Friday, February 7, 2014

Congress Ignores the Long-Term Unemployed

It was just reported by the Bureau of Labor Statistics that the economy added 113,000 jobs in January, while the unemployment rate dropped slightly to 6.6 percent. (Analysts had expected job growth of about 181,000, according to a Bloomberg survey of economists.)

But it was reported that only 3.6 million Americans were long-term unemployed (a declined of 232,000 from the month before) and that the long-term unemployed accounted for 35.8 percent of the unemployed. But most of this decline are "discouraged workers" who "dropped out" of the labor force—just as we've seen for the past 5 years.

And yet, the Republicans won't pass extending unemployment benefits.

When the Speaker of House John Boehner stands solemnly before the microphones and says "the American people", he's not speaking for the American people, or even for the majority of Republican voters—he's speaking for the Koch-funded Tea Party (a minority within the GOP) — and the Tea Party speaks for their biggest campaign donors.

One example might be the issue of raising the minimum wage, where all polls show a majority of Americans support raising it. And according to one poll, overall, 51 percent of Americans didn't want food stamps cut. Yet, the recent farm bill cuts $8 billion in food stamps, but still preserved handouts to Koch Industries.

So when John Boehner says "the American people", he is either being disingenuous or he is pathetically ignorant (neither of which speaks well for him).

Another example might be the issue of extending unemployment benefits. According to a Quinnipiac University survey, most registered voters nationwide say they favor a three-month extension of unemployment benefits for people currently out of work (83% of Democrats, 54% of independents and 54% of Republicans). And even a Fox News poll showed 69% think unemployment benefits should last at least a year (which would equate to a six-month extension).

Kentucky Democratic Senatorial candidate Alison Lundergan Grimes pressured her Republican opponent Senator Mitch McConnell ahead of yesterday's Senate vote on extending unemployment benefits, noting that 1,200 coal miners in Pike County had recently lost their jobs:

"The long-term unemployed are not a set of numbers—they are real people, tens of thousands of our fellow Kentuckians, good people, hard-working people, unable to support themselves and their families because of devastating circumstances beyond their control."

But yesterday Mitch McConnell stuck to his Kentucky muskets and voted against it when the Senate failed to passed an extension of unemployment benefits for 1.7 million jobless Americans. Only four Republicans voted with the Democrats (Kelly Ayotte of New Hampshire, Susan Collins of Maine, Dean Heller of Nevada and Lisa Murkowski of Alaska), but it was defeated 58 to 40.

Senator Elizabeth Warren (D-Mass.) denounced GOP lawmakers for blocking an extension of federal unemployment insurance:

"Unemployment insurance is a critical lifeline for people who are trying their hardest and need a little help—a recognition that Wall Street and Washington caused the financial crisis, but Main Street is still paying the price...Republicans line up to protect billions in tax breaks and subsidies for big corporations with armies of lobbyists, but they can’t find a way to help struggling families trying get back on their feet."

But even if the Senate eventually passes an extension of unemployment benefits, which seems unlikely, Republican leaders in the House of Representatives have been unenthusiastic about holding a vote.

The Center of Budget and Policy Priorities have given members of Congress many good reasons why unemployment benefits for the long-term unemployed should be extended. Spending on jobless benefits and food stamps actually has a much higher return on investment than tax cuts for the rich.

But instead, many members of Congress have chosen to ignore sane, intelligent, rational and sound advise. The GOP has consistently blocked the extension for several questionable reasons:

  • The deficit (as always)
  • Getting "offsetting cuts" (like food stamps for those already unemployed)
  • The inability to add unrelated amendments
  • Ignorance/Ideology/Religion (makes the unemployed lazy, extends the duration of unemployment, is a disincentive to find work, etc.)

According to Bloomberg, "some businesses are taking steps to reduce labor expenses". But businesses (since the dawn of mankind) have always reduced labor costs with automation, robots, computers, offshoring to low-wage countries, insourcing with guestworker visas, cutting hours, eliminating benefits, using temps (etc).— so that's not news.

But Bloomberg also noted that Leucadia National Corp., a holding company run by Richard Handler, plans to shut down a beef-processing facility in Brawley, California on April 4th—laying off 1,300 workers. (Even though Richard Handler got a $45 million pay package last year).

Monthly job cuts surged nearly 50 percent to kick off 2014, as U.S.-based employers announced plans to reduce their payrolls by 45,107 in January, according to the latest report on monthly job cuts released by global outplacement consultancy Challenger, Gray & Christmas, Inc.

The heaviest downsizing activity occurred in retail, where poor earnings led to a wave of job cut announcements from several national chains, including Macy’s, Sam’s Club, JC Penney, Sears, Best Buy and Target. Overall, retailers announced 11,394 job cuts in January. The computer industry ranked second among January job cutters, announcing plans to shed 6,456 during the month. Employers in financial services reported 4,817 planned layoffs in January.

