Archive for the ‘Unemployment Insurance’ Category
It’s time to cut the crap on this so-called “help” and call it what it is: Welfare, then take it out back and shoot it.
About 2.1 million Americans receive payments through federally backed emergency unemployment programs, which Congress adopted starting in 2008 as a temporary supplement to state-level programs funded primarily with taxes on employers, which generally offer six months of benefits. That number has tumbled from more than 3.5 million at the start of the year and a peak of more than six million in early 2010, reflecting not just the gradual improvement of the job market but also new limits that have pushed hundreds of thousands of workers off the rolls before they could find jobs.
These programs are simple welfare, nothing, more or less.
As of last week’s report “EUC 2008″, which is the program in question, had 2.156 million “beneficiaries.” To put this in context “regular” state unemployment had 2.956 million people receiving benefits as of November 3rd.
“Regular” unemployment (26 weeks) is an insurance program. You, the employee, pay into it with a piece of every paycheck. It is prohibited by law for your employer to itemize this as a deduction from your paycheck, but it is a fact that it comes out of your offered wage in each and every case. In this regard it is a forced insurance program (gee, where do you think the Government got the idea that forcing people to buy insurance — like health insurance — was a good idea?) but the fact remains that “regular” 26-week unemployment compensation is something you paid into, although as an employee it is an insurance program you cannot opt out of.
EUC is a welfare program. It is entirely unfunded and you paid nothing for it. It was and is the clear intent of government to blur the line between the two, making you believe you were and are entitled to the latter benefit because “it’s something you earned” when in point of fact nothing of the sort ever occurred.
The problem is that not only does this form of welfare distort the job market, as it encourages people to “hold out” for a job they want rather than taking whatever they can get (or starting their own business, even if it is nothing more than doing odd jobs for money from people.)
It also distorts the picture that people have regarding work .vs. welfare, a hand out .vs. a hand up.
It is my considered opinion that unemployment insurance is something that you should have the right to either buy or not as an individual employee and your employer should have nothing to do with it. The current system is rife with fraud; in Illinois, for example, it is virtually impossible to prevent someone from getting unemployment even if they are fired for cause. I had multiple cases when I ran MCSNet where I terminated someone for a blatantly “for-cause” reason (e.g. not showing up for work on a repeated and notorious basis) and they would file for unemployment anyway. We would protest and lose and the person who got canned would collect despite being outrageously ineligible.
This sort of abuse hurt everyone who legitimately wanted to work at the shop, since their wage offer was originally reduced by the amount that I would have to fork over for unemployment “insurance.” The fact that any random employee could (and some did) claim this benefit illegitimately and got away with it meant that everyone in the place got screwed. Oh sure, the amount of the screwing for each employee was relatively small, but that’s not the point — if you steal a dollar or $10,000 from someone the only thing we’re arguing about is the amount of damage, not whether the act was proper.
As a nation we need to fix these problems. The best way to solve it in this case is to scrap the “unemployment” system entirely, and make unemployment a insurance program that employees can buy on their own initiative. That in turn would make such a benefit entirely portable and entirely at the employee’s discretion; in some cases people would choose not to buy it at all (e.g. a teen taking a summer job or a second income in a household that is not necessary but enhances lifestyle) where others would want to buy it (e.g. a head-of-household.) This would also allow private companies to price the insurance for the risk on an individual basis and they’d have a strong incentive to police fraud and claims for “benefits” where the person in question was fired for cause.
Let the hate mail aimed at me for the termerity to suggest that people should work for what they get, and that the scam level in our system be reduced, no matter how slightly, begin.
I am amused by the Shadow Weekly Leading Index Project which claims the probability of recession is 31%. I think it is much higher.
When the NBER, the official arbiter of recessions finally backdates the recession, May or June of 2012 appear to be likely months. Let’s take a look at why.
US Manufacturing PMI
Markit reports PMI signals weakest manufacturing expansion in 11 months
- PMI lowest since July 2011, suggesting slower rate of manufacturing expansion
- Rate of output growth broadly unchanged
- New orders rise at weakest pace in four months
- Input costs fall for first time in three years
Durable Goods Orders Plunge
Those numbers do not look good but they are hardly disastrous. Here are some numbers that are disastrous.
