Small Victory For Jobless Workers

July 26, 2010

As you all know by now, Carte Goodwin, temporary replacement for the late Senator Byrd, arrived last Tuesday past the nick of time to break the Republican’s filibuster of the latest extension of unemployment insurance benefits. The House swiftly passed the bill. The President signed it. And the Senate moved on to other stalemates.

The UI extension bill provides immediate relief for about 2.5 million jobless workers whose extended benefits were cut off when the authorizing legislation expired. Extended benefits will also be available to other workers who exhaust their regular state benefits before the end of November.

They’ll get somewhere between 34 and 73 weeks of additional benefits, depending on how high their state’s unemployment rate is. Here in the District, with a current unemployment rate of 10%, eligible jobless workers will be able to get a total of 99 weeks of benefits.

I wish I could just rejoice in the hard-won victory. But I can’t help pondering the relatively small impact the bill will have on what promise to be long-term hardships for a vast number of jobless workers and their families.

Several major issues here.

First off, all jobless workers will get $25 a week less than they would have under all but the latest versions of was once a modest, but broader effort to deal with the jobs situation.

This will bring the average weekly benefit down to $284 — less than what’s needed to lift a family of three above the federal poverty line. So jobless workers may have benefits, but we’re still likely to have more families facing utility cutoffs, evictions, etc.

Second, we’re told that only about two-thirds of the 14.6 million people who are officially unemployed are getting unemployment benefits. “Officially” here means that they’ve got no job whatever and are actively looking for one.

At least some portion of the remaining third didn’t earn enough and/or work enough recently enough to qualify. The 1.2 million people who’d looked but given up aren’t getting unemployment benefits either.

Third, the extension will do nothing for workers who’d already exhausted their maximum benefits — the so-called 99ers. Blogger Jackie Headapohl says that economists estimate their number at around 1 million. Also says it’s expected to double or even triple in the months to come.

Received wisdom seems to be that the longer you’ve been out of work, the longer you’ll be out of work. Various reasons floated for this. One, which is bad news even for a lot of recently laid-off people, is that employers have eliminated certain types of positions, e.g., secretaries, travel agents, auto workers.

These jobs have been automated, outsourced or foisted off on other employees. Even a full economic recovery won’t bring them back.

This may be a particular problem for older workers who don’t have the time and resources to retool. Even if they do, they’re likely to face out-and-out age discrimination. Also some biases that amount to the same thing.

Employers may be ready to hire young workers with little or no relevant job experience. But as a commenter on the Poverty in America blog said, “a 57 year old with no experience in a new field isn’t exactly in demand.”

What are these workers to do until they’re old enough to qualify for Social Security benefits that will barely cover their living expenses, if that? By then, many will probably have tapped their shrunken retirement savings.

We can expect the Democrats to mount yet another effort to extend the extra tiers of unemployment benefits some time before the end of November. But, as Washington Post blogger Ezra Klein says, the latest vote in the Senate shows that any further extension will have to be offset — and may not pass even if it is.

Back in May, Senator Charles Schumer (D-NY) pledged to “work with [his] colleagues to create a fifth tier of benefits,” i.e., some unspecified number of weeks beyond the current 99-week maximum. Colleague and influential Finance Committee Chairman Max Baucus (D-MT) has already turned thumbs down on this.

Over on the House side, Speaker Nancy Pelosi (D-CA) has thus for remained technically neutral. At the end of November, she says, “we’ll take up something,” but it will have to satisfy members “from low unemployment areas [who] are very concerned about the deficit.” Odds are Senate Majority Leader Harry Reid (D-NV) will adopt the same calculus and that both will limit their efforts to the existing tiers.

But even repeated extensions of unemployment benefits, with still another tier for at least some long-time jobless people wouldn’t resolve the underlying problem.

The labor market has shed 7.5 million jobs since the recession began. Heidi Shierholz at the Economic Policy Institute says it would need to add about 325,000 jobs every month for the next four years to bring the unemployment rate back down to its pre-recession level. Haven’t seen anyone projecting anything remotely approaching this.

Will Congress rise to the challenges of what promises to be a prolonged jobs crisis, with even longer-term damage to human lives? If past is prologue, the answer is a resounding NO, even if the Democrats do better in November than the prognosticators expect.

What’s worse, it’s hard to know what Congress could do to put such a large number of unemployed people back to work, while at the same time ensuring that new entrants to the job market find work too.

Which is not to say it should wash its hands of the problem. Every job it could save or create would mean at least one less person on the brink of desperation — or over the edge.


A Real Jobs Bill At Last!

