bottom 150 million.[v]

These few are the most powerful owners of the private sector. This elite’s outlook is far removed from that of the majority. Because they are so powerful, they own a good part of both political parties. And because they are sitting on such vast financial reserves, they are less inclined to risk it on investments that provide jobs.

Their top goal is to generate as much short-term profit as possible for themselves. The long-term effects of how they do this are of no concern to them. If they can make more through destructive trickery rather than putting people to work making commodities, all the better.

The opportunities for such trickery have grown in parallel with the rapid expansion of the financial sector over the last thirty years. This is indicated by the fact that trade in U.S. equity (stock) markets grew from $1.671 trillion, or 13.1 percent of the US GDP in 1970, to $14.222 trillion, or 144.9 percent of the US GDP in 2000.[vi]

Profit has increasingly been made through financial schemes rather than production and trade. The problem developing out of this is not only a minimalization of job creating investment, it turns the economic system into a giant casino for the mega rich at the cost to society as a whole.

It was the growth of financial speculation that led to economic bubbles, particularly in housing, which helped make the collapse of 2008 so deep and lasting. The destructive possibilities of the financial sector’s activities continue unchecked. The banks have lobbied tenaciously to prevent any restrictive regulation. In fact, just last month the Securities and Exchange Commission abandoned efforts to tighten regulations on money market funds. All those who follow the financial sector agree that nothing substantial has been done to prevent a monumental financial disaster that will require an even bigger bailout than before.

Even more alarming has been the growth in derivatives trading. Paul Wilmott, an economic quantitative analyst, has estimated that the total amount of derivatives being played in the markets is $1.2 trillion — 20 times the amount of money currently in the global economy. Despite the enormous risk the exposure to such debt puts the economy in, financiers continue to realize more short-term profit through these investments than job creating production in manufacturing.

The main players in the private sector are not interested in job creating investment. The reality is that workers are too broke to buy much, therefore demand is too weak for big business to realize profits by making more goods. Better from the big business elite’s perspective to hoard trillions and invest in financial speculation, though it puts the world economy in peril.

In contrast to the claims of both Obama and Romney — and both of them know better — the private sector will not create the jobs necessary to lift workers out of the Great Recession. No matter how many incentives big business is showered with, there will not be enough to overcome the limits the profit motive places on investment, given the concentration of wealth, growth in financial speculation, and the lack of demand resulting from workers’ impoverishment.

The private sector is the problem, not the solution for the jobs crisis. It will take investment in the public sector to create full employment and lift up the economy. This investment can be funded by taxing corporations to the point where our nation is facing surpluses rather than deficits. Owners of immense wealth have for too long been let off the hook from paying their fair share.

There is no shortage of work that desperately needs to be done. Industries need to be retooled to reverse climate change. Our infrastructure needs to be maintained and, in many cases, rebuilt. Public education needs to be improved and expanded rather than privatized. Social services and health care need to be made available for everyone who needs them.

Unfortunately, this is exactly the opposite of the approach of both presidential candidates and their corporate funded parties. Workers need to wrest control of the economy from the 1% by building a politically independent mass social movement to place our needs, such as a federal jobs program to create full employment, on the front stage.

All progressive changes that have benefited the vast majority have been the result of such struggles. Our salvation from the Great Recession lies in forging the necessary grass roots/workers unity to rediscover our power to set the political agenda.

Notes.　
[i] “The Rich Get Richer” by Steven Rattner http://www.nytimes.com/2012/03/26/opinion/the-rich-get-even-richer.html?_r=1
[ii] “US firms hoarding $2 trillion” by John Aidan Byrnehttp://www.nypost.com/p/news/business/hoarding_cash_Yzfk2c8aK1wAPrZCRdEVnJ
[iii] “The low-wage jobs explosion” by Tami Luhby http://money.cnn.com/2012/08/31/news/economy/low-wage-jobs/index.html
[iv] “Michael Moore says 400 Americans have more wealth than half of all Americans” by Politifacthttp://www.politifact.com/wisconsin/statements/2011/mar/10/michael-moore/michael-moore-says-400-americans-have-more-wealth-/
[v] “Wal-Mart Heiress’s Art Museum a Moral Blight” by Jeffery Goldberg http://www.businessweek.com/news/2011-12-19/wal-mart-heiress-s-art-museum-a-moral-blight-jeffrey-goldberg.html
[vi] “Financialization” Wikipedia http://en.wikipedia.org/wiki/Financialization

Labor Day Needs Protest Marches Rather than Parades

Thursday, August 25, 2011 by RobertReich.org

by Robert Reich, Reich's Blog

 

Labor Day is traditionally a time for picnics and parades. But this year is no picnic for American workers, and a protest march would be more appropriate than a parade.

