New Jobs Figures Show Need To Extend Long-Term Unemployment Benefits

October 13, 2011

Another month, another bad jobs report from the Bureau of Labor Statistics. You’ve probably already read the top-line figures, but maybe not all these.

The unemployment rate is still stuck at 9.1%. Nearly 14 million people officially unemployed last month — about the same as in August.

An additional 1 million who looked for work during the past 12 months but gave up because they felt it was futile. Presumably lots who gave up earlier and so didn’t get counted as “discouraged.”

More than 6.2 million who’d been looking for at least 27 weeks, i.e., long enough to have exhausted their regular state unemployment insurance benefits — if they every qualified. This is a higher number than reported for either July or August.

A new brief from the National Employment Law Project tells us that jobless workers today face an average of somewhat over 36 weeks of unemployment. This figure is also higher than last month’s.

Not much hope for these people in the new jobs data. A total of 103,000 more people on non-farm payrolls than in August.

But about 45,000 of them were striking Verizon employees who’d returned to work. Discounting them, the private sector created roughly 92,000 jobs.

Meanwhile, the public sector shed an additional 34,000, bringing the total to more than half a million since September 2008.

Thus, the economy actually created about 58,000 jobs last month. NELP reports that it would need to create, on average, 400,000 per month to bring the unemployment rate back down to its pre-recession level in the next three years.

One might think that these dismal figures would prompt a substantial majority in Congress to vote for some targeted investments in job creation. But only if one had been living on another planet for the last two years.

House Majority Leader Eric Cantor (R-VA) has announced that the President’s jobs bill won’t even come up for a vote. But Republicans may pick out parts they agree with, he said.

Same seems to be the case in the Senate, where Republicans, joined by two Democrats, just blocked a vote on the bill.

Surely, one would think, they could agree to extend the federal programs that provide long-term jobless workers with some extra weeks of UI benefits.

One of them — Emergency Unemployment Compensation — is due to expire at the end of the year.

The other — Extended Benefits — will lose full federal funding. These benefits kick in after EUC benefits have been exhausted. So those receiving EUC benefits now will be shut out of the EB program unless Congress acts. Those who’ve already gotten to the EB phase will lose their benefits in January.

NELP estimates that nearly 1.8 million workers will lose their benefits by February. By the end of the year, the number will swell to at least six million.

As I’ve written more often than I wish I’d had to, UI benefits are one of the best quick-acting stimulus options we’ve got. According to Congressional Budget Office estimates, every $1.00 spent delivers as much as $1.90 in economic growth and employment.

Take the expanded benefits away and you can expect job losses. The Economic Policy Institute puts the 2012 figure for EUC alone at 528,000.

But the House Republican leadership finds potential common ground with the President only in certain UI reforms, not in the proposed extension of benefits for the long-term unemployed.

“More federal spending,” their memo says. If that were the answer, adds House Speaker John Boehner (R-OH), then the economic stimulus package would have kept the unemployment rate below 8%.

What’s needed are cuts in spending, taxes and those dreadful government regulations that are supposed to do things like prevent a repeat of the reckless financial transactions that helped land us in this mess to begin with.

So it looks as if we’re in for yet another donnybrook. And yet another round of made-up reasons for letting the extended UI benefits die.

Speaker Boehner’s argument is one of them, as the Center for Economic and Policy Research shows.

And then there’s this old warhorse trotted out by Congressman James Renacci (R-OH): “[T]he length of compensation eligibility has turned from a bridge between jobs into an excuse to put off that job search for just one more week.”

As if people who’ve been laid off just kick back when their benefits average $296 a week — much less for low-wage workers, of course.

In any event, as Renacci should know, you can’t get UI benefits unless you’re actively searching for work. And, at this point, there’s only one job for every four people looking.

Pushing more people into poverty faster isn’t going to change that.

UPDATE: BLS has just released the results of its Jobs and Labor Turnover Survey for August. EPI economist Heidi Shierholz, my source for JOLTS analyses, reports that the ratio is now one job for every 4.6 jobless workers actively looking.


What’s In The President’s Jobs Plan For DC And Its Residents?

September 10, 2011

Even those of you who didn’t watch President Obama’s jobs speech to Congress probably know, in general terms, what’s in it.

Probably have also read and/or heard reactions from various quarters. A “strong blueprint.” Same old failed stimulus stuff. And everything in between.

I’ll spare you my own off-the-top-of-the-head assessment. Will instead give you, courtesy of the White House, some sense of what the American Jobs Act could mean for the District of Columbia and its residents.*

Payroll Tax Cuts

The President, as expected, wants to extend the employee payroll tax cut that Congress passed last December. But he wants to expand it so that workers would pay only half as much as they ordinarily would.

The White House says that a “typical” District household, i.e., one with an annual income of around $53,000, would have an additional $1,640 or so in take-home pay.

The President also wants to halve the employer payroll tax for the first $5 million of a firm’s wages. According to the White House, 20,000 firms in the District would see their payroll taxes cut to 3.1% next year.

