Tuesday, March 3, 2015

CBO Director makes Wild Claims about Disability

The Congressional Budget Office always been touted as a "non-partisan" body of the U.S. Government that can always be wholly trusted to provide our political leaders with unbiased facts, free and clear of any ideological spin. But evidently, not any more.

The Republicans have already launched a first strike on disability — and they have also been recruiting new players to advance their game plan. I we find that last year the new head of the CBO had made the wild claim that 90% of the drop in the labor force since the Great Recession was attributed to young prime-age workers going on Social Security disability.

Incoming Republican leaders in Congress didn’t reappoint Doug Elmendorf to another term as head of the Congressional Budget Office. The move came after a campaign from conservative lawmakers, who wanted to change the way the CBO calculates the costs of government. Incoming House Budget Committee Chairman Tom Price (R-Ga) wanted a new CBO director who would introduce so-called dynamic scoring to CBO analysis. Dynamic scoring is the idea that policy changes can induce significant macroeconomic effects, such as tax cuts partially paying for themselves.

One economist, Mark Thoma, writes at his blog: "Another worry [about dynamic scoring] is the politicization of the CBO. See here and here. Also see here and here on the application of dynamic scoring to things such as Head Start and infrastructure spending."

New York Times (By N. Gregory Mankiw) A Slippery New Rule for Gauging Fiscal Policy: Dynamic Scoring Is Defensible, but Has Drawbacks:

"In the coming years, will these Congresses respond quickly to the revenue shortfall, or will they let budget deficits fester? When they act to close the budget gap, will they increase taxes, or will they cut spending? If they cut spending, will it be on consumption items, such as health care for the elderly, or on growth-promoting investments, such as education for the young?" (We know very well what the GOP will do. Right now the Republican leaders are trying to cut disability, for Democratic and Republican disabled voters alike.)

Republicans recently named Keith Hall as head of the Congressional Budget Office, installing a conservative Bush administration economist atop an agency charged with determining how much lawmakers’ bills would cost. Hall, who served on George W. Bush’s Council of Economic Advisers, is a critic of the Affordable Care Act, and shares Republican skepticism of government spending and regulation. He has criticized proposals to raise the minimum wage, expand regulation and boost anti-poverty programs. Last month, House Republicans formally adopted the controversial budgeting rules known as “dynamic scoring” — which aims to account for the macroeconomic effects of legislation. (The House Budget Committee Chairman Tom Price praises the new CBO boss, while diplomatically complimenting the old boss).

Keith Hall
Keith Hall CBO director

Republicans hope the combination of a new CBO director and the dynamic scoring rules, will make it much easier to cut taxes. But revenue estimates are actually the job of a different office: The Joint Committee on Taxation (JCT). The twin budget offices divvy up the scorekeeping responsibilities, with JCT focused on taxes and CBO handling spending, deficits and economic forecasts. Here are the latest proposals for taxation at the The Joint Committee on Taxation. (And guess who's in charge there? Paul Ryan is the Chair and Orin Hatch is the co-Chair. A perfect storm for those on disability.)

The GOP will cut spending, and most probably on all Social programs that benefit everybody else but the top one percent. To pay for tax cuts, cuts in social programs will most likely occur — sort of like PAYGO — but in reverse. Some call it "starving the beast".

Or maybe we can call the GOP's proposed budget and tax plans part of their overall strategy of "Starving the Least" — as in, starving the least fortunate, the least connected, the least financially secure, the least able, the least paid, the least healthy and the least wealthy. And now the GOP's plan is in full swing.

But whatever we call it, with a GOP-controlled Congress, with Rep. Paul Ryan as the chair of the Way and Means and chair of the Joint Committee on Taxation, and with Keith Hall as the head of the Congressional Budget Office, be afraid. Be very afraid, because Keith Hall was specifically picked by the new GOP Congress to replace Douglas Elmendorf so that the GOP would use “dynamic scoring” when going over new tax proposals by the Joint Committee on Taxation.

Keith Hall, who previously worked at the libertarian think tank Mercatus Center, is also not above making false and exaggerated claims about Social Security disability. Last year Keith Hall claimed that "90 percent of the labor force decline for those who were in their prime working ages [25 to 54] for the entire six-year span [from 2007 to 2013] was from disability." (The full text is at the end of this post, if the web page is ever removed).

That is a totally preposterous claim by our new head of the CBO. Below is a graph from the St. Louis Federal Reserve for the participation rates of prime-age workers and older workers from June 2009 to June 2003 — the period that Mister Hall refers to. Yes, there was a huge decline for prime-age workers; but was it because the vast majority of young workers went on disability? Simple answer. Hell no! But if you need some convincing, then read on.


Keith Hall claims: "Today, [July 2014] after six years of recession and weak recovery, labor force participation by this group [25 to 54] has plummeted. Nearly five million out of the 125 million of them dropped out of the labor force."

I assume that when he says "125 million of them" he was speaking of the civilian labor force was, although, that's wrong. According the Bureau of Labor Statistics, an agency that Keith Hall once led, as of June 2007, the civilian labor force was 154,313,000 -- and as of June 2013, it was 155,761,000 — for a net gain of 1,448,000. Also, 5 million workers didn't drop out of the labor force during the time period he refers to. It was over 11 million, as I document later on in this post — and that's something that Keith Hall should have known. So why would he fudge the numbers and say otherwise?

Keith Hall also claims that of those five million, those "between 55 and 60 years old — about 2.4 million dropped out of the labor force" — and that of those, "about 70 percent moved into retirement. The rest exited the labor force due to disability."