March 17, 2010

Those of you who follow this blog know that I’ve been disappointed with what the White House and Congress have thus far done to address the jobs crisis. I’ve recently vented on the Poverty in America blog as well. And, of course, I’m hardly a voice crying in the wilderness.

The jobs problem hasn’t been altogether ignored. The Senate managed to pass a watered-down tax credit for new hires and a stop-gap extension of expanded unemployment benefits and COBRA subsidies.

It then approved extensions of both to the end of the year, along with an extension of the higher federal match for state Medicaid programs–these as part of a large package consisting mostly of tax cut extensions. The House leadership is now deciding what to do with this bill.

By now, it’s fairly common knowledge that public benefits like UI indirectly save or create jobs because recipients use them to purchase essential goods and services. Demand drives hiring–not only at the retail level, but up the supply chain and out to firms that provide contract services.

But the unemployment problem is far larger than the investments to date. In February, 14.9 million jobless people were actively looking for work–100,000 more than in January. But the number of underemployed workers, i.e., those who were working part-time though they wanted full-time jobs, increased by nearly half a million. An additional 1.2 million had given up looking.

Adding the number of payroll jobs eliminated since the beginning of the recession to the number that would be needed to keep pace with population growth, the Economic Policy Institute estimates that about 11.1 million new jobs would be needed to bring the unemployment rate down to its pre-recession level.

Meanwhile, as the Center on Budget and Policy Priorities reports, state governments are proceeding to slash spending. Education, health care and a wide range of other public programs and services have been targeted for cuts. More freezes and reductions in state-level workforces are in the offing.

Some of the cuts–K-12 education, for example–are actually cost-shifting to local governments, which have already laid off teachers, firefighters, public safety officers and other critical workers. They have also deferred or canceled capital projects, thus precipitating more private-sector job losses.

The National League of Cities projects job losses at 1.5 million or more by the end of 2011–unless the federal government steps in to stabilize city budgets.

And now, at last, it may. Congressman George Miller (D-CA) has introduced a bill–the Local Jobs for America Act (H.R. 4812)–that addresses job creation directly and aggressively, with a focus on restoring, retaining and perhaps expanding public services.

The bill would channel:

  • $75 billion to local communities–$52.5 billion directly to communities with at least 500,000 residents and the remainder to states to distribute to smaller communities
  • $23 billion to states, most of it for earmarked for distribution to local school districts and public higher education institutions
  • $1.68 billion for law enforcement and firefighter jobs
  • $500,000 to Workforce Investment Act programs for additional on-the-job training slots in private-sector businesses

Most of these provisions were part of the jobs bill the House passed in December, though the proposed WIA funding is somewhat lower. The local community aid would be new.

Funding under the new provisions would be allocated according to a formula that targets funds to communities with above-average poverty and unemployment rates.

Up to half the funds could be used to preserve local government public service positions that would otherwise be eliminated and up to half could go to nonprofits that provide services not customarily provided by local government employees. Any funds left over would go to creating new local government public service jobs.

Funds could be used only for compensation of employees in full-time, full-year positions. And priority for new hires is to be given to laid-off city workers, veterans and workers who are receiving unemployment benefits, have been unemployed so long as to have exhausted their benefits and/or aren’t eligible for benefits because their earnings were below the required minimum.

The price tag on the total package is about $100 billion over the next two years. Miller estimates it would save or create a million jobs. EPI says the actual number could be higher because people with these jobs would be spending money at local businesses.

EPI is very high on the bill. Needless to say, the National League of Cities is too. Also, needless to say, the bill has no Republican cosponsors.

A spokesperson for House Minority Leader John Boehner (R-OH) previews where the Republican delegation will be coming from: “The American people don’t want more wasteful Washington spending that expands government at the expense of small businesses. They want Congress to focus on long-term economic growth by helping small businesses create jobs.”

Last time I checked, Americans were a whole lot more concerned about jobs than the economic engine that would create them. But the Miller bill will face tough sledding anyway.


Correction: More Job Creation In Obama’s Budget Than I Said

February 20, 2010

I recently criticized President Obama’s job creation initiative, in part because $1 billion seemed to me too little to make much impact on our high unemployment rate. Policy analyst and sometime-guest blogger Matt McKillop commented that I was understating the job creation components of the President’s budget.

A budget briefing hosted by the Coalition on Human Needs has just confirmed Matt’s view. According to Robert Greenstein, Executive Director of the Center on Budget and Policy Priorities, the better figure is $281 billion over the next three years–or as a CBPP brief explains, $266 billion over the long term.