Philly Fed Survey
For the second consecutive the Philly Fed Survey has been solidly in the red.
Those numbers are nothing short of a disaster.
The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, fell from a reading of ‐5.8 in May to ‐16.6, its second consecutive negative reading. Nearly 40 percent of the firms reported declines in activity this month, exceeding the 22 percent that reported increases in activity.
Indexes for new orders and shipments also showed notable declines, falling 18 and 20 points, respectively. Indexes for current unfilled orders and delivery times both registered negative readings again this month, suggesting lower levels of unfilled orders and faster deliveries.
Firms’ responses suggest steady employment this month but shorter hours. The percentage of firms reporting higher employment (14 percent) edged out the percentage reporting lower employment (12 percent). The current employment index increased 3 points this month. Firms indicated fewer hours worked this month: the average workweek index decreased 14 points and posted its third consecutive negative reading.
Note the misguided optimism about six months from now. It’s not going to happen.
- Europe is a disaster.
- US manufacturing is cooling rapidly
- China is cooling rapidly: China Manufacturing PMI 7-Month Low, Sharpest Decline in New Export Orders Since March 2009
- US Monetary policy is at best useless, but more likely net harmful, especially to those on fixed income.
- First year presidential politics are frequently recessionary
- US still needs fiscal tightening
- Unemployment insurance has expired for millions: 200,000 Lose Unemployment Benefits This Week, Nearly Half From California
- Self-Employment desperation: 100% of U.S. Jobs Added Since 2010 Have Been Self-Employment, Contractor, or Other Jobs Without Unemployment Insurance Benefits
- Last two jobs reports have been dismal: Another Payroll Disaster: Jobs +69,000, Employment Rate +.1 to 8.2%, April Jobs Revised Lower to +77,000; Long-term Unemployment +310,000
- The 4-week moving average of weekly unemployment claims is at the highest rate of the year, at 386,250.
- New home sales cannot gain significant traction: New Home Sales Hype vs. Reality
- Tax Armageddon
Deficit spending has carried this “recovery” further than I thought it would, but the party is now over.
It will be difficult if not impossible to overcome the above set of circumstances regardless of what anyone feels about economic back-tested recession probabilities.
Please consider Taxmageddon
The Tax Foundation reports that because of higher federal income and corporate tax collections, Tax Freedom Day came four days later this year than last. And the bad news is that unless Washington takes action, it will take working Americans 11 more days to meet next year’s tax burden.
That’s all due to Taxmageddon — a slew of expiring tax cuts and new tax increases that will hit Americans on January 1, 2013, amounting to a $494 billion tax hike. Heritage’s Curtis Dubay reports that American households can expect to face an average tax increase of $3,800 and that 70 percent of Taxmageddon’s impact will fall directly on low-income and middle-income families, leaving them with $346 billion less to spend.
Taxes Will Go Through the Roof
Without significant tax code changes, in 2013, America is scheduled to get hit with what would be the largest tax increase in our history.
Not only will the $1,000 per year tax holiday for a $50,000 income household disappear, come 2013 all Americans will see the tax on their first $8,700 of income jump from a 10% rate to 15% rate.
That hike will cost the majority of filers an additional $435.
For those eligible for child care tax credits that deduction will drop from $1,000 to $500. The marriage penalty will roar back into effect. The AMT, alternative minimum tax, will finally kick in.
Roll those changes up and a family filing as married with two children making $50,000, will see their taxes increase by basically $2,700.
Regardless of whether or not you feel taxes need to be raised, a big set of tax hikes is scheduled to happen.
To be sure, some of those hikes will be undone in compromises, but many if not most will sneak through.
Who is to blame for Taxmageddon?
Republican are to blame. They accepted this silly deal instead of a far better one that Obama would actually have signed.
But No! Republicans insisted on no tax hikes at all in 2012, putting everything off until after the election, believing Romney would win in a cake-walk.
However, if President Obama wins, certainly not at all an unlikely possibility, he is going to drive a much harder bargain this go around.
Regardless of tax consequences, the US is headed for recession, if not already in one. 2013 rates to be a disaster regardless who wins.