70% of 2.4 million is 1,680,000 who he says had retired — which would mean the other 30% (who are "between 55 and 60 years old") would equate to be 720,000 who "exited the labor force due to disability." Math would also indicate that when he says "the rest", it is 2.6 million. But according to the Social Security database, as of June 2007 there were 6,923,999 "disabled workers" in payment status for disability. As of June 2013 there were 8,892,515 — for a net gain of only 1,968,516 (for all age groups) over that 6-year period that Keith Hall refers to. But he says "the rest" (2.6 million) "exited the labor force due to disability." (Remember these numbers for future reference, because he is totally wrong about, both the number on disability, and the number of retirees.)

Keith Hall also claimed the rise in the disability rate "hit a record 5.2 percent in 2013". This is only partially true, if one were using the number who are disabled and assigning it an equivalent percentage to those who are in the labor force (155,047,000 in the civilian labor force and 8,942,584 in payment status for disability in 2013). Yes, as a percentage of those we count in the labor force (the "employed" and the "unemployed"), a greater share is on disability today. (In 1967 there were 1,193,559 on disability — or 1.52% of a labor force of 78,491,000 as an equivalent percentage). But that increase is also taken out of context, because as a percentage, overall there also more people NOT in the labor force for many other reasons as well (retirement, discourage workers, etc.)

A combination of many different factors can also be attributed to the increase of those disability (as a percent to the labor force), such as an aging work force (e.g. the Baby Boomers) — and because of many other factors that effects the overall labor force in general, which has kept the labor force from growing in direct proportion to the population as a whole: factors such as off shoring, computers, automation, immigration, guestworker visas (etc.), all of which requires less workers (from a larger pool of workers) to produce the previous equivalents of GDP output; and that's another reason why we have a declining labor force (a lack of enough jobs to employee everyone who wants one.) For Keith Hall to simply claim the decline in the labor force is because of young people dropping out to go on disability, is at best, ignorant — and in the worse case, very disingenuous.

Also during that same period of time that Keith Hall stipulates, according to the Bureau of Labor Statistics (BLS), as of June 2007 there were 77,460,000 Americans (16 and over) not in the labor force. By June 2013 there were 88,463,000 — for a net gain of 11,003,000 more not in the labor at the end of that 6-year period that Keith Hall refers to. Not just 5 million as he had claimed.

Keith Hall claims: "For those aged 55 and above, the participation rate was below 30 percent just 20 years ago — yet for the past five years, it has been higher than 40 percent." (Yes, this is the one point he makes that is totally true, as verified by FRED (which also helps to dispel the myth that it's mostly Baby Boomers retiring that's driving down the labor force participation rate.)

But then, on almost everything else, Keith Hall gets it all very wrong. He claims: "For those who remain in their prime working years — now between 31 and 54 years old — the story is different. As with the older workers, the decline in participation has been significant — over 2.5 million have dropped out of the labor force. But while some moved into retirement, a shocking nine out of 10 individuals of the younger group report that they exited the labor force due to a disability."

I reiterate: he's said that 5 million dropped out of the labor force during the time frame of June 2007 to June 2013, which is dead wrong. As was previously noted, we've had over 11 million more — over double than what he claims.

Also, very few people younger than 54 (in their prime age years) can afford to retire, nor do they retire, even if they could. Second, Keith Hall doesn't specifically say these prime-aged workers who dropped out of the labor force had also filed a disability claim, or that they received a disability award. Just that they exited the labor force, and supposedly gave "disability" as a reason for exiting the labor force. But even that is highly questionable, and sounds pretty far-fetched. Where is the data to support his preposterous claim???

Since he previously mentions "20 years" when referencing the decline in the labor force, we will compare the decline for 25-54 years and those 55 and older. Below is for the participation rates of prime-age workers and older workers (for 20 years) from June 1993 to June 2003. Again, we see that Boomers aren't driving down the labor force participation rate.

So when Keith Hall mentions the labor force participation rate, he's correct in that, the majority who left were prime-age workers, but then he mangles the statistics by claiming the reason was because the vast majority (90%) of those 25-to-54 years old left to go on disability. That is totally and unequivocally false, and very concerning, especially when this comes from the new head of the Congressional Budget Office. How can we be expected to trust him when it comes to other budget matters?


But it's not those who are filing for, and receiving, disability claims that are driving the LFPR that much either — especially when compared to wannabe new entrants into the labor market, such as 3 million high school grads every year (not to mention college grads and those that drop out of school).

According to the NCES, a research arm of the U.S. Education Department (in the time frame Keith Hall refers to), the U.S. had approximately 21 million high school graduates (for classes 2007, 2008, 2009, 2010, 2011, 2012 and 2013. We had a record 3.4 million high school graduates in 2013 alone. Remember: We had a net gain of only 1,968,516 (for all ages) on disability over that 6-year period that Keith Hall refers to — and we had over 11 million more not in the labor force. The Bureau of Labor Statistics reported that only 48.8 percent of the 3.2 million youth who graduated from high school (as of 2012) were "in the labor force".

Oh...and about one million working Americans have been retiring every year on Social Security. Of all the Americans who retired on Social Security since 2000 (when the labor force participation rate had peaked for all age groups combined, as shown in the graph below) to the end of 2013 — of those, 6,365,927 were Baby Boomers (the first one retired early at age 62 in 2008). But yet, Keith Hall claims that most of the drop in the labor force since the Great Recession is attributed to prime-age workers going on disability (as he is quoted further below in this post).

LFPR - all

Keith Hall claims: "In fact, overall the number of Americans removed from the labor force because of a reported disability is at a record 14 million — up from about 11 million just six years ago."

THIS IS TOTALLY WRONG. Even if one included, not just disabled workers, but also included spouses and children of disabled workers, and also added disabled widows (which would really fall under survivor benefits), it would still only be total 8,953,979 as of June 2007 — which then rose to 11,210,384 by June 2013 — for a net gain of 2,256,405 over those 6 years.