Not only are 25 million unemployed or underemployed, but American companies continue to cut wages and benefits. The median wage is still dropping, adjusted for inflation. High unemployment has given employers extra bargaining leverage to wring out wage concessions.

All told, it’s been the worst decade for American workers in a century. According to Commerce Department data, private-sector wage gains over the last decade have even lagged behind wage gains during the decade of the Great Depression (4 percent over the last ten years, adjusted for inflation, versus 5 percent from 1929 to 1939).

Big American corporations are making more money, by creating more jobs outside the United States than in it. If corporations are people, as the Supreme Court’s twisted logic now insists, most of the big ones headquartered here are rapidly losing their American identity.

CEO pay, meanwhile, has soared. The median value of salaries, bonuses and long-term incentive awards for CEOs at 350 big American companies surged 11 percent last year to $9.3 million (according to a study of proxy statements conducted for The Wall Street Journal by the management consultancy Hay Group.). Bonuses have surged 19.7%.

This doesn’t even include all those stock options rewarded to CEOs at rock-bottom prices in 2008 and 2009. Stock prices have ballooned since then, the current downdraft notwithstanding. In March, 2009, for example, Ford CEO Alan Mulally received a grant of options and restricted shares worth an estimated $16 million at the time. But Ford is now showing large profits – in part because the UAW agreed to allow Ford to give its new hires roughly half the wages of older Ford workers – and its share prices have responded. Mulally’s 2009 grant is now worth over $200 million.

The ratio of corporate profits to wages is now higher than at any time since just before the Great Depression.

Meanwhile, the American economy has all but stopped growing – in large part because consumers (whose spending is 70% of GDP) are also workers whose jobs and wages are under assault.

Perhaps there would still be something to celebrate on Labor Day if government was coming to the rescue. But Washington is paralyzed, the President seems unwilling or unable to take on labor-bashing Republicans, and several Republican governors are mounting direct assaults on organized labor (see Indiana, Ohio, Maine, and Wisconsin, for example).
So let’s bag the picnics and parades this Labor Day. American workers should march in protest. They’re getting the worst deal they’ve had since before Labor Day was invented – and the economy is suffering as a result.

The “Real” Long-term Unemployment Report.

Unemployed 99er Population Rises Dramatically in March

by Layofflist.org

 

The March Employment Report was again pumped as another victory in the war against unemployment. But for millions of long-term unemployed, it’s still a brutal battle to find work. That’s why it’s unfortunate that most main stream media outlets and politicos seem incapable of understanding, or chose to ignore the “real” unemployment numbers.

The BLS reported that unemployment (U3) for March was 8.8%, which is a slight improvement from February’s 8.9%. 216,000 jobs were created, but that’s a relatively small monthly number of jobs for what is supposedly a strong economic recovery from the Great Recession. In comparison, during the 2004 economic recovery, 338,000 jobs were created in March.

The Obama administration and media mouthpieces seem preoccupied with the U3, 8.8% measure of unemployment, but you need to dig into the numbers to reveal the “real” state of unemployment.

A disconnected news media conveniently forgets to mention that the US needs to create about 125,000 jobs a month to simply keep up with new entrants to the workforce. If you subtract 125,000 from 216,000 jobs created in March, you end up with 91,000 “extra” jobs for 13.5 million unemployed.

Underemployment remained quite high at 15.7%, or 11 million workers who want full-time work, but are forced to work part-time jobs of 34 hours a week or less. Yes, full-time work is considered 35 hours or more per week, although many “real world” workers consider jobs of less than 40 hours a week as part-time.

But what was most striking about the March jobs report was the continuing increase in the number of long-term unemployed. According to the BLS, March showed 1,899,000 workers who have been out of work for 99 weeks or more, an increase of 127,000 from February. The real 99er population is growing quickly and shows no signs of abating.