Mike “Mish” Shedlock
In the week ending June 16, the advance figure for seasonally adjusted initial claimswas 387,000, a decrease of 2,000 from the previous week’s revised figure of 389,000. The 4-week moving average was 386,250, an increase of 3,500 from the previous week’s revised average of 382,750.
Well, no, it’s not. And that’s a problem.
Ominously, the “big table” was almost flat — roll-offs in the extended benefits are countered by new claims in the 26 week “basic” program, which may indicate building layoff pressures once again.
This is not confirmed, but it’s definitely not a good sign, and this far into the so-called “recovery” we should be well on our way to solid, week-over-week gains in these statistics.
It’s not happening.
There is no recovery folks, and there can’t be — there is simply too much debt and thus far everyone’s “prescription” for how to “fix it” is to…. wait for it… add more!
This economic decline has been really hard on everyone, but it has been particularly hard on American men. During the last recession male employment dropped like a rock and it has not recovered much at all since then. That is why many referred to the last recession as a “mancession”. Industries where men are disproportionately represented such as construction and manufacturing have really been hit hard in recent years. In the old days, you could take a high school education down to the local factory and get a job that would enable you to live a middle class lifestyle and support a growing family on just that one income. Sadly, those days are long gone. Today, American men live in a world where their labor is not really needed. Wages are falling because almost any worker can be easily replaced by the vast pool of unemployed American workers that are currently searching for work, and a lot of big companies are shifting labor-intensive jobs overseas where workers only make a small fraction of what they make in the United States. American workers (especially those without much education) are considered to be expensive liabilities in a world where labor has become a global commodity. So the percentage of working age American men that have jobs is likely to continue to decline and wages are likely to continue to stagnate as well.
For many men, a long-term bout with unemployment can almost be worse than a major illness. It can be really hard to feel like a man when you don’t have a job. Men often see themselves as filling the “provider” role, and when they aren’t providing for their families self-esteem can fall through the floor. It is easy to feel worthless when there is no money coming in and your wife and your kids are looking at you with worry every single day.
As you read this, there are millions upon millions of unemployed men sitting at home with a glazed look in their eyes. When you talk with these men, many of them seem as though the life has been sucked right out of them.
As I wrote about recently, when you cannot find a job month after month after month people start to look at you differently. Some start to look at you with pity in their eyes, and others start to look at you with disgust in their eyes.
Most Americans don’t really understand how much the economy has fundamentally changed, and many of them still believe that it shouldn’t be too difficult to find a job in “the greatest economy on earth”.
But things have changed. If you don’t have a college education or some highly specialized skills then it is going to be exceedingly difficult to get a good paying job in this economy.
Unfortunately, finding a job is not going to be getting any easier. Times are hard now, but they are going to be getting a lot harder.
The following are 16 signs that this economic decline is sucking the life out of the American male….
#1 During the last recession, men lost twice as many jobs as women did.
#2 According to the Economic Policy Institute, the “real entry-level hourly wage for men who recently graduated from high school” has declined from $15.64 in 1979 to $11.68 last year.
#3 During the recent economic downturn millions of men saw their family finances get absolutely destroyed. According to the Federal Reserve, the median net worth of families in the United States declined “from $126,400 in 2007 to $77,300 in 2010“.
#4 As you can see from the chart below, in the 1950s there were times when nearly 85 percent of all working age men had a job. Sadly, that number has stayed below 65 percent since the end of the last recession….
#5 More unemployed fathers than ever are staying at home with the kids. Over the past decade the number of “stay at home dads” has doubled.
#6 Prior to the recession, women accounted for approximately 45 percent of the workforce. Now, they account for 49.4 percent of the workforce.
#7 According to one new survey, 23 percent of all small business owners in America have gone for more than a year without pay. More than half of all small business owners are men.
#8 The decline in manufacturing jobs has had a disproportionate impact on men. Back in 1940, 23.4% of all American workers had manufacturing jobs. Today, only 10.4% of all American workers have manufacturing jobs.
#9 More than half of all middle management jobs in America are now held by women.
#10 More than half of all health care jobs in America are now held by women.
#11 American men love to watch television. But because of harsh economic conditions more families than ever are eliminating cable television service. According to one survey, a whopping 6.9 million American homes cancelled cable service last year.