To get to 14 million, Keith Hall was probably doing what the NPR previously did, and used SSI statistics — and then added those to SSDI statistics — that's how NPR also showed 14 million on disability. But if Keith Hall doesn't know the difference, as I've explained it here, then how can he head the CBO? Clearly, qualifications must not matter if arithmetic and/or a knowledge of these two different government programs is a job requirement (How much are the taxpayers paying him? Compensation for the CBO director in 2009 was $162,900 a year. The average for a disabled worker is a mere $13,984 — so who's really on the government dole?)

Then Keith Hall goes on to say: "For those who were in their working prime in 2007 and remain there today, there was a 1.7 million increase in those taking SSDI. This one program alone accounts for three-quarters of the disability exits and therefore, for most of the decline in labor force participation by the prime working-age population."

Again, this is total BS. Remember, we only had a net gain of 1.9 million (for all age groups combined) during the time frame he refers to, so how can there be 1.7 million in their prime age? And according to Social Security, most of those on disability are over 55 years old (at 65 and over, they covert to regular retirement benefits). There are currently 3,497,673 in payment status for disability in the age bracket from 25 to 53 (the prime years) — and there are 5,423,007 in the age bracket of 54 to 65 (older folks). Clearly, it's mostly older workers, not prime-age workers, who are going on disability. What is Keith Hall's real agenda? Or did the head of a major government accounting department make a simple mathematical mistake?

So, if it's not Boomers that is mostly driving down the labor force participation rate, and even though it's mostly older workers who are retiring or going on disability, then it most definitely has to be "a lack of jobs" that is the primary reason for a declining labor force. So why would Keith Hall claim otherwise? (Note: But it would be very helpful if I can find the ages of those who were actually awarded SSDI claims only from June 2009 to June 2013 --- for further debunking Keith Hall. Maybe a reader can provide one.)

It's also worth noting, that historically, both disability "claims" (applications) and actual disability "awards" are way down — both in terms as percentages and numerically in the rise from previous year-to-dates. But for some reason, the GOP has targeted disability as one of their very first acts with their new Congress in 2015 (those who are the least able to fend for themselves), and now they have Keith Hall to help them.

Keith Hall also opines: "Although it was never meant to be an unemployment insurance program, both the applications and acceptances into the program follow the unemployment rate." That is total bullshit. There, I finally said it (because it's true).

Keith Hall also probably thinks that unemployment benefits cause unemployment — and that cutting unemployment benefits creates jobs too, even though currently only 2.5 million unemployed Americans receive jobless benefits out of the 9 million who are currently counted as unemployed. He, like others in the GOP, believe that ending these benefits for 2.5 million people will magically create 2.5 million net new jobs — and lower the number of people unemployed from 9 million to to 6.5 million — and raise the labor force participation rate up a notch too. (Now, if only we could get all those lazy scoundrels off the government dole!)

How can the CBO ever again be considered "non-partisan" (and not just another tool for the GOP) with someone like Keith Hall as the new boss? Hint: It can't.

(Below: The full text to Keith Hall's op-ed, followed by links to the Social Security Administration for all the numbers quoted in this post.)

Social Security Disability Insurance's Effect on Labor Force Participation (by Keith Hall Jul 25, 2014)

The labor force participation rate for the prime working-age population — those between 25 and 54 years old — has been declining in the U.S. since 1997. One of the big reasons is a rise in the disability rate, which hit a record 5.2 percent in 2013. Since the start of the Great Recession, the withdrawal rate due to disability has accelerated. In fact, 90 percent of the labor force decline for those who were in their prime working ages for the entire six-year span was from disability. Most of this — three quarters — was from those receiving Social Security Disability Insurance (SSDI) benefits.

In 2007, 83 percent of the prime working-age population was in the labor force and accounted for over two-thirds of our total labor force. Today, after six years of recession and weak recovery, labor force participation by this group has plummeted. Nearly five million out of the 125 million of them dropped out of the labor force. But why? How much of this is due to retirement? What else contributed to this decline?

For those who aged out of their prime working years — those now between 55 and 60 years old — about 2.4 million dropped out of the labor force. As you might expect, most (about 70 percent) moved into retirement. The rest exited the labor force due to disability. An underappreciated aspect of baby boomer retirements is the fact that they have not reduced their participation as much as prior generations. In fact, for those aged 55 and above, the participation rate was below 30 percent just 20 years ago — yet for the past five years, it has been higher than 40 percent.

For those who remain in their prime working years — now between 31 and 54 years old — the story is different. As with the older workers, the decline in participation has been significant — over 2.5 million have dropped out of the labor force. But while some moved into retirement, a shocking nine out of 10 individuals of the younger group report that they exited the labor force due to a disability.

In fact, overall the number of Americans removed from the labor force because of a reported disability is at a record 14 million — up from about 11 million just six years ago. What appears to have enabled so many of the prime working age population to exit the labor force has been a single program: SSDI. For those who were in their working prime in 2007 and remain there today, there was a 1.7 million increase in those taking SSDI. This one program alone accounts for three-quarters of the disability exits and therefore, for most of the decline in labor force participation by the prime working-age population.

The SSDI program is the largest federal insurance program for lost income from a disability. To qualify, someone must have a minimum work history and a physical or mental condition that prevents them from engaging in any "substantial gainful activity" for at least 12 months. Use of the program has grown significantly — generally over 4 percent per year. Although it was never meant to be an unemployment insurance program, both the applications and acceptances into the program follow the unemployment rate.

Many have expressed concerns over the sustainability of the growth in spending on SSDI, and the Social Security Administration projects the program to be insolvent in just two years. One aspect of this is concern over whether the incentives of the program are encouraging people with disabilities to substitute SSDI benefits for labor market participation. If this is happening, more may be at stake than viability of the program. It may be undermining one of the important purposes of the Americans with Disabilities Act that tries to make sure people with disabilities access the same employment opportunities and benefits as everyone else.

SSA and other Sources


Saturday, February 28, 2015

How Temp Workers get Screwed Twice


Once when they're hired; then again, when they're laid off.

