Saturday, December 17, 2011

Where did 15 million jobless Americans go?

Catherine Rampell at the New York Times writes: "Since June 2008, when Congress first created the Emergency Unemployment Compensation program, nearly 18 million Americans have at some point received federally funded extended unemployment benefits." (federal extended benefits, not counting those who only received regular state benefits).

According the Bureau of Labor Statistics, currently only 3 million people now receive federal extended benefits (EUC). So where did 15 million-plus unemployed Americans go?

And how many more are there who quit jobs, were independent contractors, or new to the job market (or for other reasons) and didn't even qualify for unemployment benefits?

Now add to that 3.7 million who are currently receiving regular State benefits (up to 26 weeks). Last week it was reported by the labor department that we had 366,000 initial jobless claims, which is a measure of the number of new jobless claims filed by individuals seeking to receive State jobless benefits (mostly layoffs in the service industry, which is now our prime industry).

Many economists have argued that, besides being compassionate, unemployment benefits have stimulated the economy. That’s because people who receive jobless benefits go out and spend their checks very quickly after receiving them, and spending ripples through the rest of the economy.

Former White House adviser Jared Bernstein considers unemployment benefits to be one of the most efficient forms of economic stimulus in existence. Mark Zandi, an economic adviser for Sen. John McCain's (R-Ariz.) 2008 presidential campaign, has estimated that each dollar spent on extending unemployment benefits generates $1.61 in economic growth. Meanwhile, according to an analysis from the National Employment Law Project (NELP), the Republicans' bill would result in $22 billion in lost economic growth and cost at least 140,000 jobs next year.

But some economists worry that longer periods for benefits may delay the job market recovery. By definition, jobless benefits make unemployment less uncomfortable, and so on the margins they may discourage idle Americans from going back to work if they have the option.

But according to a new study, extending unemployment benefits for the long-term jobless is not a major cause of the high U.S. unemployment rate. Read my Op-Ed piece: The Truth about Unemployment Benefits.

Benefits generally don’t cover more than half of a worker’s lost wages, and they’re capped at a maximum amount. In many states, the cap is quite low relative to the cost of living and local wages, so there is probably still a strong incentive for most unemployed workers to start earning higher wages again instead of receiving benefit checks.

A new White House report on jobless benefits shows average weekly unemployment benefits received per worker, the maximum weekly benefit granted in that state, and the share of a worker’s lost wages that jobless benefits cover. (click here for chart)

Another variable to bear in mind when thinking about how extended jobless benefits are interacting with unemployment rates is the employer side of the puzzle. After all, unemployment isn’t only about Americans’ work incentives; it’s also about employers’ willingness to hire.

In October, there were 3.3 million job openings, but 13.3 million unemployed workers, according to the Labor Department. That means that according the their own numbers, even if every single open job was filled with a willing worker, more than 10 million Americans would still be pounding the pavement.

But this blogger says there are many, many more...almost 27 million. And the Republicans infer they're all lazy (see my links below this article).

Over two years ago in October 2009 (at the supposed "peak" of unemployment) the Bureau of Labor Statistics reported that the national unemployment rate was at 10.2% with 15.7 million Americans out of work.

So we can safely assume that, even if every single person received the maximum of 99 weeks in unemployment benefits, they would have all expired two months ago...and 15.7 million jobs have not been created in the last 26 months.

Since October 2009, Obama says that according the Bureau of Labor Statistics, 3 million jobs were created. During the past 2 years (during that same period of time) 6 million Americans also graduated from high school and college.

15.7 million unemployed in October 2009 + 6 million graduates = 21.7 million MINUS 3 million NET jobs created = 18.7 million out of work. The Bureau of Labor Statistics reports 13.3 million.

I estimate there are another 8.4 million no longer even being counted because the Bureau of Labor Statistics claimed they stopped looking for work, based on a flawed CPS household survey. (Read my post: Simple Math Proves Jobs Report A Lie)

The Numbers

18 million Total received federal extended jobless benefits since 2008
3 million Currently receiving federal extended jobless benefits
3.7 million Currently receiving regular state jobless benefits
6 million High school and college graduates since October 2009
3 million Jobs reported created in last 26 months (net?)
3.3 million Current job openings
15.7 million Reported unemployed 26 months ago
13.3 million Currently reported unemployed

* Social Security retirees and Federal tax returns filed last year

* Data reported on my links to the Bureau of Labor Statistics may be subject to change with their updates after this posting.

Who Dropped Out of the Work Force?

Washington Post: This month, the unemployment rate fell from 9.0 percent to 8.6 percent partly because [the labor department claimed 315,000] workers have dropped out of the labor force.

Economists have pointed out that the labor force "participation rate" has been steadily shrinking over time due to "structural changes in the economy". The Congressional Budget Office, for instance, expects the participation rate to keep dropping in the years to come, even after the economy recovers.

New York Times: "The reason the total number of dropouts has risen more recently is that more unemployed workers have given up applying for jobs. Again, it’s the discouraged-worker narrative."

I've been unemployed for 3 years and 2 months. My benefits expired in June 2010. Am I counted as part of the labor force? Or am I labeled as a "discouraged worker" who dropped out of the labor because my benefits expired?

How does the labor department know if I'm still looking for work? Once someone's benefits expire, there's nothing to file with any government agency. I contacted the Bureau of Labor Statistics and they basically told me it was a guess based on a CPS survey.

They claim not to use State data on who's receiving jobless benefits, and don't cross reference Social Security numbers or measure taxes deducted from employers for the IRS.