#12 According to the New York Times, approximately 57 percent of all Americans that are currently enrolled in college are women.
#13 According to one study, between 1969 and 2009 the median wages earned by American men between the ages of 30 and 50 dropped by 27 percent after you account for inflation.
#14 According to another study, “young, urban, childless women” make more money in America today than young, urban, childless men do.
#15 According to CNN, in the United States today men in the 25 to 34 age bracket are nearly twice as likely to live with their parents as women the same age are….
The number of adult children who live with their parents, especially young males, has soared since the economy started heading south. Among males age 25 to 34, 19% live with their parents today, a 5 percentage point increase from 2005, according to Census data released Thursday. Meanwhile, 10% of women in that age group live at home, up from 8% six years ago.
#16 Our system often treats elderly American men like absolute trash. Just check out what happened to one elderly veteran up in Montana recently….
Warren C. Bodeker is an 89 year old World War II Army Airborne combat veteran and war hero, living in Montana, who is being thrown off of his own land and thrown out of his own house, by Montana Federal Bankruptcy Trustee, Christy Brandon, with the approval of the U.S. Bankruptcy Court in Montana. And to make matters worse, Warren’s wife Lorna just died of cancer this past year, and is buried there on their land, right next to the house. Warren had planned to live there till he died and then be buried right next to his wife, there on their property at 11 Freedom Lane, in the town of Plains, Montana, but now, not only is he being forced off his land, he is being forced to exhume his wife’s body and take her with him.
As the ability of men (and women) to take care of their families continues to decline, the middle class continues to shrink rapidly.
Most Americans continue to expect our economy to be able to bounce back to where it was before, but the truth is that the U.S. economy is in the midst of a long-term decline.
We are heading for an absolute economic nightmare, and we desperately need to come together as a nation and find some real solutions.
Unfortunately, our nation is becoming more divided than ever, and most of our politicians are proposing that we continue to do the exact same things that got us into this mess.
So what do all of you think about “the mancession” and what this economic decline is doing to the American male? Please feel free to post a comment with your thoughts below….
By Karl Denninger
Debra Rousey of Gainesville, Georgia, says that she received an unemployment check of $194 last week, half the usual amount she receives, along with a letter announcing that this check would be her last. She is now in a complete panic over what to do next.
Welcome to a thing called “reality.”
“I’m desperate and devastated,” she told HuffPost. “I didn’t get any warning. I was barely making ends meet on $330 a week, trying to diaper my grandchild and put food on the table for the four people I support. What do I do now? How am I going to make rent next month? I keep thinking, ‘If I end up in a cardboard box, can I find one big enough for everybody, or do I have to send my son to live with someone else?’”
Ok, let’s think here. Four people you support? One is a grandchild (where’s Dad – if not Mom?); who are the other four?
Since Rousey, 45, was laid off from her job as a branch manager for Suntrust bank in November, she says she has been “frantically looking” for a job — everything from entry-level marketing positions to a fry cook job at McDonalds — but hasn’t had an interview in months. As of tomorrow, she will be one of nearly 1.7 million people whose unemployment benefits have prematurely expired while Congress sits on legislation that would renew those benefits.
How long did you have that job and how much did you save of your income during that time? Little – or zero? It sounds like it. This situation, incidentally, is why that’s a bad idea.
Rousey is currently pursuing a master’s degree in adult education through an online program, and her son, 17, and her 25-year-old daughter are also full-time students. She said all three of them are desperate for work.
How is the school being paid for? And the 25-year old – how long has she been in school?
“They cut off my Internet and cable about five minutes ago, and my landlord is already calling,” she said. “I don’t have time to wait for Congress to extend these benefits. I’m drowning fast.”
Oh, I see. And in November, when you lost your job, the Internet and Cable (which is likely $100 a month or so) was not something you cut off proactively to conserve funds? Why not?
Got a cell phone? What’s the monthly nut on that?
Diapers are expensive in packages. Cloth ones are cheaper. Yes, they’re less convenient – a lot less convenient. I remember buying the packages of Pampers for my daughter. If I had been broke, cloth it would be.