I relied on the figure the White House cited–as indeed did many reporters. Turns out that, for strategic reasons, the White House decided not to include the costs of its proposed extensions of a number of provisions in the economic stimulus package–expanded unemployment benefits, COBRA subsidies, the increased federal match for Medicaid, the boost in food stamp benefits and more.

While these alleviate hardship, they also provide a big “bang for the buck” stimulus to the economy–thus preserve and create jobs.

So I stand corrected. And I’m glad of it. Now let’s see what our fractious Congress does.


President’s Budget Falls Short On Job Creation

February 13, 2010

I’ve spent the past two weeks combing through President Obama’s proposed Fiscal Year 2011 budget and analyses from various sources. A fine occupation for a snowed-in wonk. Of course, I’ve been highly selective, focusing on the relatively few issues I’ve been blogging about.

Even for these, there’s still more to learn. But this much I’m pretty sure of. It could have been a whole lot worse, especially with the President committed to a freeze on discretionary spending. But it could have been better too.

Consider what’s supposed to be his top priority–job creation.

The President proposes $100 billion for a new jobs initiative. This is much more than we understand the Senate leadership plans to invest, but $54 billion less than the jobs bill the House passed in December.

It’s hard to know just what the President has in mind since the figure is characterized as a placeholder. We do know it would include tax credits for small businesses that increase their payrolls, other small business benefits, new investments in clean energy and infrastructure, plus some extensions of provisions in the economic recovery act, e.g. expanded unemployment insurance benefits.

What we don’t see is a focus on people who were struggling to make it even before the recession began. Where are the investments to create jobs in and for disadvantaged communities? We look in vain for a budget theme that focuses on them.

Ben Jealous, President and CEO of the NAACP frames the issue well. “You cannot … rebuild the middle class without rescuing those who strive to be in the middle class. Many Americans live on Main Street, but many more live on Back Street.”

It’s all very well and good to create new, good-paying “green jobs.” But what assurance do we have that people with the highest unemployment rates will get them?

In January, the unemployment rate for adults without a high school diploma was 6.7% higher than for those with some postsecondary education and 10.3% higher than for those with at least a bachelors degree. How will the dropouts and the numerous teenagers who graduate from high school without basic skills compete for the jobs that will give them a pathway out of poverty?

And how much will $100 billion do when we need to create more than 400,000 jobs a month for the next three years to get the unemployment rate back to its pre-recession level?

I understand that the President feels pressed to control the deficit. He’s also undoubtedly gauging what can pass in the Congress and hoping to avoid another donnybrook like health care reform. But I’d like to see some leadership here–and greater concern for people whose boats won’t necessarily be lifted by the rising economic tide.


New Report Warns of Growing Race Gap In Employment

January 22, 2010

The Economic Policy Institute has issued what it rightly calls “grim 2010 projections” for the employment prospects of our nation’s racial minorities.

Here are some lowlights from the “downcast” forecast, along with some calculations by yours truly.

The overall unemployment rate is expected to peak at 10.7% in the third quarter of 2010. But for blacks, the projected rate is 17.2%. This is in part because minorities “began the recession in a recession,” with the black unemployment rate more than double the white unemployment rate–higher, in fact, than the current white rate.

In the third quarter of 2009, the white unemployment rate was at or below 9% in all but nine states. In the 18 states for which there are reliable data black unemployment rates were all double digit. By the projected 2010 peak, the black unemployment rate will be over 17% in 11 of these states and over 20% in five.

The race gap is writ large in the District of Columbia.

  • In the third quarter of 2009, the black unemployment rate was 11.9% higher than the white unemployment rate. This is larger than any of the reported state race gaps except South Carolina’s, which is a mere 0.1% higher.
  • By the 2010 peak, the white unemployment rate will have increased by 0.4% and the black unemployment rate by 1.3%–more than three times as much as the white rate.
  • The difference between the white and black rates will have grown to 12.8%–again greater than the difference in any state except South Carolina.
  • Yet the increase in the black unemployment rate since the recession set in will be just about at the median–another indicator that black unemployment in the District is a long-standing problem.

The EPI report is a call to action for a job creation strategy that targets states and populations with the severest employment problems. And, indeed, the race gaps it documents clearly show that we can’t count on a rising tide to lift all boats.

The administration and Congress are going to be under pressure to put as many people as possible back to work as soon as possible. But if they focus only on raw numbers, low-income minorities and their communities will again be left behind.

In December, the unemployment rate for adults over 25 without a high school diploma was more than three times greater than the rate for those with a bachelor’s degree or higher. For teens, the rate was 23.6% and for black teens an appalling 48.4%.