Walmart planned to layoff 2,300. Sprint planned to layoff up to 500, saying "Those cutbacks, like those planned now, reflect Sprint's push to operate more efficiently." HP plans to layoff 5,000 in 2014 as part of a multi-year restructuring plan. The Pentagon may layoff at least 6,200 members of its civilian workforce this year.

All these workers, just like millions of other Americans before them, will be unemployed for 26 weeks and then will most likely be "long-term unemployed" after 6 months. Then eventually, many (if not most) of them will no longer be counted at all—because the labor department will say they "dropped out of the labor force". They will get an unemployment check for 6 months (in most states); and then, like 23.9 million other long-term unemployed Americans since the Great Recession, their benefits will run out—and most, without every finding another job again.

A recent Fed study found that "the rate of decline in interview requests appears to drop sharply after six months of nonemployment. Résumés for employed applicants have a 10.25 percent chance of receiving an interview request." Note: It says for employed applicants, not unemployed applicants. (Read more here: There's about a 0% chance for a long-term unemployed middle-aged worker after being unemployed for a year or longer.)

From the Washington Post: "If you've been out of work for 27 weeks [6 months] or longer, then you currently have just a 12 percent chance of finding a new job in a given month. And those odds go down the longer you're out of work."

According to an op-ed by the economist Dean Baker at the New York Times, he estimated that for workers over 50 who had been unemployed for 17 months or longer, they only had about a 9 percent chance of ever finding a new job --- and the longer they were unemployed, the lower their chances for ever finding work again. (The odds may be lower now.)

BusinessWeek: "The long-term unemployed tend to get ignored—or even worse, treated as losers or shirkers. Congressional Republicans have blocked extended unemployment benefits for the long-term unemployed this year in part because of concern that those benefits breed dependency."

Last month on ABC’s This Week, Senator Rand Paul (R-Kentucky) said:

"I’m not against having unemployment insurance. I do think, though, that the longer you have it, that it does provide some disincentive to work and that there are many studies that indicate this."

This week House Rules Committee Chairman Pete Sessions (R-Texas) said that it would be "immoral" to extend benefits to the long-term unemployed.

These congressional creeps should read some bullet points from a recent White House report (released last month) called Addressing the Negative Cycle of Long-Term Unemployment—to enlighten themselves on the severe problems that the long-term unemployed in this country faces today:

While older workers and disadvantaged populations may face particular challenges, the long-term unemployment affects a diverse group of workers. Research suggests that the long-term unemployed face significant disadvantages in the labor market simply by virtue of their status as being long-term unemployed.

Today, the long-term unemployed are slightly more educated on average than their recently unemployed peers: 27 percent of the long-term unemployed have post-secondary credentials, compared to 24.5 percent of the short-term unemployed.

The long-term unemployed are about half as likely as the short-term unemployed to get a callback. Interview "callback" rate for otherwise identical resumes falls sharply as the length of unemployment rises, with callbacks 45 percent lower for those unemployed for eight months compared to those unemployed for just one month.

To land an interview, the long-term unemployed must apply to 3.5 times as many jobs as the short-term unemployed. Applicants unemployed for seven months need to send an average of 35 resumes to online job postings to receive just one interview, compared to just 10 resumes per interview for those unemployed for only one month.

Employers may be screening out applicants based on duration of unemployment, and missing the more qualified applicants. Long-term unemployed workers with relevant work experience are less likely to be invited for an interview than recently unemployed job applicants with no relevant experience.

Many of the long-term unemployed lost their job at a time when the economy was shedding jobs and it was extremely difficult to quickly find new employment–a record one in six workers reported losing a job between 2007 and 2009.

Only 3 in 10 unemployed workers found jobs within a few weeks of becoming unemployed, and those who remained unemployed for more than six months saw their chance of finding jobs fall below 15 percent.

2.6 million long-term unemployed have been looking for work for 52 weeks or more [many millions more dropped out of the labor force and are no longer counted].

While older workers are less likely to experience unemployment, when they do lose their jobs they have a more difficult time finding new employment. Moreover, for these workers unemployment is more likely to be permanent—with too many ultimately exiting unemployment by exiting the labor force. [They dropped out of the labor force and are no longer counted.]

During the 1970s and 1980s the long-term unemployed tended to be more heavily concentrated among blue-collar workers and in the manufacturing sector.

Even as hiring rates have increased generally, employers have preferred those who recently became unemployed to those with longer spells of unemployment. Research has shown that long-term unemployed job applicants are frequently overlooked and sometimes excluded from job opportunities—even when they may have identical or even superior resumes and skills to other candidates.