There’d also be a full payroll tax holiday for firms that increase their payrolls by new hires, raises or both. No impact estimate for this.

Construction Projects

The President’s plan has five discrete types of investments in infrastructure upgrades and other modernization projects.

Highways and public transit systems, high-speed wireless services, public schools and community colleges would each get a pot of money. A separate pot would be available for projects to rehabilitate and refurbish vacant and foreclosed homes and businesses.

For highways and transit systems, the District could get at least $387.3 million, for public school modernization another $84.7 million, for community college facilities $2.5 million and for rehab/refurbishing about $20 million, plus whatever it might get through competitive grants.

Funding in the first two categories could support an estimated 6,100 jobs, the White House says. No jobs estimates for the other two.

Public Sector Jobs

The Presidents wants targeted funds to go to state and local governments. About 85% would have to be used to save teacher jobs and/or to reverse the results of layoffs. The remainder would be earmarked for hiring and retaining public safety officers and firefighters.

The District would get a total of $45.1 million. The White House says this would support as many as 500 jobs.

Other Help for the Unemployed

The President’s plan confirms his support for another extension of the federal programs that provide unemployment insurance benefits to jobless workers when their regular state benefits expire.

The White House says the extension would preserve benefits for 5,500 District residents during the first six weeks alone. The number could triple by the end of next year if the situation here proves typical of what it projects for the country as a whole.

The President is also proposing “reforms” in the UI system. These will require a closer look. Generally speaking, most of them would allow states more flexibility in how they use UI benefits.

States could, for example, continue paying UI benefits to long-term unemployed workers who take temporary jobs or pursue work-based training. This is the option the President highlighted in his speech, but the legislation will apparently provide for others.

The White House says the reforms “could help put the 16,000 long-term unemployed workers in the District of Columbia back to work.” Or not, since the impact would depend on many factors, e.g., what, if anything, the District decided to do differently, how employers responded, labor market demands.

The President also proposes a new fund to provide low-income youth and adults with job opportunities and on-the-job-training. He seems to envision something like the subsidized jobs programs that were supported by the now-expired TANF Emergency Contingency Fund.

The White House says the new program could place 400 adults and 1,400 youth in jobs in D.C. I assume the District would make sure they lived in D.C. too.

The Pay-For

The President has said he’ll produce a plan showing how the cost of the whole package could be fully offset so that the Super Committee could still meet its deficit reduction target.

His speech refers to eliminating tax breaks for “the wealthiest Americans and biggest corporations.” Also to unspecified “modest adjustments” in Medicare and Medicaid.

Judging from what the White House has floated before, these “adjustments” could be bad news for the District and its low-income residents. (See my post on what the White House previously proposed for Medicaid matching rates.)

But, of course, the President proposes. Congress disposes. And what, if anything, it passes is likely to look quite different.

Caveats notwithstanding, not too different I hope.

* What follows is based on a fact sheet in a state-by-state set the White House circulated via e-mail and has now posted here.

NOTE: This version of the post reflects a correction in one figure and the addition of a missing item in the construction section. I have also added a link to the state fact sheets, which were not online when I wrote this.


Not All Tax Cuts Are Created Equal

September 8, 2011

We know that a vast majority of Republicans in Congress have pledged to oppose any and all tax increases unless they’re matched, dollar for dollar, by reduced tax rates. They also seem to have taken a pledge to preface any mention of tax increases with “job-killing” or the equivalent.

But come January 1, all workers will face higher payroll taxes unless the one-year 2% cut agreed to last December is extended. Congressional Republicans, including two on the so-called Super Committee, seem inclined to let it expire.

“Not all tax relief is created equal for the purposes of getting the economy moving again,” says Super Committee Co-Chair Jeb Hensarling (R-TX).

Congressman David Camp (R-MI) has other objections. “No matter how well intended,” he says, tax reductions “will push the deficit higher.”

These are the same folks who were ready to let the government shut down unless the Bush tax cuts for high earners were extended. CNNMoney put the two-year cost at about $81.5 billion.

We didn’t hear a peep from the Republicans about driving up the deficit. Nor much concern about evidence of potential impact on economic growth.

The nonpartisan Congressional Budget Office ranked income tax cuts generally as the least effective of the 11 options it reviewed. A payroll tax cut for employees came in fourth.

Now is another tax cut fight brewing — this one centered directly in the ongoing jobs crisis.

Seems to me the comments above raise two main issues — the effectiveness of the employee payroll tax cut and the tax relief House Republicans want instead.

No one, to my knowledge, is arguing that an extension of the employee payroll tax cut will give our sluggish economy the boost it needs to start creating jobs for the more than 23.7 million unemployed and under-employed workers who need them.

The rationale, as I understand it, is rather that jobs will be lost if workers have to pay the full tax again because they’ll compensate by cutting back on spending.

