More than a million unemployed Americans are about to get the
cruelest of Christmas “gifts.” They’re about to have their unemployment benefits
cut off. You see, Republicans in Congress insist that if you haven’t found a job
after months of searching, it must be because you aren’t trying hard enough. So
you need an extra incentive in the form of sheer desperation.
As a result, the plight of the unemployed, already terrible, is about to get
even worse. Obviously those who have jobs are much better off. Yet the
continuing weakness of the labor market takes a toll on them, too. So let’s talk
a bit about the plight of the employed.
Some people would have you believe that employment relations are just like any
other market transaction; workers have something to sell, employers want to buy
what they offer, and they simply make a deal. But anyone who has ever held a job
in the real world — or, for that matter, seen a Dilbert cartoon — knows that
it’s not like that.
The fact is that employment generally involves a power relationship: you have a
boss, who tells you what to do, and if you refuse, you may be fired. This
doesn’t have to be a bad thing. If employers value their workers, they won’t
make unreasonable demands. But it’s not a simple transaction. There’s a country
music classic titled “Take This Job and Shove It.” There isn’t and won’t be a
song titled “Take This Consumer Durable and Shove It.”
So employment is a power relationship, and high unemployment has greatly
weakened workers’ already weak position in that relationship.
We can actually quantify that weakness by looking at the quits rate — the
percentage of workers voluntarily leaving their jobs (as opposed to being fired)
each month. Obviously, there are many reasons a worker might want to leave his
or her job. Quitting is, however, a risk; unless a worker already has a new job
lined up, he or she doesn’t know how long it will take to find a new job, and
how that job will compare with the old one.
And the risk of quitting is much greater when unemployment is high, and there
are many more people seeking jobs than there are job openings. As a result, you
would expect to see the quits rate rise during booms, fall during slumps — and,
indeed, it does. Quits plunged during the 2007-9 recession, and they have only
partially rebounded, reflecting the weakness and inadequacy of our economic
Now think about what this means for workers’ bargaining power. When the economy
is strong, workers are empowered. They can leave if they’re unhappy with the way
they’re being treated and know that they can quickly find a new job if they are
let go. When the economy is weak, however, workers have a very weak hand, and
employers are in a position to work them harder, pay them less, or both.
Is there any evidence that this is happening? And how. The economic recovery
has, as I said, been weak and inadequate, but all the burden of that weakness is
being borne by workers. Corporate profits plunged during the financial crisis,
but quickly bounced back, and they continued to soar. Indeed, at this point,
after-tax profits are more than 60 percent higher than they were in 2007, before
the recession began. We don’t know how much of this profit surge can be
explained by the fear factor — the ability to squeeze workers who know that they
have no place to go. But it must be at least part of the explanation. In fact,
it’s possible (although by no means certain) that corporate interests are
actually doing better in a somewhat depressed economy than they would if we had
What’s more, I don’t think it’s too much of a stretch to suggest that this
reality helps explain why our political system has turned its backs on the
unemployed. No, I don’t believe that there’s a secret cabal of C.E.O.’s plotting
to keep the economy weak. But I do think that a major reason why reducing
unemployment isn’t a political priority is that the economy may be lousy for
workers, but corporate America is doing just fine.
And once you understand this, you also understand why it’s so important to
change those priorities.
There’s been a somewhat strange debate among progressives lately, with some
arguing that populism and condemnations of inequality are a diversion, that full
employment should instead be the top priority. As some leading progressive
economists have pointed out, however, full employment is itself a populist
issue: weak labor markets are a main reason workers are losing ground, and the
excessive power of corporations and the wealthy is a main reason we aren’t doing
anything about jobs.
Too many Americans currently live in a climate of economic fear. There are many
steps that we can take to end that state of affairs, but the most important is
to put jobs back on the agenda.
February 23, 2013
The New York Times
By ROSS DOUTHAT
IMAGINE, as 19th-century utopians often did, a society rich
enough that fewer and fewer people need to work — a society where leisure
becomes universally accessible, where part-time jobs replace the regimented
workweek, and where living standards keep rising even though more people have
left the work force altogether.
