Only 1/3 of the Unemployed Receive Jobless Benefits

For some people, a drop in the number of Americans filing new claims for unemployment benefits means an improvement in the job market, though recent irregularities in the reported data cast doubt on the reliability of the government figures.

MFR economist Joshua Shapiro tells the Wall Street Journal that the monthly jobs reports, as well as the other data such as withholding tax receipts (federal and payroll taxes), have pointed to a weaker labor market. "Our belief is that the [government] claims data should not be taken at face value as they are inconsistent with too much other evidence."

The unemployment rate fell to 7.3%, though the decline was largely the result of a shrinking labor force, because according to the Department of Labor, millions of Americans "dropped out of the labor force" after giving up on searching for non-existent jobs.

Of the 11.3 million Americans who are still being counted by the government as unemployed, only about 36% currently receive unemployment insurance benefits --- mostly the short-term unemployed (less than 6 months). Over 4 million of them are long-term unemployed, but only a fraction of these still receive any unemployment benefits.

Because of sequestration cuts, the amount of federal extended benefits (also known as Emergency Unemployment Compensation or EUC) have already been reduced in most states. The jobless in Nevada, with the highest State unemployment rate in the nation, had theirs reduced by a whooping 59-percent.

By some estimates, another 7 million* have already exhausted all their UI benefits (many, as far back as 2010) without ever finding work again. As of 2011, almost 18 million long-term unemployed Americans (at some point in time during the Great Recession) received federal extended unemployment benefits. Now only 1.5 million do --- but the program for federal extended benefits will end in 2 months.

* Editor's note: I have been attempting to find a reputable economist (preferably one that doesn't work for the U.S. Bureau of Labor Statistics) to crunch the data from the Social Security Administration on reported withholding taxes, disability awards, and retirement claims (including those forced into early retirements) --- and comparing them to IRS filings for individual tax returns for the years 2008 to the present. Then looking at high school and college graduates that may have first entered the labor force during that time (and accounting for the population growth and the reported number of people in the work force) --- then looking at the death rate for those 18 to 62 (Suicide rates had spiked in the aftermath of the Great Recession, with older men being the most significant) to get a more accurate number of people who may no longer be counted (by any measure) in the officially reported unemployment rate.

Some say as many as 35 million Americans could be unemployed today, and why with an increased population, the labor force participation rate has remained very low.

Only about 4 million (of 11.3 million still counted as unemployed) receive some form of unemployment benefits as of this week. Meanwhile, some states have been cutting regular weekly benefits down from 26 weeks to 20, and they will longer be offered any State extensions either. (See the post at Bloomberg: The Untimely Death of Unemployment Insurance)

From the DOL:

• 2.5 million receive Regular State Benefits (up to 26 weeks or less)
• 1.4 million receive Extended Federal Benefits (for 2 more months until December 28, 2013)
• 4,142 receive Additional State Benefits (up to 13 weeks max in some states)

Bottom line: With cuts to food stamps scheduled for November, and with federal extended unemployment benefits being phased out in December, it's going to be a horrific time to get laid off from your job next year --- especially with only 3.7 million job openings for 11.3 million (counted) unemployed.

And if you do lose your job, as far as getting another job, good luck (especially if your older than 50), because you'll be competing with 3 million newly graduated high school students every year (not counting college graduates).

Otherwise, there's always another alternative...you can move to Mexico. According to the New York Times, Mexico’s economic growth has easily outpaced the giant of the western hemisphere — the United States — and is increasingly becoming an immigrant destination. Americans now make up more than three-quarters of Mexico’s roughly one million documented foreigners. Mexican migration to the United States has reached an equilibrium, with about as many Mexicans moving north from 2005 to 2010 as those returning south.