So how can the labor department possibly know (or even come close to guessing) who dropped out of the labor force? I think it's just a convenient way to sweep millions of American people under the rug.

Where did everybody  go?

Related posts:


  1. Good news! More people quitting their jobs...yeah!!!

    In a Sign of Labor Recovery, More Workers Are Quitting - "The number of people quitting jobs was significantly larger than the number who were fired or laid off."

  2. Senate leaders struck a tentative deal Friday night to extend the payroll tax rate and jobless benefits through the end of February, electing to punt tough economic decisions into the new year. But Republicans won a major concession: The deal includes a provision pushing President Obama to make a decision on the controversial Keystone XL oil pipeline, which has divided labor groups from environmental activists in the Democratic ranks.

  3. The Senate voted 89-10 Saturday to approve a package that would extend a payroll tax holiday and jobless benefits for two months and force the Obama administration to make a decision on the Keystone XL oil pipeline within 60 days. The House is expected to take up the plan in the coming days.

  4. The Senate on Saturday morning approved a sweeping $1 trillion spending bill that averts a government shutdown cuts 10 percent from the domestic budget. The Senate vote was 67-32, coming a day after the House approved the same bill 296-121. The legislation now heads to President Barack Obama, who will sign it into law.

  5. The Senate on Saturday morning approved a sweeping $1 trillion spending bill that averts a government shutdown cuts 10 percent from the domestic budget. The Senate vote was 67-32, coming a day after the House approved the same bill 296-121. The legislation now heads to President Barack Obama, who will sign it into law.

  6. On January the benefits program will expire in: Minnesota, Michigan, Massachusetts, Maine, Oregon, Indiana - - In February, Extended Benefits will drop off in: Wisconsin, Tennessee, South Carolina, Rhode Island, Ohio

  7. 15 million people moved into their parent’s basements and are living on savings & food stamps, and some are working for cash not reported to the IRS...all 15 million of them...and they have for the last two years.

  8. The Republicans keep saying that Obama is making us "dependent on government". There’s 3 million jobs for 27 million unemployed. Obama’s not making me dependent, he's saving my ass!

  9. Great article, Bud. Your argument is laid out very well and very distinctly.

    Does my part time (ie 8-16 hrs/week), minimum wage job ($7.64/hr) count as 'finding a job'?!
    Sure, it helps push down the
    unemployment rate (only if one ignores the U-6 measure of unemployment which includes the under-employed and dicouraged workers), but it does NOTHING for the actual/literal (real life) unemployment crisis facing this country. Let me also point out that as a 46-yr old with no children under the age of 18 yrs, who is not elderly or disabled (and also is not a military veteran) - I qualify for NO assistance other than food stamps. Shelter/housing, healthcare and/or the ability for people like myself to purchase toiletries and other basic necessities is of abolutely zero importance to this country and many in this society. Brutal, but honest truth, AliceLA. My already struggling, 65 yr old mother (who was laid of for the 2nd time in a18 months just a few months ago) is effectively supporting me and has been doing so since my UI ran out in June 2010.

    Let me also point out, that I paid my taxes, put myself through college as a night student and achieved the American Dream - until this recession hit.

    People who ridicule the unemployed and underemployed by calling them lazy, advocating the end of extended UI benefits should try to refrain from making such judgemental, harsh and ignorant/incorrect assumptions about stories told by and about the long-term unemployed and underemployed in this country.

    The politicians and corporate media need to stop asking - expecting the American people to drink their 'corporate/goverment kool-aid). At the same time, the American people need to start REFUSING TO DRINK the 'corporate/government kool-aid. This kool-aid is filled with nothing but rhetoric, lies and half-truths.

    Denver Unemployment Examiner

  10. January 12, 2012 - President Obama said that he would propose tax incentives for companies to bring home manufacturing jobs they had moved overseas, and curtail tax breaks for those that keep relocating jobs abroad.

    (We'll see.)

  11. Hey idiot...

    I wrote to the Bureau of Labor Statistics asking about the household (CPS) survey. Below is what I wrote to them...

    If the Social Security Administration and the IRS and all 50 states' Employment and Security Divisions had computerized records of EXACTLY when I worked, what I earned, where I was employed, how much tax I paid (or what I owed), and when I was no longer showing earnings on a W-4 form, can't all this information be easily cross referenced and shared (in part or completely) with the Department of Labor's Bureau of Labor Statistics?

    It seems it would be fairly easy to do. You would have an EXACT count, at any given time, of how many people are working and how many aren't. You could also say for certain how many people had exhausted all their unemployment benefits and still remain unemployed. You could also determine EXACTLY what percent of high school and college graduates find jobs after completing school.

    This was their reply...

    The QCEW program at BLS does part of what you suggest. They aggregate all the wage and salary data collected by the UI system. The methodology that you suggest for enumerating final exhaustions is a good one but you would also need to account for the high volume of churn in the UI system. Any claimants have been through the EUC 2008 system, as an example, two and even three times. To enumerate the final exhaustees, as you indicated, you would want those people who had received at least some UI during a specified time period, and then do not now show up on wage records _and_ are not currently receiving UI. This has been proposed to some research consortiums. The primary issue is that the UI data (both wage, salary and benefit) is governed by some aggressive confidentiality laws so it�s not the case that anyone can simply get direct access to these systems.

    Some idiots might follow my hyperlinks for source references. I've studied this for 3 years...idiot.