So there’s an urgent need to build education and training into job creation programs, including meaningful work-learning opportunities for low-income youth. And we need, at long last, to commit to resolving other problems underlying the employment race gap.

And what if we don’t? Well, according to EPI, the black child poverty rate will increase to more than 50%–more than half of all black children beginning life with two strikes against them. A recipe for millions more trapped on the bad side of the economic divide.


Hunger Experts Say the Top Remedy Is Jobs

January 11, 2010

Catching up on things in my files…

A mid-December article in the Washington Post explores “the silent epidemic” of child hunger. Bottom line is that the problem is complex and unlikely to be solved by simply putting more money into food assistance programs.

This took me back to a webinar on the struggle against hunger in America. Anyone who’s been following the news knows the news wasn’t good.

  • Food banks in Feeding America’s network reporting an average of 30% more requests for emergency food assistance since last year.
  • An unprecedented one-year jump in the number of people who are food insecure–from 36.2 million in 2007 to more than 49 million in 2008.
  • Nearly 37.2 million people receiving food stamps in September–almost 15.6% more than in September 2007.
  • Hunger and/or dietary deficiencies among one in four of the children cared for by pediatricians in the Children’s HealthWatch network.

And more …

But, of course, we already knew that many more households are struggling with hunger–and many more children at high risk of life-long consequences. Every new report is a shocker, but not a surprise.

The surprise, for me, was what the panelists said should be done. As you’d expect, they noted needs to improve and expand federal nutrition programs. But their A-number 1 remedy was action to address the jobs crisis.

Putting people back to work will surely reduce food hardship. But just creating jobs won’t be enough. We’ll continue seeing dire figures like those above unless we make sure that those who’ve been hit hardest by the labor market contraction can find living wage jobs–a challenge for many of them even before the recession set in.


900,000 Jobs At Risk and Easy To Save

December 16, 2009

I, for one, am underwhelmed by the President’s job growth plan. I’d hoped for something bigger, bolder and more targeted to reach low-income people and their communities.

Still, I understand there are political realities here. As New York Times columnist Paul Krugman says, the President probably can’t do much in the face of rock-solid Republican opposition, especially when centrist Democrats are nervous about the deficit–and its effects on their re-election prospects.

One thing the Democratic leadership could do is reframe the objective. Yes, we need to create new jobs. But we also urgently need to preserve jobs in jeopardy. Otherwise, those new jobs we’ve been promised will be offset by new cutbacks.

Cutbacks are a virtual certainty unless Congress delivers additional fiscal assistance to the states–and, through them, to local governments.

According to the Center on Budget and Policy Priorities, 35 states are already facing shortfalls in their current budgets–this despite the fact the budgets were balanced when enacted.

Two major elements of the economic stimulus package will partially fill the gaps–the temporary increase in the federal government’s match on state Medicaid costs, a.k.a. FMAP, and the state fiscal stabilization fund, a one-time infusion of federal funds for education and other key services. Yet we can expect further cuts in critical services–and with them, more job losses.

The Center for Economic and Policy Research reports that state and local governments have shed more than 110,000 jobs in the last two years. Add to these jobs lost by employees of contract service providers and vendors. All these job losses ripple through the economy, as people with drastically reduced or no income cut back on spending.

Looking ahead to Fiscal Year 2011, 32 states already face budget gaps they haven’t yet addressed. CBPP expects the total shortfall to be $180 billion–only $10 billion less than this fiscal year’s. The big difference is that states will have used up most of their stimulus funds for education and other services, and the extra FMAP assistance will end part-way through the year.

So states will make further spending cuts and/or raise taxes. CBPP says these could result in a loss of 900,000 jobs–and even deeper cutbacks in education, health care and programs for low-income elderly and disabled people.

Seems to me that extending FMAP aid and the fiscal stabilization funding is a no-brainer. The basic legislation is already on the books. The funding would avert at least some further fraying of our tattered safety net. And it would prime the economic pump, thus offsetting the spending.

Mark Zandi, Chief Economist at Moody’s Economy.com recently testified that every federal dollar spent on general aid to state governments translates into a $1.41 increase in the GDP. This is a much bigger bang for the buck than the tax cuts the President in talking about.

Extending aid to the states can’t wait until Congress comes back in late January. Governors are already developing their budgets for FY 2011. State legislatures will begin voting on them as early as March. If they don’t know they can count on additional federal relief, they’ll begin implementing cutbacks. Local governments will do the same.

There go 900,000 more workers on the unemployment rolls, drawing unemployment insurance, accessing other benefits, reducing their spending to the minimum.

What will happen to our fragile economic recovery then?


Follow

Get every new post delivered to your Inbox.

Join 165 other followers