The President has said this could cost the economy a million jobs. John Irons at the Economic Policy Institute puts the figure at 972,000 — still a significant dent in a job market that’s already shy about 11.1 million jobs.

The House Republicans’ latest job creation plan doesn’t delve into such specifics. Merely cites gross job creation figures from the hardly reliable analysts at the Heritage Foundation.

It does, however, specify two forms of tax relief.

One is a cut of at least 10% in the nominal corporate tax rate, apparently offset by some other specified changes in the tax code. The other is a “tax holiday” that would let corporations bring home profits gained abroad at a fraction of what they’d otherwise pay.

These measures would, in theory, enable corporations to invest more funds in creating jobs here. But there’s no evidence they’d do anything of the sort.

Corporations, after all, aren’t exactly short on cash. Many are sitting on big bundles of it. They’re creating jobs, as they always do, when they need them and where they can fill them at the lowest cost.

For multinationals as a whole, that appears to be mainly outside the U.S. No indication that the corporate tax rate cut the Republicans have in mind would change this.

For the “tax holiday,” we can look to past experience, since Congress put one into a job creation package in 2004.

As the Center on Budget and Policy Priorities reports, a number of studies found that it didn’t increase domestic investment or employment. In fact, some large companies that brought home billions turned around a laid off American employees.

CBPP argues — persuasively, I think — that another “tax holiday” would probably encourage corporations to shift even more of their income overseas.

For this reason, among others, the Joint Committee on Taxation estimates lost federal revenues at up to nearly $79 billion over the next 10 years.

If past is prologue, there’d be more American jobs lost too.

UPDATE: Shortly after I posted this, I saw a new brief on the employee payroll tax cut by the Center on Budget and Policy Priorities.

It includes an interesting table showing how much more, on average, workers in different occupations would pay if the cut expires. An even more interesting (to me) table showing how much workers in each state are receiving as a result of the cut.

CBPP makes the important point that other measures will be needed to boost job creation and economic growth. But letting the employee payroll tax cut expire without putting something more effective in its place would decrease consumer purchasing power by well over $110 billion.


Dark Deficit Clouds Over DC

July 29, 2011

I’m following — some would say obsessively — the byzantine maneuvers on Capitol Hill. Wasn’t going to write about them, but can’t stay focused on anything else.

Bills passed in the House that can’t pass in the Senate. Bills offered in the House that can’t pass there because some Republican members think they’re not extreme enough.

I’m gripped by suspense. Will Congress raise the debt ceiling before the drop-dead date? What will happen if it doesn’t? What will happen if it does, but only for a short period of time? Will the President follow through on his almost-but-not-quite veto threat?

And I’m profoundly disheartened because whatever deal gets passed — and I’m pretty certain one will be — will do grave damage to low and moderate-income Americans.

Many economists — not all of them liberals — say that spending cuts should wait until the economy is growing at a healthier pace. Say that won’t happen until the unemployment rate drops to something closer to normal because, needless to say, jobless people and their families don’t buy more than they absolutely have to.

Yet all the deficit reduction plans afloat would cut spending next year below the already-cut levels in the continuing resolution that’s the substitute for a regular budget now.

And none of them would shield safety net programs that get their funding from annual appropriations.

These programs, recall, don’t just protect poor people from destitution. They also create and preserve jobs — both directly in the agencies that administer them and indirectly because they give beneficiaries some spending power.

Nobody knows what all this will mean for the District of Columbia because nobody knows how either the crisis or the solution will play out. But we can make some educated guesses.

The Chief Financial Officer has warned of short-term financing troubles if the debt ceiling isn’t raised. Also of longer-term constraints from what I guess he foresees as losses of federal funds due to cuts in Medicaid and other federal programs, e.g., aid to public education.

He expresses worries about a bond downgrade due to lack of ready cash and impacts on revenues the District gains because the federal government is headquartered here.

There could, however, be other impacts. If interest on Treasury bonds rises because they’re no longer viewed as 100% safe, interest on other new bond issuances will rise. Interest on loans in the private sector too.

Include here not only financing for development projects, but home mortgages, car loans, higher education loans and plastic debt. Hardly a stimulus to local consumer spending.

And what about recovery in our anemic job market? The National Employment Law Project gives us a partial answer.

A fact sheet it’s not yet posted provides state-by-state (and District) figures for jobs lost or gained since the recession began, plus new jobs that would have to be created to accommodate growth in the working-age population.

The District, it shows, would have to gain 30,100 jobs just to get back to where we were in December 2007.

How can we possibly get anywhere near this number when federal spending cuts will mean widespread job losses?

We’ve got residents working in federal agencies, in local companies that provide them with contract services, in District agencies that depend in part on federal funds, in the organizations they contract with and in a large number of for-profit businesses that grow, shrink or die on the basis of consumer spending.

All vulnerable to layoffs as the federal budget cuts unroll. More certain hardships for our most vulnerable neighbors too.

I don’t recall when I’ve ever felt so anxious about our community — and our country. And I’ve been watching federal policymaking for a long time.


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