NELP estimates (PDF) that “throughout 2010, 3.9 million unemployed workers exhausted all of their unemployment benefits without finding new work.” Exhausting unemployment benefits also includes those unemployed that exhausted benefits after 60, 73, 79, or 93 weeks, so NELP’s estimate is larger than the BLS estimate for those out of work 99 weeks or more.

Not only are more unemployed out of work 99 weeks or longer, but those out of work 52 and 27 weeks or more are increasing as well. Those out of work 27 weeks or more now accounts for a record 45.5% (6.14 million) of all unemployed, while for those out of work 52 weeks or more the rate is 31.5% (4.25 million) of all unemployed; again a record high.

The participation rate is another employment issue rarely discussed on the national media stage. According to the BLS, “the participation rate is the share of the population 16 years and older working or seeking work.”

The labor force participation rate was unchanged, 64.2%, the same as the previous two months. This is the lowest labor participation rate since March 1984.

The March Employment Report showed some job gains, but not nearly enough jobs were created to put a dent in the long-term unemployment problem. Media talking heads and politicians looking for 2012 votes touted the March jobs report as a winner, but it was a loser for millions of increasingly desperate long-term unemployed who are struggling without jobs or unemployment benefits. Let’s not hang those “Mission Accomplished” banners just yet…

8 Unemployed for Every Job Opening

By Joshua Holland

What Are They Supposed to Do Once Their Benefits Run Out? Is there any hope of help arriving for the "99ers"?

There are now approximately 14 million Americans who want a job and can't find one. According to the National Employment Law Project (NELP), if they stood side by side, they'd stretch from Bangor, Maine to Los Angeles, California and back. Added to that figure are 11 million more "underemployed."

While plenty of ink has been dedicated to distant crises in the Middle East and Japan, and a wholly trumped up “deficit crisis” that haunts the sleep of the Beltway media, this disaster occurring right here at home has received far less attention than it should.

Those who have been out of work for an extended period of time face not only extreme economic suffering, but also unique barriers to getting back into the workforce. Yet the political establishment has all but ignored the pain being felt by this broad swath of working America. Economist Paul Krugman called them the “forgotten millions,” and warned that “we’re well on the way to creating a permanent underclass of the jobless.”

That disconnect has left a gap that some individuals and grassroots organizations have attempted to fill. Their efforts are commendable, and at times innovative, but a number of activists interviewed by AlterNet said that absent a serious effort by the federal government, they are merely tinkering around the edges of a deep and avoidable catastrophe.

36 Weeks

In February, the average length of joblessness for all unemployed workers was a record 36 weeks. Many of those people relied on their unemployment insurance to get by until it ran out and still haven't found work -- they've come to be known as "99ers," as extended unemployment benefits in many states last a maximum of 99 weeks. NELP researchers estimate there were 3.9 million 99ers out of work last year, and project a similar number for 2011.

“It's pretty tragic out there for a lot of people,” says Mike Thornton, a writer and activist who runs a Web site dedicated to providing information and resources for the jobless called the LayoffList. “The long-term unemployed are discriminated against for being long-term unemployed,” he said. Employers are hesitant to hire those who have been out of work for a lengthy period of time because they think there must be something wrong with workers who haven't been picked up by another firm by now, but the reality is that there are now five unemployed people for each job opening. According to NELP, when you include people who are working part-time while looking for a full-time gig, that ratio jumps to eight to one.

Making matters worse, extended periods of unemployment crush people's sense of self-worth. “There are a lot of self-esteem issues there,” says John Dodds, director of the Philadelphia Unemployment Project. “There are obviously issues of maintaining the basic necessities – people are losing their homes. It's a very depressing situation for the long-term unemployed – they have to worry about their benefits running out, and many of them have.”

“It's not easy on anyone,” says Mitchell Hirsch, who was out of work for more than six months after being laid off from his retail job of over 20 years and has since become an organizer with NELP. “The first thing that hit me,” Hirsch said, “is just the loss of the place to go. Whether people have worked in an office or a factory or a store or a restaurant, most working people go to work at a place, and when that place no longer exists, it's like a part of your soul is removed,” he said, adding, “You find yourself very much alone.” Despite the number of Americans who don't have a job, “people unemployed these days feel virtually invisible.”