As we see the number of people who are classified by the Bureau of Labor Statistics as "unemployed" drop from over 15 million (in September 2009) to about 9 million today, we must also consider other factors affecting these numbers.

We must also consider the actual number of "new" jobs created, not just one job that is open and filled more than once during any given 12-month period. One temp job can be filled twice or more during any given year, and can be filled by the same person — or by two or more different people. So how many actual people actually found an actual job; and how many "net" new jobs were actually created since the Great Recession ended? The BLS JOLTS report doesn't answer these questions:

"Over the 12 months ending in December 2014, hires totaled 58.3 million and separations totaled 55.4 million, yielding a net employment gain of 2.9 million. These figures include workers who may have been hired and separated more than once during the year."

The Center for American Progress looks at these numbers in a recent article titled: The State of the U.S. Labor Market: Pre-February 2015 Jobs Release:

Policymakers and pundits have taken far too much comfort in the decline in the headline unemployment rate ... Perhaps the most complete picture, called U-6, includes marginally attached workers — those who have looked for work recently, but are not looking currently — and those working part-time who would prefer full-time work. U-6 is always higher than U-3, but it has gotten a lot higher since the recession ... Long-term unemployed, while down sharply from its post-recession peak, is still almost 50 percent higher than its highest prerecession level on record ... At the average rate of job growth over the past three years, The Hamilton Project estimates that we will not reach our former level of employment, when factoring in new labor-force entrants, until sometime after September 2016 ... In a healthy labor market, there is a tremendous amount of churn, with roughly 2 million workers flowing in and out of jobs each month. This is crucial for the U.S. economy, as it represents workers and firms finding better, more productive matches. During times of economic uncertainty, however, people are hesitant to leave their jobs ... Quit rates are conspicuously low, yet another indicator of a still sluggish labor market ... If the [labor] market is improving, we should see more jobs and upward pressure on the cost of labor ... The Employment Cost Index shows falling real wages since the recession. Negative real wage growth means the amount of slack in the market is still considerable ... We have been living with the effects of the Great Recession for nearly six years, and the unemployment rate has never told a story of the labor market as incomplete as it does today.

For the last several months the media has been saying that all 8.7 million jobs that were lost during the Great Recession were gained back. But during the last 6 years since the recession officially ended, we have to remember that every year, an average of 3 million young people are graduating from high school, with most attempting to enter the work force, go to college, or both. Of course, every year there are also college grads as well — and there are also those who drop out of high school and college. But 65 percent of college graduates are showing up on their parents' doorsteps looking for free room and board while they're looking for work. As the economist Mark Thoma reports:

The number of young Americans living with their parents has grown over the last 15 years. Some have returned home after striking out on their own (earning the nickname "the boomerang generation"), while others never left at all ... In 1999, approximately 30 percent of 25-year-olds lived with their parents — but by 2013 the percentage had risen to nearly 50 percent ... It has become more difficult for the young to get an education, strike out on their own, and not have to rely on their parents for support. And there's little reason to suspect this trend will end any time soon.

Also affecting the labor market and the unemployment rate: There are about a million Americans retiring on Social Security every year — and since the recession, the majority were early retirements at 62 with reduced benefits (maybe because they were laid off and couldn't find re-employment). Also, there are those who went on disability. Since June 2009 we had a NET gain of about 5.5 million retired workers on Social Security and 1.5 million disabled workers on Social Security — many who would still work if they were offered jobs. (Source: SSA)

Add to that, all those who also dropped out of the labor force because they couldn't find work and are no longer counted as "unemployed". Over 11 million left the labor since June 2009 when the recession was "officially" declared over. So all these people who left the labor force (who are neither "employed" nor "unemployed"), also reduced the ratio of those "employed-to-unemployed" — which contributed to driving down the unemployment rate (and not just because of net new jobs being created).

Today, if we counted about 9 million still included in the labor force and referred to as "unemployed", and add 6.5 million who are NOT in the labor force (but who say they want a job), we still have just as many out of work today as we did at the height of the Great Recession. Does this mean NO jobs were actually recovered, and that job growth over the past 6 years has only just barely kept pace with population growth?

And the number of "multiple job holders" has also risen: meaning, one person has more than one job, so no additional people are working in proportion to the number of jobs that were created (or the number of actual people who have been employed or re-employed).

Now, of those who were previously unemployed — and who DID find a "new" job (out of the 8.7 million jobs lost during the recession and all the "net" new jobs that were created since that threshold was recently passed), how many of those jobs were temp and/or part-time jobs? And how are these people faring today?

If they get laid off, most of them can't get unemployment benefits between jobs; and when they do quality, some can only collect for as little as 12 weeks (as they do in North Carolina).

People who are in and out of temp jobs (working a few months on-and-off at a time, before being laid off in between) — and especially if they only work part-time hours — often don't earn enough or have worked long enough to even qualify for unemployment benefits — and that's why only about a third of those who get laid off from work can qualify for benefits. (Which counters the argument that, cutting unemployment benefits creates jobs).

We sometimes see the media tout "initial new weekly unemployment claims" has dropped, and they point to that as a sign of a healthy job recovery. The current news release from the Department of Labor shows: "In the week ending February 21, the advance figure for seasonally adjusted initial claims was 313,000, an increase of 31,000 from the previous week's revised level." And the number of people receiving jobless benefits is about 2.5 million out of 9 million currently counted as "unemployed". Could this also be because temp jobs and part-time jobs are also rising, and that many simply no longer qualify for unemployment benefits? The simple answer: Yes.

To qualify for State UI (unemployment insurance benefits), if one is able and willing to work, all State unemployment agencies look to the employee's recent work history, earnings and their "base period" (the period leading up to their layoff). That's another reason why, with such low job security these days, it's best to work full-time and continuously for the period leading right up to a layoff — to not only qualify for UI benefits, but also to receive the maximum allowable by one's particular State. And so naturally, the higher one's wages (earnings) the better as well.

