A recovery with no jobs Commentary: Falling claims don't mean the worst is over

CBS Marketwatch ^ | 12/3 | Kellner

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IRWIN KELLNER

A recovery with no jobs
Commentary: Falling claims don't mean the worst is over

By Dr. Irwin Kellner, CBS MarketWatch.com Last Update: 8:30 AM ET Dec. 3, 2002

NEW YORK (CBS.MW) -- Just because jobless claims are trending lower, it doesn't mean that the worst is over for the U.S. economy -- or for those who are already unemployed.

Fewer people may be losing their jobs these days -- but fewer people are finding them, too. As a consequence, the average duration of unemployment is now at its highest level in over eight years.

Thirty-six percent of those officially counted as unemployed have been without a job for 15 weeks or more. You have to go back to recession year 1991 to find a bigger percentage.

Those without work 27 weeks or more are also at eight-year highs when taken as a percentage of the unemployed. And while this figure always lags behind the turn in the economy, their numbers have increased much faster this time than they did following the end of the previous recession, back in 1991 and 1992.

We are now at the point in the business cycle where, if the economy is, indeed, recovering, employment should be in a solid upturn. Instead, employment has zigzagged all this year, rising in some months but falling in others.

As a result, payrolls are slimmer than they were this time last year as well as the year before. Call it a jobless recovery.

Business may be proud of the fact that it is adjusting its workforce to reflect the new reality of slow growth, but who do you think is responsible for this sluggishness in the first place?

By being so quick to fire and so slow to hire Corporate America is shooting itself in the foot, then running to Washington to look for help.

The Business Roundtable, a group of chief executives of the nation's largest firms, recently called for the president and the Congress to enact a $300 billion tax cut. And they want it the sooner the better.

Although the economy could use a dollop of fiscal stimulus to supplement monetary policy (see my column of Nov. 1), the likelihood of getting a timely push from Washington is fading like the winter sun.

Just the other day, Congress failed to extend unemployment benefits for the long-term unemployed. This means that many people will lose their benefits just as the bills roll in for their holiday shopping.

It seems like Congress is vying with Corporate America to see who is the bigger Scrooge.Dr. Irwin Kellner, chief economist for CBS.MarketWatch.com, is the Weller professor of economics at Hofstra University.

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[vannrox]

"...Just because jobless claims are trending lower, it doesn't mean that the worst is over for the U.S. economy -- or for those who are already unemployed..."


I have been unemployed since February. No Engineering positions in Boston in my speciality. Even when I offered a serious cut in pay. No Jobs - None.

My unemployment ran out. I will no longer be filling out unemployment forms. That means - to the pollsters that the unemployment rate is lessening. Not so. Not by a long shot.

[wideawake]

What a communist this guy is.

Extend the unemployment benefits - sure? How long, Irwin? Six more months? Six years?

Paying people not to work - that's a sound recipe for economic recovery.

[Alberta's Child]

What is your specialty?

[vannrox]

.


I would normally agree with you.

However, I have two reasons not to. The first is that I am unemployed and with no unemployment income is really hard on my family...and secondly, Unemployment compensation are funds I ALREADY earned. The Feds and the States take out significant amounts of monies before you ever see them, and they are not indicated on the paychecks. Social Security is one such example.

With Social Security, you pay 6.5% out of your pay check and the Company matches that amount. So you are really paying twice the amount in Social Security. Crazy huh?

Well, the same is true with Unemployment benefits.

Unemployment COmpensation only applies to employees. These are the people whom PAID into the Unemployment slush fund. Investors, COntractors and Professionals or BUsiness owners operate under a different set of rules.

Unemployment Compensation thus fills up in a big bucket. Now, normally it is only supposed to be used for the needs of the unemployed workers who paid into it...but that's not so. It's dipped into all the time.

The amount of benefits are determined by a complexity of factors. The first being the anticipated length of a typical length of unemloyment - this is a State unemployment rate coupled by the amount of monies in the fund, and the state of the overall economy.

The extra three months of additional unemployment compensation was only an adjustment on the anticipation of the length of an unemployment crisis. Congress initially felt that 911 would extend the recession by a good 12 months. But the Senate stalled and a mere three month extension was obtained.

The length was to be revised, but Jumpin' Jim enabled Dashhole to block the effort for this year.

It really rucks.


.

[RLK]

As a consequence, the average duration of unemployment is now at its highest level in over eight years.

------------------

That's the real measure of the economy. The rest is spin.

[vannrox]

I am an Senior (Staff Level) Electro-Mechanical Engineer. I have over 20 years experience in this field.
I specialize in Consumer products utilizing microprocessor electronics and offshore manufacturing. My base experience and strength is composite plastics and applications for quick turn around fabricration. I hold 13 patents and I am a member of both the Stratfords and the Lexington Who's Who.

Like I said. There is NO WORK.

[wideawake]

Hmmm . . . I sympathize.

I was unemployed for a few weeks earlier this year - if you're like me, as I suspect you are, you're literally crawling the walls to work again.

And I agree - you pay into the system, you should get paid back. Of course, the Democrats would prefer to jack taxes up to pay for the unemployment money they've already spent on a new project for Robert Byrd's constituents.

BTW, what do you specialize in? I know some execs at a tech company in Westwood.

[vannrox]

Incidently, this unemployment rate is unique in another factor. Over 75% of the Unemployed are between the ages of 35 and 45. Usually, the unemployment curve is rather flat.

[RLK]

This is typical throughout most of engineering with exception of a few small areas.

[Hodar]

Paying people not to work - that's a sound recipe for economic recovery

I agree with your sentiments, but not your statement. As an engineer, I was around $72K, and paying taxes accordingly. My house payment, car payment, and assorted debt totalled more than my unemployment check. This did not include any food. Bottom line, an unemployed professional is far better off working, than enjoying the benefits of unemployments. You will wind up bankrupt, and without a home. I was lucky, I relocated and got a job paying significantly more money, in an area of the country I love. Hello, Austin!!!

[RLK]

I don't have a whole lot of compassion. You can always find a job.

---------------------

No you can't. Not only do you not have a lot of compassion, you don't have much of a sense of reality.

[UnBlinkingEye]

I hold 13 patents ...

I own one patent and it may be the thing that saves me financially. Do you own your patents or are they the property of the companies that employed you?

I'm a software engineer with fifteen years of application development experience. The last company I worked for went bankrupt over a year ago, hundreds of resumes sent, three interviews, no job. BTW my unemployment ran out in September, so I am no longer counted in these statistics either.

[chit*chat]

Paying people not to work . .

It isn't paying people not to work, it is helping them to pay the most basic bills (mortgage, food and utilities) and to get a job.

Obviously you have not been in a position where you are unemployed, receiving unemployemnt and faced with the decision of paying for food and utilities or spending money on gas for interviews, and investing in clothes for same. We have.

I know people (with kids) who purchased food with credit cards while on unemployment just to survive. Fortunately they were able to work overtime on the next job and pay the credit card off in a few years.

Accusing people of not working because they receive unemployement is to assume they are slothful right off the bat. What gives you the right to make that generalization of people who are out of work through no fault of their own?

Don't accuse all because a few abuse the system.

[RLK]

What gives you the right to make that generalization of people who are out of work through no fault of their own?

---------------------------

Being spoiled rotten gives him that right.

[wideawake]

You have no idea what situations I've been in. And PLENTY of people abuse the unemployment system.

[RLK]

You can always find a job. ALWAYS.

-----------------------

You're dead wromg.