“Age is another factor,” Thornton told AlterNet. “You know, people over 45 years old seem to have a more difficult time finding positions the longer they've been out of work." That claim is born out by the numbers – the average length of unemployment is 44.1 weeks for those between 55 and 64 years of age, compared with 29.2 weeks for those 20 to 24.

Many people who have been out of work for a lengthy period of time – especially those whose unemployment benefits have expired – have had to max out their credit cards to keep afloat, or have missed mortgage payments or other bills. “I can speak for myself here,” said Nicole Sandler, a talk-radio host who started the Web site HelpThe99ers.com and who has herself been “underemployed” for over a year. “I've basically lost my house. I stopped paying my mortgage and moved in with my boyfriend six months ago.” Sandler says she's found a buyer and will do a "short sale" – getting less than she paid for the property – but, she adds, “my credit is shot, and we know that potential employers can check your credit, and if you have bad credit that's another reason for employers not to hire you. And once you're in this vicious cycle, it's very hard to get out of it.”

The unemployment crisis also has an impact on those who are able find work after being laid off. In an employers' market, over half of all full-time workers laid off after three years at the same job return to the workforce with lower wages. According to the Wall Street Journal, more than a third of them lose 20 percent or more of their previous income.

What many don't understand about the grim reality of the American labor market is that its impact on workers who have faced extended unemployment can reverberate for decades – long after the economy has recovered. Columbia University labor economist Till von Wachter studied the fortunes of workers who faced sudden lay-offs during the 1981-1982 recession in the period since that time. He found that even after 15 to 20 years, those workers' wages were still 20 percent lower than comparable workers who had held onto their jobs in the early 1980s downturn.

According to the Journal, the impact of this kind of joblessness can span generations:

Research shows that children of workers who lose jobs and go back to work at lower wages appear to suffer from lower wages, too. In a 2008 study, a group of economists tracked the wages of 60,000 father-child pairs from 1978 to 1999. Children whose fathers went through mass layoffs in the 1982 recession ended up with 9% lower earnings than similar children whose fathers didn't experience the job cuts.

Into the Chasm

Joe Carbone heads Workplace Inc., a non-profit that does research on the labor market and provides services to struggling workers in Connecticut. He told AlterNet the organization judges success “not just by people getting a job, but really getting empowered through credentials and knowledge so that they can traverse the system and make their way into the middle class.”

Carbone says that since the recession began he's seen a surge in demand for his organization's services. “What it's done is completely stressed out the capacity of our system,” he said. The stimulus package helped, but, says Carbone, “we had that funding for two years, but now that's gone. So, we've got the same numbers in terms of the people who have a need for our system, but we've gone back to the 2009 funding levels that we had before the worst of the recession.”

Carbone's organization is launching a project, in tandem with the private sector, to ease 99ers back into the grind of the workplace and overcome the discrimination they face among employers. “We're developing an instrument whereby for $6,000 per person, these 99ers would be given an opportunity to work for a business for eight weeks while they were officially employed by Workplace, Inc.,” he said. “There would be no liability, no risk on the part of business – it would be an eight-week trial period to see if we could establish a good comfort level between that person and whatever company we assign them to.”

Carbone says he “doesn't expect a federal response to this,” and is going to foundations and various family trusts in order to launch a pilot program for the first 100 workers this summer.
Radio host Sandler says she was inspired to start Helpthe99ers.com after getting an email from a listener whose benefits had just expired begging her to report on their plight. “It was right around the time that Obama negotiated with the GOP to extend the Bush tax cuts, and yet so little was being done for the 99ers,” she says. “And here was this group, growing in numbers and being ignored.”

Sandler describes Helpthe99ers.com as a “message board to put people who have needs – who are out of work, have exhausted their benefits and have nowhere else to turn – to put out their stories, and a place where people who have the means and compassion to help can get in touch with them directly. There's no middle-man involved, no foundation that people have to go through.”

She says the project has been slow to take off, but some connections have been made, including a man who sent a space heater to a woman in upstate New York who was unable to pay her heating bill. “I know that some people have gotten help with rent – a couple of people got their rent paid for a month or more – at least a handful of people have gotten help.”

Like Workplace, Inc., the Philadelphia Unemployment Project (PUP) has been around for a while – since 1975 – but has seen a surge in its clientele. “We do have a lot more people around,” says John Dodd. “We have a computer lab for job searches that is always packed. We have about a dozen computers that are always taken by people looking for work.”