What’s your electric bill? Did the AC get cut off in November too, or has it been blasting away all spring and summer? Was your heat set at “Jimmy Carter” levels over the winter months, or was it a nice toasty 72F inside?
November -> June is six months during which the standard 26 weeks of unemployment (that you do pay into via taxes and premiums that are assessed on your employer) ran.
The rest is a handout.
Over those six months this individual appears to have made no adjustments of materiality to compensate for the fact that she lost her income. Now she’s in a panic and is looking for someone to blame.
Notice that nowhere in that article is even the first hint of accepting responsibility for not cutting back on significant discretionary purchases when the job was lost and attempting to stretch every dollar as far as it could possibly go.
I empathize with this woman’s dilemma, but here’s the problem: We (the government, the people) don’t have the money to keep doing this.
Yes, I also recognize that we squandered an awful lot of money, but those funds are gone. Take it out on whoever you’d like for those acts. I did my level damndest to stop it, and failed. We gave money to GM, we gave money to Chrysler, we gave money to AIG, we gave money to foreign banks. Both republican and democrat administrations did this, including President Barack Obama who, I remind everyone voted for TARP along with a number of other pork-laden bills.
Nearly three years ago I recommended that the government fund and put aside $200 billion in actual cash to provide emergency shelter and food for up to 25% of the population for as long as 12-24 months. I was entirely serious, although I’m sure that many Congressmen and women who got my faxed letter perceived me to be absolutely insane. My recommendation was to be prepared to provide “three hots and a cot” on closed military bases or unused parts of active facilities for this purpose. These would not be “luxury accommodations” or even trailers – we’re talking literally “three hots, a cot, hot water to shower with and flush toilets.” That’s all.
The simple fact of the matter is that huge swaths of America literally have saved nothing. They have been goaded into borrowing amounts that in some cases exceed their annual earnings. Most of these people are literally one hiccup in their income stream away from utter destitution.
Yes, much of it (if not all of it) is their own fault. They have saved nothing. They run $100 cable TV and Internet bills, and another $100 for “smart” cellphone service – each and every month. They have their financed car(s) on which they must maintain full coverage insurance (instead of a “moving jalopy” that is paid for, worth little, and on which one only needs liability insurance at 1/4 the cost.) They’re entitled to a 75 degree house in the winter or summer, even if it generates a $300 electric bill. They believe they’re entitled to student loans to go to college (instead of refusing to attend until the colleges get costs in check) further damaging their economic futures.
This state of affairs did not come about in an afternoon and it can’t be fixed in one either. We cannot allow people to starve, but we also cannot continue to fund handouts as we have. The money simply is not there.
We need to figure out how to live in a nation with a forty percent smaller GDP than we now have. Yes, 40%. That means you, I, everyone else. The “living large” game is over. All Ponzi Schemes ultimately collapse – they do not go quietly into the night. The collapse is brutal, it’s quick, it’s efficient and it’s devastating to anyone caught in it.
These are facts, not fantasies.
If you are not prepared today, you need to become so by tomorrow.
Incidentally, yesterday would have been better.
There are some things we can do to help though, and they don’t cost much money at all.
One of them is to kick out the 20 million+ illegal invaders who are consuming resources of all sorts – including taking jobs that Americans could be doing. The non-institutional working-age population (of legal residents and citizens) has gone from 230.6 million in 2007 to 237.5 million now. The number employed has gone from 144.2 million to 139.5. That’s 11.5 million citizens out of work but ready, willing and able.
So tell me why we have 20 million illegal invaders in our nation again? Sure, some of them have jobs. But every one of those jobs is one that an American could be doing. It is an outrage that we allow our nation to be overrun with illegal Mexican invaders while our citizens are out of work and days or weeks away from being evicted and living under a highway overpass.
People tell me we can’t deport ‘em all. My retort is that we don’t have to. Drive a bus with armed security to every chicken plant and strawberry field in America. Pick ‘em up, fingerprint ‘em electronically, bus ‘em to the border. Make clear that if they get caught again in the United States they’ll do five years at hard labor, no possibility of early release, before being deported again. Third time, 10 years. And so on.
It’ll be a week before they all leave on their own, except the gang bangers, of which there are many. Those we’ll have to actually go round up the hard way.