But if one is working in a temp position, and is only making the federal minimum wage (or slightly higher) — or worse, and is only earning the minimum wage for "tipped employees" — they basically get the shaft between jobs. And if they are classified as an "independent contractor", they are totally shafted, because they don't have an "employer" paying an unemployment insurance tax. Otherwise, a laid off worker has to meet the following criteria.

Base Period, Work Requirements, and Earnings Requirements

Base Period: In almost every state, the base period is a one-year period: the earliest four of the last five complete quarters of the calendar year (The base period is usually the four full quarters preceding that one where one had lost their job.). The way the base period is measured doesn't usually count your most recent employment* (but with some exceptions**).

*Depending on when you file, almost six months of work might not be included in the base period. Recognizing this, many states have created an exception for workers who don't have enough hours of work or earnings in the base period to qualify. In these states, employees don't have to skip the last complete calendar quarter. Instead, they can use an alternative base period that includes the last four calendar quarters. This measurement will include more of their most recent work history.

** Some states have an exception for those who have been out of work for a longer period -- typically because of a job-related illness, injury, or disability. These former employees may be entitled to an extended base period, which looks at the worker's hours and earnings before the worker was injured, even if that work history falls outside of the usual base period.

Work Requirement: Some states require employees to have worked a certain amount of time during the base period to be eligible for benefits. In almost every state that imposes this requirement, the employee must have done some work in at least two of the four calendar quarters that make up the base period.

Earnings Requirement: Most states impose an earnings requirement for the base period -- either instead of or in addition to the work requirement -- before an employee will be eligible for unemployment compensation. States measure the minimum earnings requirement in a variety of ways. Here are the most common:

  • Flat dollar amount. Some states require workers to earn a minimum amount of wages during the base period.
  • High quarter wages. Some states require workers to earn a set minimum during their highest paid quarter of the base period. This requirement may stand alone or may be combined with an additional requirement for the entire base period. In some states, for example, employees must not only earn a minimum amount during the highest paid quarter, but must also earn a multiple of that amount during the entire base period. This is another way of ensuring that the employee worked at least two quarters during the base period.
  • Multiple of the weekly benefit amount*. In some states, a worker must earn at least a certain multiple of the weekly benefit he or she would receive in order to qualify. The multiple is generally between 30 and 40. Example: In Wisconsin, for example, the weekly benefit is 4% of the employee's total wages in the highest paid quarter. If the employee earned $5,000 in that quarter, the weekly benefit would be $200. To be eligible to earn that benefit, the employee must have earned at least 35 times that amount, or $7,000, in the entire base period. Again, this ensures that the employee has earnings in at least two quarters of the base period.

NOTE: These are not the only methods states use to calculate eligibility for unemployment benefits based on earnings (your state's may be different) and some states combine the methods above.

Many times when someone takes a lower-paying job (paying less than before), or if they are more desperate — a low-paying temp or part-time job (either before or after their UI benefits expire), they may get laid off again, and their earnings during the base period are reduced, lowering their previous weekly UI benefit amount (if they even still qualify).

Meanwhile, when someone is trying to determine their best financial strategy while job searching, and while trying to pay the bills, and while coping with any domestic issues, while navigating through their State's unemployment insurance system, it can all be very stressful.

Overall, outside of the anxiety and varying levels of depression that one feels with a job loss, just by filing an unemployment claim can also add to one's feeling of inadequacy. Many people, if they can't file a claim online, may be too proud and feel too ashamed to go stand in a public line looking for a "government hand out" (even though it's an "insurance claim") — especially because of all the negative cognitively associated with being, not only out of work, but also of being on "the government dole" — of which negativity has been constantly perpetuated by many of our political leaders.

Many times our leaders will set the policies in place for you to become unemployed (like tax incentives to offshore jobs or allowing for H-1B visas), and then they'll blame you for being unemployed, and then they'll insult you for being unemployed, and then they'll deny you help while being unemployed — after you are laid off from a job through no fault of your own.

* Study: Basic personality changes linked to unemployment
* In 2008, around 46,000 suicides overall were associated with unemployment
* To find out more about your state's rules for determining unemployment eligibility based on past earnings, contact your state unemployment insurance agency. You can find links and contact information for every state's unemployment agency at this website sponsored by the federal Department of Labor's Employment and Training Administration.

So, because the federal unemployment program for jobless benefits expired for the long-term unemployed at the end of 2013 (for those out of work for 6 months), and because State level UI benefits have been reduced (mostly in Red States), and because of the rise in part-time and temp jobs, and because of the negative social stigma being deliberately attached to the unemployed, many Americans have been getting totally screwed.

Slackers on Unemployment Benefits

If a person (say a low-paid computer programmer) takes home $3,000 a month at their job, while owing $1,200 a month on a mortgage before being laid off, they might collect $1,600 a month in unemployment benefits — barely enough to live on. (Wages, the cost-of-living, and jobless benefits vary in different regions, so this is only an example).

When this laid-off person is looking for a job, at first they will look for one paying AT LEAST what they previously earned in an attempt to maintain their status quo, before gradually lowering their standards, until finally accepting a job that pays AT LEAST what unemployment benefits pays (barely enough to survive on).

But when someone gets laid off (especially right away), they won't take the first job they find paying LESS than unemployment benefits (say $7.25 an hour) — because, even at full-time, it wouldn't be near enough to pay their mortgage, let alone leave them with enough left over to pay for food or utilities.

But when they are forced to, they would have to abandon their home, and despite what skills they might have, will have to take a much lower-paying job (maybe the computer programmer will be working as a fast-food worker), and maybe they will have to move back home with their parents — or into a one-room weekly motel rental. (And if they have a spouse and kids, that could be pretty darn crowded.

They'd also have to apply for food stamps. But some politicians want to cut unemployment benefits — and they also want to cut food stamps.