Dodd says his organization offers “housing counselors, a job developer, a jobs club, a health-care navigator – helps people access health care – and we help people with unemployment appeals.” PUP has also organized to help people threatened with foreclosure stay in their homes.

“The fact that people are organized and working together is something that makes people feel better,” Dodd told AlterNet. “We have regular committees that meet on the unemployment issue, on the foreclosure issue, so in a way we provide some support so people don't feel all alone.”

According to Mitchell Hirsch of NELP, 40 percent of eligible workers don't file for benefits. NELP, in addition to its political advocacy on behalf of working America, runs UnemployedWorkers.org, which Hirsch describes as a place “to get information about benefits availability, a resource that allows you to speak out and tell your story and a resource of news and information” for the jobless, “all of which is ultimately a way for us to organize unemployed workers and their supporters on behalf of things that matter for working people.” The site gathered over 100,000 signatures for a petition urging Congress to re-authorize the extended unemployment benefits program.

These efforts, and others that have popped up across the country, provide valuable assistance to the relatively small number of jobless workers who take advantage of them, but all of those interviewed by AlterNet agreed that the depth of the jobs crisis plaguing the U.S. merits a massive response from policy-makers. They lamented the fact that a second stimulus package, direct, WPA-style job programs like those established during the Great Depression and much more help transitioning the long-term unemployed back into the workforce had never been on the table in any serious way.

Some members of Congress have taken a few small steps. Reps. Barbara Lee, D-California, and Bobby Scott, D-Virginia, introduced legislation that would extend benefits for 14 more weeks, and Rep Hank Johnson, D-Georgia, has a (difficult to enforce) bill that would make it illegal to discriminate against workers for being unemployed.

But both bills face a steep hill in the GOP-controlled legislature. A previous effort to get an additional extension of benefits was killed when it faced opposition from Republicans and Blue Dog Democrats last year. Meanwhile, Missouri lawmakers are filibustering an extension in federal benefits that wouldn't cost the state a dime – they're willing to sacrifice the well-being of 23,000 Missourians in order to “send a message to Washington” about the deficit. And in Michigan, conservatives are opposing a technical fix to the extended benefits program that, if defeated, would leave 150,000 state residents without eligibility for federal benefits.

The 10 Worst States in Which to Lose Your Job

The recession has hurt the whole country, but not equally -- here are the worst states you can live in when a pink slip arrives.
By Joshua Holland | Alternet

The recession has hurt the whole country, but not equally. For example, the unemployment rate in North Dakota, a state with its own bank, which helped insulate it from the financial crash, stands at just 3.6 percent, while Nevada's rate last month was 13.2 percent.

Obviously, it's much harder to find a job in places where unemployment is high and there are lots of other people vying for open positions than it is in a tight job market. But looking at the top-line unemployment rate alone doesn't tell the full story of what it's like to be jobless in any given part of the country. While being unemployed sucks for everyone, the benefits available to keep the unemployed afloat vary significantly from state to state.

We decided to dig into state-level data and try to flesh out which are the very worst states in which to lose one's job. We looked at several factors.

It's not just the rate of unemployment that matters, but the length of time people are unemployed – long-term unemployment comes with unique problems that people who are jobless for a brief period don't experience.

Nationwide, the average length of unemployment stands at 39 weeks, shattering the previous record of 23 weeks set in the early 1980s. Unfortunately, on the state level, the most recent data are from 2009. But we used the median length of joblessness that year to give a relative sense of how long it takes to find a job in various states.

We also looked at underemployment – people who aren't counted in the headline numbers. These include those who are working a part-time job because they can't find a full-time gig, and others who have been out of work for so long that they've given up the search.

On the benefits side, states have a lot of leeway in how they administer their unemployment insurance programs. The policies set in state houses determine who is eligible for unemployment insurance, how much of their salaries are covered and how long they're eligible to receive benefits.