Callbacks are 45 percent lower for those unemployed for eight months compared to those unemployed for just one month...the long-term unemployed are at risk of being permanently left behind as the overall economy recovers.

(Page 18 of the 31-page White House report) Over 20 million people received reemployment services over the past year from the Department of Labor’s programs.

Today’s long-term unemployment crisis is perhaps the worst legacy of the financial crisis and ensuing recession. While the United States’ economy has steadily recovered and continues to create more private sector jobs, much work remains to break what has become a self-perpetuating cycle of long-term unemployment for many Americans.

The White House report also goes in to great detail about the long-term unemployed's physical and mental health --- and that, the current levels of long-term unemployment—if unaddressed—threatens to inflict lasting damage on the US economy. (The report also proposes some solutions.)

We've had a problem with long-term unemployment for 5 years. A year ago the problem with long-term unemployment was described as "the crisis of our time"—and now a year later, it still is. Nothing has changed, and most likely, it has only become worse today.

So good luck if you are laid off in 2014. If you are working now, it would be to your own advantage to support raising the minimum wage, extending unemployment benefits and oppose any further cuts to food stamps—because YOU TOO can very easily need these government programs going forward...just ask millions of others who were laid off over the past 5 years and never found work again.

Which begs the question: Why aren't people like Senator Rand Paul long-term unemployed? Oh yeah, because as a member of Congress, he's on the "too-big" government dole while raking in $174,000 a year (plus perks)—and getting paid to do absolutely nothing to create jobs for the long-term unemployed.

And no, TransCanada's Keystone XL Pipeline is not a "jobs bill". It will only create—at the very most—50,000 jobs when the U.S. has about 48 million people who want a full-time job that pays a living wage (out of a record 93.2 million people who are currently not in the work force).

And shipping oil from Canada to China (via the refineries on our Gulf Coast) will not make America energy independent or lower our costs at the gasoline pumps. It will only make the GOP's campaign donors richer. The Keystone pipeline is not a "jobs bill"— whereas, borrowing $500 billion with a no-interest loan from the Federal Reserve to repair and build infrastructure—now THAT is a real jobs bill.

Supposedly big businesses have agreed to join Obama's efforts to help the long-term unemployed—but many people don't see that happening—not when businesses are still shutting down plants, losing more manufacturing jobs, "restructuring", offshoring and insourcing with H-1B visas—all to "reduce labor expenses" to increase their insatiable thirst for ever higher profit margins and more stock-option grants. After all, the very nature of a business isn't to create jobs, but only to turn a profit for investors. Jobs for disposable employees are only a "byproduct" (using the D.E.M. model) in the pursuit of those profits (It's nothing personal, it's just business.)

But at least Obama (albeit, years later) is finally trying to help the long-term unemployed; whereas the Tea Party Republicans would rather just hurtle rocks and insults at them, and then pass another abortion bill—205 in the past three years, with 70 in 2013 alone. The newest one is the No Taxpayer Funding for Abortion Act. How many jobs would that create for the long-term unemployed?

The simple-minded Republicans (after 5 long years) have finally came up with one jobs bill —The Save American Workers Act (all of 2 pages long, not counting the congressional credits), and it says:

"To amend the Internal Revenue Code of 1986 to repeal the 30-hour threshold for classification as a full-time employee for purposes of the employer mandate in the Patient Protection and Affordable Care Act and replace it with 40 hours."

The GOP's real reason for repealing Obamacare is to eliminate the additional 3.8% surtax added to capital gains taxes on the very rich to expand Medicaid (On long-term capital gains on realized gains after one year. Read: How Congress Let's the Rich Pay Less.)

Take 2 minutes of your time to watch this short video at YouTube by Robert Reich called "The War on the Poor and Working Families". Then call your senators via the switchboard at 202-224-3121 and demand that they end the war on the poor and working families — starting by extending emergency unemployment benefits.

And speaking of simple minds, the band Simple Minds also has a message at YouTube from the long-term unemployed to members of Congress:

Don't you forget about me
As you walk on by
Will you call my name?
When you walk away
Or will you walk away?
Will you walk on by?
Come on - call my name
Will you call my name?

1 comment:


  1. UPDATE from the New York Fed

    The Job-Finding Rate

    "The job-finding rate is still substantially below its pre-recession levels, suggesting that it is still difficult for the unemployed to find work ...both the vacancy-to-unemployment ratio and matching efficiency declined during the Great Recession and have not recovered since ... the most important factor in the low job-finding rate is the persistently low level of vacancies per unemployed."

    http://libertystreeteconomics.newyorkfed.org/2014/02/why-is-the-job-finding-rate-still-low.html

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