In the interim, the job that the computer programmer lost (while making $3,000 a month) might be going to someone younger who is willing to work for less; or the job is given to an H-1B worker (also willing to work for less); or the job is filled by a temp worker (earning less); or is filled by two part-time workers (also earning less); or the job is permanently eliminated, being offshored to China (to someone else who is willing to work for less.)

Meanwhile, as wages have stagnated (or declined in real dollars) in the U.S. over the past 30 years (as the U.S. middle-class has declined), it's being reported that millions have "left" the labor force, even though they were really "forced" out. The " job creators" claim it's because American workers "lack the necessary skills". Some say the labor market has a "skills mismatch". The economists say we have "job polarization" and/or "secular stagnation". The politicians just say we have a lot of "lazy slackers" who don't want to work any more. (I don't think anyone knows for sure. It's probably a combination of many things — but it's most probably just old fashioned greed by those at the top and their political enablers.)

The New York Times reports that for the entirety of 2014, U.S. the economy grew at a rate of 2.4 percent rate. Are the unemployed and under-paid to blame for that? Whereas, The Wall Street Journal reported China's economy expanded 7.4% in 2014 — the slowest in decades! But Bloomberg reports that China's GDP could be much higher!

China's economy has already overtaken the U.S. to be the world's largest economy — lifting 500,000 of their people into the middle-class. And by 2022, China could have over 630 million, while the U.S. middle-class continues to decline. But many of our political leaders don't care — so long as we have less lazy slackers on the government dole collecting unemployment benefits. That seems to be their number one concern, not creating jobs --- or jobs that pay a living wage.

Our middle-class has declined because we lack jobs — and because, of the jobs that we do have, a great many don't pay living wages. But if the job creators gave American workers a raise, they would have to buy one less mansion, a shorter yacht and a smaller private jet.

Thursday, February 26, 2015

GOP Blasts "Accounting Gimmicks" in Social Security

Now, according to the GOP, Social Security is just a scam. Below is from Rep. Paul Ryan's recent blog at the Committee on Ways and Means, where it says:

Democrats continue to claim we can fix the looming shortfall in disability insurance by raiding retirees’ Social Security trust fund. But CBO Director Doug Elmendorf poured cold water on those assurances during his testimony before the House Budget Committee yesterday. Rep. Diane Black asked the head of the nonpartisan agency whether the Democrats’ preferred answer would actually work:

Rep. Diane Black [R-Tennessee, member House Ways and Means Committee, member of the House Budget Committee, and co-author of Paul Ryan's Path to Prosperity Budget]: "As a matter of fact, I’ve heard some folks just talk about if this trust fund does become defunct, that we would then just transfer money from the Old Age Survivor fund into the Social Security Disability fund. Can you tell me how that would affect both of these funds over long term?"

CBO Dir. Elmendorf: "So the approach you describe has been used before, as you know. If money is moved from the Old Age Survivors Insurance trust fund into the Disability Insurance trust fund, that will extend the number of years from which the DI trust fund can pay benefits and reduce the number of years for which the OAS trust fund can pay benefits."

Rep. Diane Black: "So that old [adage] robbing Peter to pay Paul is certainly the case here, and if something is not done to reform both of these programs, that will be all that we’re doing is robbing Peter to pay Paul until essentially there’s nothing left in either program to rob or pay?"

CBO Dir. Elmendorf: "Certainly, Congresswoman, if you want to help both programs you’re not going to accomplish that by moving money around just between them."

But the real kicker was when Rep. Tom McClintock [R-California] asked the director whether we could just keep kicking the can down the road:

Rep. McClintock: "If we continue down the path we’re on, can today’s college students count on receiving the Social Security benefits that they’ve been promised?"

[* Editor's note: "College students" —> The GOP's tactic of using "generational warfare" to divide the Boomers and Millennials on issues such as Social Security.]

CBO Dir. Elmendorf: "Um, no, Congressman."

Paul Ryan's blog concludes: "If Director Elmendorf’s testimony tells us anything, it’s that we need a real solution, not an accounting gimmick."

Paul Ryan's blog is obviously very partisan. I'm currently looking for video and/or text of the entire hearing, as I'm very sure those remarks were taken out of context. Oral testimony was from "invited witnesses" only. However, they say any individual or organization may submit a written statement for consideration by the Committee (and for inclusion in the printed record of the hearing) by the close of business on Wednesday, March 11, 2015.

And transferring funds is not a "raid" or an "accounting gimmick" — it's temporary "tool" that the L.A. Times thoroughly explains has been used 11 times before, because of the partisan divide in Congress has yet to agree on a more permanent solution. But rather the "fix" the problem, the GOP is trying to use this as an excuse to denounce the whole program one big problem.

The GOP's first attack on Social Security this year was with the false accusation that there was rampant fraud in the disability program, when two different reports show only 0.04% fraud in the program — far less than any other government program — and probably far less than employee theft in the private sector — and by far, much less fraud, waste and abuse that's found in the defense industry. Now we have Paul Ryan's blog complaining about accounting gimmicks.

Rep. Diane Black (quoted at that Social Security hearing) also noted on her website that the GOP's newly proposed budget would also eliminate the ability for some people to receive both unemployment insurance and disability insurance benefits simultaneously — which at first glance, might seem very reasonable.

"This option would eliminate the ability of individuals to receive both Unemployment Insurance benefits and Disability Insurance benefits. A condition of receiving UI benefits is that the individual is available and seeking work. In direct contradiction, Disability Insurance is available to benefit only those who are unable to work. The President included a similar proposal in his fiscal year 2015 budget."

Rep. Sam Johnson (R-Texas) concurs. The GOP calls these scoundrels "double-dippers", even though, only about 117,000 Americans double-dipped by cashing unemployment and Social Security disability checks — and that was during the worst time of the economic crisis. (We probably have more tax dodgers.)