We looked at the following info:

• The percentage of unemployed workers receiving benefits provides a rough measure of how restrictive a state's eligibility requirements are. This measure isn't perfect, because there are various reasons people don't receive benefits for which they're eligible, but it gives us a good sense of how restrictive the requirements are. In the United States (in the second quarter of 2008), 37 percent of jobless workers received unemployment benefits – so we looked at how states stacked up against the national average.
• The average weekly check received by unemployed people varies from state to state, as does the share of their working incomes those benefits represent. Among developed countries, the US offers some of the stingiest unemployment benefits around, which is why conservative spin that the jobless are living it up on their unemployment insurance instead of trying to find work is so ludicrous (though there is evidence that this is actually true in places like Scandinavia, where people who lose their jobs still take in 70 percent or more of their income). In 2008, those unemployed Americans who qualified for benefits got $293 per week, or about 35 percent of their lost income. We looked at how states compared with those nationwide numbers.
• Congress has authorized extended unemployment benefits – totaling up to 99 weeks – during this recession. That's why people who have seen their benefits expire before finding a job have come to be known as “99ers.” But not every state with high unemployment offers 99 weeks of benefits. We looked at which ones don't.
• The federal COBRA law offers laid off workers the ability to stay in their group medical plan for up to 36 months, but it only applies to companies with 20 or more employees. That doesn't help people who lost jobs at smaller companies, and many states have stepped in to fill the gap by enacting “mini-COBRA” laws for smaller firms. Not all have done so, and the details of those plans vary. We looked at these laws as well.

In considering all these factors, we get a better picture, beyond what the unemployment rate tells us, of what it's like to lose one's job in a given state. For example, we considered including California because of its 12 percent rate of joblessness and long duration of unemployment, but ultimately rejected it because its programs cover more people than the national average, offer above average benefits and feature mini-COBRA coverage for a full 36 months. Tennessee is included, despite having a lower unemployment rate, because its benefits are stingy and don't cover a lot of its jobless citizens.

This isn't a scientific study, so you can argue over which states you think should have been included or excluded:

Mississippi
Unemployment rate: 10.2 percent
Underemployment: 17 percent
Maximum extended benefits: 79 weeks
Median duration of unemployment in 2009: 13.1 weeks
Share of jobless receiving unemployment benefits: 25 percent
Average weekly check: $177.73 (29.4 percent of lost earnings)
Mini-COBRA for health insurance: 12 months

Arizona

Unemployment rate: 9.5 percent
Underemployment: 18.7 percent
Maximum extended benefits: 99 weeks
Median duration of unemployment in 2009: 14.5 weeks
Share of jobless receiving unemployment benefits: 29 percent
Average weekly check: $211.19 (27.4 percent of lost earnings)
Mini-COBRA for health insurance: None

Florida

Unemployment rate: 11.1 percent
Underemployment: 18.8 percent
Maximum extended benefits: 99 weeks
Median duration of unemployment in 2009: 18.1 weeks
Share of jobless receiving unemployment benefits: 25 percent
Average weekly check: $177.73 (29.4 percent of lost earnings)
Mini-COBRA for health insurance: 18 months

Georgia

Unemployment rate: 10 percent
Underemployment: 17 percent
Maximum extended benefits: 99 weeks
Median duration of unemployment in 2009: 16.2 weeks
Share of jobless receiving unemployment benefits: 25 percent
Average weekly check: $267.04 (34 percent of lost earnings)
Mini-COBRA for health insurance: 3 months

Kentucky
Unemployment rate: 10.2 percent
Underemployment: 16.3 percent
Maximum extended benefits: 99 weeks
Median duration of unemployment in 2009: 16.2 weeks
Share of jobless receiving unemployment benefits: 30 percent
Average weekly check: $291.49 (42.9 percent of lost earnings)
Mini-COBRA for health insurance: 18 months

Nevada
Unemployment rate: 13.2 percent
Underemployment: 23.7 percent
Maximum extended benefits: 99 weeks
Median duration of unemployment in 2009: 15.2 weeks
Share of jobless receiving unemployment benefits: 41 percent
Average weekly check: $288.49 (35.9 percent of lost earnings)
Mini-COBRA for health insurance: 18 months

Michigan

Unemployment rate: 10.3 percent
Underemployment: 20.3 percent
Maximum extended benefits: 99 weeks
Median duration of unemployment in 2009: 19.4 weeks
Share of jobless receiving unemployment insurance: 39 percent
Average weekly check: $296.35 (36.3 percent of lost earnings)
Mini-COBRA for health insurance: Only for children

Rhode Island
Unemployment rate: 11 percent
Underemployment: 19 percent
Maximum extended benefits: 99 weeks
Median duration of unemployment in 2009: 17 weeks
Share of jobless receiving unemployment benefits: 42 percent
Average weekly check: $367.70 (46.5 percent of lost earnings)
Mini-COBRA for health insurance: 18 months