If such a utopia were possible, one might expect that it would be achieved first
among the upper classes, and then gradually spread down the social ladder. First
the wealthy would work shorter hours, then the middle class, and finally even
high school dropouts would be able to sleep late and take four-day weekends and
choose their own adventures — “to hunt in the morning,” as Karl Marx once
prophesied, “fish in the afternoon, rear cattle in the evening, criticize after
Yet the decline of work isn’t actually some wild Marxist scenario. It’s a basic
reality of 21st-century American life, one that predates the financial crash and
promises to continue apace even as normal economic growth returns. This decline
isn’t unemployment in the usual sense, where people look for work and can’t find
it. It’s a kind of post-employment, in which people drop out of the work force
and find ways to live, more or less permanently, without a steady job. So
instead of spreading from the top down, leisure time — wanted or unwanted — is
expanding from the bottom up. Long hours are increasingly the province of the
Of course, nobody is hailing this trend as the sign of civilizational progress.
Instead, the decline in blue-collar work is often portrayed in near-apocalyptic
terms — on the left as the economy’s failure to supply good-paying jobs, and on
the right as a depressing sign that government dependency is killing the
American work ethic.
But it’s worth linking today’s trends to the older dream of a post-work utopia,
because there are ways in which the decline in work-force participation is
actually being made possible by material progress.
That progress can be hard to appreciate at the moment, but America’s immense
wealth is still our era’s most important economic fact. “When a nation is as
rich as ours,” Scott Winship points out in an essay for Breakthrough Journal,
“it can realize larger absolute gains than it did in the past ... even if it has
lower growth rates.” Our economy may look stagnant compared to the acceleration
after World War II, but even disappointing growth rates are likely to leave the
America of 2050 much richer than today.
Those riches mean that we can probably find ways to subsidize — through public
means and private — a continuing decline in blue-collar work. Many of the
Americans dropping out of the work force are not destitute: they’re receiving
disability payments and food stamps, living with relatives, cobbling together
work here and there, and often doing as well as they might with a low-wage job.
By historical standards their lives are more comfortable than the left often
allows, and the fiscal cost of their situation is more sustainable than the
right tends to admits. (Medicare may bankrupt us, but food stamps probably will
There is a certain air of irresponsibility to giving up on employment
altogether, of course. But while pundits who tap on keyboards for a living like
to extol the inherent dignity of labor, we aren’t the ones stocking shelves at
Walmart or hunting wearily, week after week, for a job that probably pays less
than our last one did. One could make the case that the right to not have a boss
is actually the hardest won of modern freedoms: should it really trouble us if
more people in a rich society end up exercising it?
The answer is yes — but mostly because the decline of work carries social costs
as well as an economic price tag. Even a grinding job tends to be an important
source of social capital, providing everyday structure for people who live
alone, a place to meet friends and kindle romances for people who lack other
forms of community, a path away from crime and prison for young men, an example
to children and a source of self-respect for parents.
Here the decline in work-force participation is of a piece with the broader turn
away from community in America — from family breakdown and declining churchgoing
to the retreat into the virtual forms of sport and sex and friendship. Like many
of these trends, it poses a much greater threat to social mobility than to
absolute prosperity. (A nonworking working class may not be immiserated; neither
will its members ever find a way to rise above their station.) And its costs
will be felt in people’s private lives and inner worlds even when they don’t
show up in the nation’s G.D.P.
In a sense, the old utopians were prescient: we’ve gained a world where steady
work is less necessary to human survival than ever before.
But human flourishing is another matter. And it’s our fulfillment, rather than
the satisfaction of our appetites, that’s threatened by the slow decline of
The New York Times
By MICHAEL COOPER and ALLISON KOPICKI
nation’s lingering unemployment crisis has forced many people without work to
dip into their savings, borrow from relatives and do without necessities
including health insurance, and most people who receive unemployment benefits
said that the money was not enough to meet their basic needs, according to a New
York Times/CBS News poll of jobless Americans.