And although the GOP always claims to support our Veterans (part of the 47%), they too have been targeted for cuts with chained-CPI. And the Republican's mouth piece (Fox News) also calls some of our Wounded Warriors "triple-dippers" — because about 60,000 also receive Veterans benefits. Yet in the GOP's new 2015 budget proposal, they feign compassion for our Vets.

Rep. Sam Johnson also set about muddying the Democratic narrative on past reallocations from the disability fund to the old-age fund with expert witness testimony insisting that previous reallocations always came with major reforms. From his opening remarks at the hearing today:

"I think it's fair to say that this program can and must work better for people with disabilities as well as for the hard working American taxpayer ... The Administration just wants to kick the can down the road and offers no ideas on how to make the program work better. That’s not right. Americans who have paid into Social Security and are currently receiving benefits as well as today’s younger workers deserve better. This Congress should and must act to make sure that Disability Insurance benefits continue to be paid in 2016 and beyond to those who rely on them. And in doing so we should make this program work better for those who depend on it."

[* Editor's note: When he says, "The Administration just wants to kick the can down the road and offers no ideas on how to make the program work better." That is a BIG FAT LIE. When he says, "Today’s younger workers deserve better," that too is using generational warfare. But it's that last sentence in his quote: Is he saying he and the GOP will do everything possible to make sure those on disability will not see any cuts, because they are going to make the program "work better for those who depend on it"? Because if so, he doesn't say how they will accomplish this.]

Below is from the Republican's new 2015 budget proposal titled "The Path to Prosperity" (Yes, just like Paul Ryan's original budget was also named, which was just more "feed the rich and starve the poor" policies to starve the beasts). These are just excerpts from the section on Social Security — with a few duly-notated editorial remarks, marked with asterisks inside brackets:

The Obama administration has called on diverting funds from the retirement system (Old Age and Survivors Insurance or OASI) for Social Security to the Disability Insurance system. This will accelerate the insolvency of the OASI trust fund, necessitating earlier cuts to Social Security benefits for current and future retirees. This budget does not support the raid on the OASI trust fund.

[* Editor's note: It's not a "raid" or an "accounting gimmick" — it's temporary "tool" that the L.A. Times thoroughly explains has been used 11 times before, because of the partisan divide in Congress has yet to agree on a more permanent solution. But rather the "fix" the problem, the GOP is trying to use this as an excuse to denounce the whole program one big problem.]

Any value in the balances in the Social Security Trust Fund is derived from dubious government accounting. The trust fund is not a real savings account. From 1983 to 2010, it collected more Social Security taxes than it paid out in Social Security benefits. But the government borrowed all of these surpluses and spent them on other government programs unrelated to Social Security. The Trust Fund holds Treasury securities, but the ability to redeem these securities is completely dependent on the Treasury’s ability to raise money through taxes or borrowing.

[* Editor's note: But a new report from the Social Security Administration says just the opposite, and states: "Although some observers view the trust fund reserves and interest income as accounting fictions, a careful tracing of the cash flows reveals that the reserves and their interest earnings are, for all practical purposes, as real as those of any bank account." So who do we believe, people at the SSA — who want to protect retirement and disability benefits for Republican voters — or Republican leaders, who want to cut those benefits for their Republican constituents?]

Social Security is currently paying out more in benefits than it collected in taxes — in other words, running cash deficits — a trend that will worsen as the baby boomers continue to retire. To pay full benefits, the government must pay back the money it owes Social Security. In testimony before the House Budget Committee, CBO Director Doug Elmendorf stated that: "Well, again, Congressman, on a unified budget basis, taking account of just the tax revenues, the dedicated tax revenues, and the benefits, [Social Security] is contributing [to] the deficit now. If one instead looks at just the balance in the Social Security Trust Fund, that balance is, the annual balance is positive now, but will be negative within about a half dozen years."

The President’s Fiscal Commission made a positive first step by advancing solutions to ensure the solvency of Social Security. They suggested a more progressive benefit structure, with benefits for higher-income workers growing more slowly than those of workers with lower incomes who are more vulnerable to economic shocks in retirement. The Commission also recommended reforms that take account of increases in longevity, to arrest the demographic problems that are undermining Social Security’s finances.

[* Editor's note: "Increases in longevity" —> But I thought it was mostly the rich who were living longer. But I digress...]

In addition, there is bipartisan support that Social Security reform should provide more help to those who fall below the poverty line after retirement. There is no security in a program that fails to the meet needs of the nation’s most vulnerable citizens — lower-income seniors should receive more targeted assistance than those who have had ample opportunity to save for retirement.

[* Editor's note: "Most vulnerable citizens" —> What is the GOP's proposal to meet the needs of these lower-income retirees — and those on disability? To repeal and replace Social Security with something much better? Show us your plan!]

While certain details of the commission’s Social Security proposals, particularly on the tax side, are of debatable merit, the commission undoubtedly took several steps forward on bipartisan solutions to strengthen Social Security. This budget seeks to build on the Commission’s important work, calling on action to solve this pressing problem by requiring the President to put forward specific ideas on fixing Social Security. The budget also puts the onus on Congress to offer legislation to ensure the sustainable solvency of this critical program. To be clear, nothing in this budget calls for the privatization of Social Security.

Trust us!

[* Editor's note: "Debatable merit" and "Specific ideas on fixing Social Security" —> Such as raising the $118,500 income cap for Social Security taxes — so that members of Congress also pays this tax on 100% of their incomes, just like 94% of all other American wage earners must? Or by taxing billionaires on their capital gains for Social Security? These seem like reasonable "solutions to strengthen Social Security" — but the GOP won't raise one penny in additional revenues from the wealthy, even though they have made all the income gains over the past 30 years, while wages have stagnated or declined for almost everyone else.]