South Carolina
Unemployment rate: 9.9 percent
Underemployment: 17.5 percent
Maximum extended benefits: 99 weeks
Median duration of unemployment in 2009: 19.4 weeks
Share of jobless receiving unemployment benefits: 34 percent
Average weekly check: $236.08 (35.7 percent of lost earnings)
Mini-COBRA for health insurance: 6 months

Tennessee
Unemployment rate: 9.5 percent
Underemployment: 16.2 percent
Maximum extended benefits: 79 weeks
Median duration of unemployment in 2009: 15.3 weeks
Share of jobless receiving unemployment benefits: 28 percent
Average weekly check: $211.11 (29.6 percent of lost earnings)
Mini-COBRA for health insurance: 3 months

Sources:

Unemployment rates are March figures from the Bureau of Labor Statistics: http://www.bls.gov/web/laus/lauhsthl.htm

Underemployment is averaged from the second quarter of last year through the first quarter of 2011, also from BLS: http://www.bls.gov/lau/stalt11q1.htm

Median duration of unemployment are numbers from 2009, courtesy of the Economic Policy Institute:
http://www.epi.org/economic_snapshots/entry/job_searches_take_longest_in_michigan_and_south_carolina

The length of extended UI benefits are from the Center for Budget and Policy Priorities: http://www.cbpp.org/cms/index.cfm?fa=view&id=3164

The National Employment Law project brought us the average weekly checks sent to the unemployed in various states, what they represent in terms of replacing lost wages and the share of jobless people who are covered by the states. The data is from the second quarter of 2008. They have it broken down by region:

East: http://www.nelp.org/page/-/UI/2008.2.%20Eastern%20States.pdf
Mid-west: http://www.nelp.org/page/-/UI/2008.2%20Mid-Western%20States.pdf
South: http://www.nelp.org/page/-/UI/2008.2%20Southern%20States.pdf
West: http://www.nelp.org/page/-/UI/2008.2%20Western%20States.pdf
 
Mini-COBRA info from the State COBRA Law Directory: http://www.cobrahealth.com/statelawdirectory.htm

The Stimulus Complex

Hit Me With Your Best Shot
By MARK WEISBROT

This is the worst Labor Day for American labor in decades, maybe since the Great Depression. Unemployment is at 9.5 percent (as of July), and if we add in the people involuntarily working part time or who have given up looking for work, we get 16.5 percent of the labor force. This means that unemployment plus underemployment has risen by about 14.6 million people since the recession began.

How bad does it have to get before the Congress (and the president) decide that we need another stimulus to get this economy moving? The collapse of home sales in July to the slowest pace on record was a reminder that the market for housing is likely to be depressed for years to come. Home prices have another 15 percent to fall to get back to pre-bubble trend levels. Add that gloom to the labor market and no wonder consumer spending has been weak in this recovery.

You know things are bad when the Chairman of the Federal Reserve – trying to calm the markets, as he attempted last week - makes a speech to his fellow central bankers assuring the world that the Fed has more tools in its toolbox of monetary policies if things get more desperate.

But compared with the elected branches of our government, the Fed has done a lot to counteract this recession. It can and should do more – such as raising its targeted rate of inflation - but right now we need Congress and the president to act.

Fears of a double-dip recession, which is a real possibility, are only part of the story. If the economy limps along at the growth of the last quarter – 1.6 percent – or less, and therefore job creation does not keep up with the growth of the labor force, it will still feel like a recession to most Americans. Even people who are employed will be reluctant to spend because of job insecurity. And businesses will hold back on investment; business investment (not including inventories) is still down 15 percent from its pre-recession peak. The technical definition of recession will not matter, except to the National Bureau of Economic Research. Employment is what matters.

Republicans have successfully promoted the idea that we already tried a stimulus and it didn’t help. There are few, if any, economists who would agree. The non-partisan Congressional Budget Office estimates that between 1.4 and 3.3 million more people were employed by mid-2010, because of the stimulus.

The problem is that there is no stimulus any more, as state and local spending cuts outweigh what little impact remains of federal stimulus on growth. The results of these local budget cuts can be tragic, as on July 20 in San Diego, when a two-year-old child died after a response from emergency medical services was delayed because of fire department cutbacks.