There’s your employment problem.
Who was it that gave a speech yesterday exhorting us to “understand” all those illegal invaders in our country, let them keep the jobs that Americans could be doing, and not kick them out again?
That would be President Obama, I think…..
There is an old saying, “when in doubt follow the money.” These days investors have lots of doubt about pretty much everything (if not so much money). And with data from the government increasingly bearing the Quality Control stamp of approval of the Beijing Communist Party, there is much doubt in store courtesy of an administration which will stop at nothing in its competition with China as to who can blow the biggest asset bubble the fastest, data integrity be damned. Undoubtedly, of all government released data, the most important is, and continues to be, anything relating to unemployment. Which is why this is precisely where the government’s propaganda armada is focused. Yet in matters of (un)employment, the ultimate authority is, luckily, the Treasury, and not the Fed. “Luckily,” because when it comes to making money “difficult to follow” Tim Geithner’s office still has much to learn. Which is why when we looked at the Daily Treasury Statement data we were very surprised: because it indicates that the government could be underrepresenting employment data by up to 32%!
The suddenly very prominent topic of Unemployment Insurance, whether it pertains to Initial Claims or to Emergency Unemployment, has one very useful characteristic: it is based on “money”, specifically money outflows from the US treasury which goes to fund the weekly “paychecks” of those that have not been in the workforce for well over a year. And as pointed out earlier, money can be followed. The US Treasury presents a daily in and outflow of all money sources in the Daily Treasury Statement prepared by the Financial Management Service. And in the plethora of data presented here, probably the most relevant and useful data series is the Withdrawals quantified in the form of Unemployment Insurance Benefits.
Compiling the monthly data of Treasury Disbursements for Unemployment Insurance Benefits and then superimposing it with the total number of people receiving Insurance Benefits as disclosed by the Department of Labor is a useful exercise, as the two series have historically correlated with an R2 of well over 0.90. Below is an indexed comparison of UIB outlays and Unemployment Insurance Receivers for Fiscal 2007.
Surely this is logical: the more unemployed collecting benefits from the government, the more the outlays.
Yet what struck us is the when this chart is presented from 2007 until today. Something unusual emerges. An absolute chart of the money spent by the government superimposed with the total insured unemployed is presented below:
Yet the best way to see what this chart indicates is on an indexed basis with a September 2007 baseline.
What becomes obvious is that a correlation which used to be almost 1.000 has diverged massively, and now the relative outlays surpass what the government highlights are the number of people actually collecting benefits by 32%! This implies two things: either the average unemployment monthly paycheck has surged, which is not the case, or there is some gray unemployment area which is not disclosed by the government, and which accounts for a shadow unemployed insurance economy. Because while the DOL indicates there are about 9.5 million total unemployed, for the correlation to return to its near 1.0 trendline the number of unemployed on benefits has to be 14 million. At least this is what the actual cash outlays by the Treasury suggest: the government spent a record $14.7 billion on Unemployment Insurance Benefits as of December 30, a 24% jump sequentially from the $11.8 billion in November. Yet the DOL has disclosed a mere 1.7% increase in those to whom insurance benefits are paid: from 9.4 million to just under 9.6 million. To put the $14.7 billion number in perspective, in December the Federal Government paid a total of $14 billion ($700 million less) in Federal Salaries! A cynic could be temped to say that effectively the number of people employed by the government is double what is disclosed. A yet bigger cynic could claim that America is now the biggest socialist state in the world. Both cynics would not necessarily be wrong.
And some more perspective: in calendar 2009 the government has paid $140 billion in Unemployment Insurance Benefits. This is yet another economic stimulus that nobody in the administration discusses, yet which undoubtedly has the biggest impact on the economy, as all those millions unemployed can moderate their pain courtesy of a passable weekly check from the government which should just about cover the rent and beer. Which is why more than anything, Obama is dead set on extending insurance benefit payments in perpetuity: because if the 10 million official and 14 million unofficial people who are on benefits (not to mention the tens of millions of unemployed unlucky enough to even get their weekly allowance from Uncle Sam) start thinking about their true predicament and their real “employability”, then a landslide loss by this administration at the mid-term elections will actually be an upside surprise to what it can objectively expect.