This budget calls for setting in motion the process of reforming Social Security by altering a current-law trigger that, in the event that the Social Security program is not sustainable, requires the President, in conjunction with the Social Security Board of Trustees, to submit a plan for restoring balance to the fund. This provision would then require congressional leaders to put forward their best ideas as well. Although, in the House, the Committee on Ways and Means would make the final determination, this provision would require that:

1) If in any year the Board of Trustees of the Federal Old-Age and Survivors Insurance Trust Fund and the Federal Disability Insurance Trust Fund, in its annual Trustees’ Report, determines that the 75-year actuarial balance of the Social Security Trust Funds is in deficit, and the annual balance of the Social Security Trust Funds in the 75th year is in deficit, the Board of Trustees should, no later than the 30th of September of the same calendar year, submit to the President recommendations for statutory reforms necessary to achieve a positive 75-year actuarial balance and a positive annual balance in the 75th year.

[* Editor's note: "A positive 75-year actuarial balance" —> Such as the way the GOP insisted healthcare benefits be financed for retired Post Office employees? See my post and a short video from the last Senate hearing on disability.]

2) No later than the 1st of December of the same calendar year in which the Board of Trustees submits its recommendations, the President shall promptly submit implementing legislation to both Houses of Congress including recommendations necessary to achieve a positive 75-year actuarial balance and a positive annual balance in the 75th year.

3) Within 60 days of the President’s submitting legislation, the committees of jurisdiction to which the legislation has been referred shall report the bill, which shall be considered by the full House or Senate under expedited procedures.

The Republicans borrowed the Democrats' terminology for strengthening and expanding Social Security (not cutting it) with specific proposals — but the GOP claims (as quoted below) that their newly proposed 2015 budget will ...

  • Secure seniors’ retirement by strengthening Medicare and other vital programs.
  • Protect and strengthens Medicare for current and future generations.
  • Strengthens critical programs like Medicare by giving seniors more control over their health-care.
  • Strengthens our health-care system by repealing Obamacare.
  • Strengthens the safety net by retooling federal aid. It secures seniors’ retirement by reforming entitlements.
  • Empowers reformers at the state level to strengthen and secure Medicaid.
  • Protects and strengthens Medicare for current and future generations.
  • Strengthens Medicare for younger generations.
  • Protect and preserve Medicare for those in or near retirement, while saving and strengthening the program so future generations can count on it when they retire.
  • Strengthen and enhance this aspect of Medicare so seniors will have more health-care choices.
  • Reform aimed at empowering individuals — with a strengthened safety net for the poor and the sick.
  • Strengthen the Medicare program.
  • Strengthen the safety net and protect taxpayers.
  • Social Security must be reformed to prevent severe cuts in future benefits. This budget strengthens the program.
  • The commission undoubtedly took several steps forward on bipartisan solutions to strengthen Social Security.
  • Puts in place fundamental reforms to protect and strengthen Medicare.

...but they don't say how, not without cuts to benefits or by raising revenues. Glaring omissions, wouldn't you think?

As I've mentioned before, the true advocates for Social Security are people such as Senators Elizabeth Warren (as evidenced here and here) and Bernie Sanders (as evidenced here and here) who are the real advocates for Social Security — as well as progressives who caucus with the Democrats. President Dwight D. Eisenhower was the last Republican to advocate for (and expand) Social Security. Currently, no Republican politician supports Social Security or Medicare as a government program — at least, not in its current form.

If the GOP wants to talk about "accounting gimmicks", look no farther or further than corporate tax dodgers. The GOP talks about robbing Paul to pay Peter — but Paul has been robbing Peter for decades — and has trillions of dollars in offshore banks accounts as proof.

Tuesday, February 24, 2015

Who will Hillary Clinton debate in 2016?

We need to see Democratic debates, not just have one person anointed like royalty to be the nominee for President. We always see the clown car in town whenever the Republicans have a debate. I say, bring in the Democratic clowns as well.

GOP clown car

Monday, February 23, 2015

Quick links and thoughts...

In an article at the New York Times, they write, "A Quinnipiac University poll in Colorado, a crucial swing state, released last week indicated that 58 percent of voters said they wanted the next president to “change direction from Barack Obama’s policies".

The 2015 War Revenue Tax Act

With some people complaining that America is going broke, while at the same time, those very same people are saying large corporations and the very wealthy are being taxed to death — how will another war in the Middle East be paid for if Congress wants to send ground troops to fight ISIS?

Sunday, February 22, 2015

The Good Fight for Social Security

People such as Senators Elizabeth Warren (as evidenced here and here) and Bernie Sanders (as evidenced here and here) are also very strong advocates for Social Security, as well as progressives who caucus with the Democrats. President Dwight D. Eisenhower was the last Republican to advocate for (and expand) Social Security. Currently, no Republican politician supports Social Security or Medicare as a government program (at least, not in its current form.)

Saturday, February 21, 2015

61% of New Jobs were in Low-Paying Sectors

St. Louis Fed (PDF): "Since June 2009, private-sector employment has increased by about 10 million, more than offsetting the decline that occurred during the recession. However, unlike in the recession, the majority of job gains were in the low-paying industries. Of the 10 million increase in private nonfarm jobs during the current expansion, about 61 percent, 6.1 million, were in low-paying industries ...

Temp Workers aren't Temporary, they're the Norm

First, let's look at the number of unemployed Americans during the Great Recession...

Number unemlpoyed during Great Depression

On December 7, 1941 the Japanese bombed Pearl Harbor — and the U.S. went to war — and it expanded it's industrial might to put millions of Americans back to work. Then in the month of September 1945, the U.S. suddenly had a loss of 1,967,000 jobs — because World War II had ended.

Fast forward to Ronald Reagan: In the month of September 1983, the Bureau of Labor Statistics showed a gain of 1,115,000 jobs. But the recovery during Reagan's presidency did not include any month in which one million jobs were actually created — but it did include one month in which almost 700,000 striking AT&T workers had returned to work.

Fast Forward to the Great Recession.