What is the argument against another stimulus? Simply that it will add to our national debt. But what is another few percentage points of debt compared with leaving millions of Americans unemployed, indefinitely, and the risk of a downward spiral that could sink the economy even further? It is better to err on the side of caution – and yes, the side of caution is avoiding the more serious risks.

A national grass-roots non-profit group called Jobs with Justice is organizing a nationwide effort on Sept. 15 to pressure Congress to act. It makes sense to me. Maybe voters should make it a “litmus test” for every Congressional candidate in November: no new stimulus, no vote. If they don’t care enough about our jobs to make a simple commitment like this, they don’t deserve to have a job either.

Underemployment Through Mid-May

Underemployment - A situation in which a worker is employed, but not in the desired capacity, whether in terms of compensation, hours, or level of skill and experience. While not technically unemployed, the underemployed are often competing for available jobs.

Underemployment At Record 20% According To Gallup

A stat that is far more accurate on the state of employment for 1/5 of all able to work Americans. The number of freelance gigs I get lowers each month (not counting the months when I've gone without any freelance gigs, which is up higher than I care to admit).


Underemployment At Record 20% According To Gallup

Just in case anyone needed confirmation that the DOL data is just a little, how should we say it, cooked, here comes Gallup with their March 15 undermployment number, which just hit a 2010, and series, high of 20%. This is obviously worse compared to both the beginning of the year (19.5%) and February (19.8%). Unlike the Dept of Labor's arcane voodoo which lately is based more on executive confidential memos and snowfall observations, Gallup's underemployment measure is based on more than 20,000 phone interviews collected over a 30-day period and reported daily. Furthermore "Gallup's results are not seasonally adjusted and tend to be a precursor of government reports by approximately two weeks." We wonder if the abnormally hot March weather will used as an excuse for a deterioraiton in the most recent NFP numbers.

A summary of underemployment trends as per Gallup:

A profiling of the two components of the Underemployment index indicate that while Gallup's unemployment rate declined marginally from February and was at 10.3%, the percentage of those emplpoyed part time and seeking full time work surged to 9.7%.

Focus on Underemployment, Not Unemployment

Even with historic healthcare legislation under consideration, Congress passed and the president signed a new jobs creation bill on March 18. No doubt, national attention will shortly shift to unemployment and anticipation of the government's April 2 report of the March unemployment rate. In this regard, Gallup's mid-March unemployment rate is likely indicative of the not-seasonally adjusted unemployment rate the government will release in April, as is Gallup's broader underemployment rate.

The danger associated with focusing on unemployment is reflected by the recent statement of Morgan Stanley economists suggesting that the U.S. may add as many as 300,000 jobs in March owing to an improvement in the weather, economic growth, and the government's hiring of temporary census workers. If anything close to this number of new jobs is announced by the government in early April, there is likely to be an enthusiastic, possibly even celebratory, response. Government officials are liable to tout the continued benefits of last year's stimulus and the future benefits of the new jobs bill. Many Wall Streeters will likely argue that the surge in jobs is simply another confirmation of the strength of the overall economic recovery.

However, before policymakers celebrate too much, they should note Gallup's recent findings involving its new, more inclusive measure of underemployment. To be sure, there are some benefits associated with the unemployed getting part-time jobs, no matter the source. For example, Gallup's self-reported spending data show that part-time workers who want full-time work spent on average 24% more per day ($51) during the past 30 days than did the unemployed ($41). While this represents an improvement and is good for the economy, it is not nearly as good as the 85% higher daily spending of those having full-time jobs ($76).

It is also often suggested that a growth in part-time jobs may indicate future growth in full-time work -- that companies hire part-time workers before committing to hiring new full-time employees. While this is sometimes the case, it may not be so at this point in the U.S. economy: Gallup data show that one in three part-time employees who are wanting full-time work are currently "hopeful" about finding a full-time job in the next 30 days -- not much of an endorsement of the idea that today's new part-time work will progress to full-time jobs.

Regardless of how one interprets the shifts taking place between part-time and full-time jobs, it is important that policymakers focus on the broader goal of reducing underemployment, not just unemployment. Part-time, temporary jobs like those associated with census-taking are far better than no job and may reduce the unemployment rate, but they do not represent the kind of job creation needed for a sustainable economic recovery.