Still, despite enduring hardships and being even more pessimistic about the
nation’s economy than the general public, unemployed Americans remained
optimistic about eventually landing jobs. A little more than half of those
polled said they were either very or somewhat confident they would find
long-term employment in the next year, and a majority said they expected that
when they did find permanent work, it would be at a similar or higher salary
than they had received in the past.
But the poll found deep unease about unemployment benefits. At a moment when
several states have decided to pay fewer weeks of benefits to save money, and
President Obama has been urging Republicans in Congress to renew a program — due
to lapse at the end of the year — that pays federal jobless benefits to the
long-term unemployed, 7 in 10 of those receiving unemployment benefits said that
they feared their benefits would run out before they could find new jobs.
While jobless benefits have been criticized as unaffordable by some Republicans,
particularly at the state level, three-quarters of the people receiving them
said that they got “a lot less” than they used to earn at their jobs, and
two-thirds said that the benefits were not enough to pay for basics like housing
“I was earning $50,000 a year, and now I get $200 a week,” said Jan Thomas, 62,
an unemployed marketing executive from Sarasota, Fla., who has been laid off
from two jobs in the last three years. Ms. Thomas said in a follow-up interview
to the poll that she recently dropped her health insurance “just hoping all will
be well” and that she would soon lose her unemployment benefits, leading her to
think about applying early for Social Security. “And I’m giving up my apartment
and moving in with my mom because my unemployment will be running out,” she
The toll that unemployment is taking on families is not just financial,
according to the telephone poll, which surveyed 445 unemployed adults from Oct.
19 to Oct. 25 and has a margin of sampling error of plus or minus five
percentage points. More than half of those polled said that they had experienced
emotional or mental health problems like anxiety or depression because of their
lack of work, and nearly half said that they had felt embarrassed or ashamed not
to have jobs. More than a third said that they had had more conflicts or
arguments with family and friends because of being jobless. The top reason
people cited for not getting work: Too many applicants.
Threats of foreclosure or eviction were reported by a fifth of the unemployed,
and one in eight said that they had moved in with relatives or friends. More
than half said that they lacked health insurance. A fifth said that they had
received food from a nonprofit organization. And in a sign that the nation’s
current economic woes could reverberate for years, nearly two-thirds said they
would probably not have enough money to live comfortably during retirement. More
than half said that they had taken money out of savings or retirement accounts.
But the unemployed continue to believe in the American dream. Two-thirds of
those surveyed said that they still believed it was possible to start out poor
in this country, work hard and become rich — only a little lower than the
three-quarters of all Americans who said that they believed that, according to a
New York Times/CBS News nationwide poll that was conducted at the same time as
the poll of the unemployed adults.
Robert Roberson, 52, a licensed plumber from Corpus Christi, Tex., who has been
out of work for a year, said that he hoped to get work soon when a delayed
project to build a prison breaks ground. “I actually think the job market will
get better because I think the recession will have a break and they’ll go back
to building housing,” he said.
Unemployed people are now less likely to blame former President George W. Bush
for the nation’s high unemployment rate than they were two years ago in the last
Times/CBS News poll of the unemployed. But few blame Mr. Obama. Eight percent of
the unemployed in the new survey said that Mr. Bush was most to blame, down from
26 percent two years ago. Five percent said that Mr. Obama was most to blame,
almost the same as the 3 percent who said so two years ago. Nearly a fifth said
“politicians” were most to blame.
There are currently 14 million Americans unemployed, and more underemployed, and
the unemployment rate remained stubbornly high at 9.1 percent last month. Fierce
debates over how to spur the economy, and how far to go in taking care of
unemployed people, are consuming Washington and state capitals.
One of the most contentious policy questions is how long the government should
continue to pay unemployment benefits. The length and depth of the downturn led
many states to deplete the trust funds they use to pay such benefits, forcing
them to borrow billions of dollars from the federal government and prompting
some states to raise taxes on businesses to continue paying benefits. This year
half a dozen states decided that they would no longer pay the 26 weeks of state
benefits that has long been standard.
The federal government has been picking up the tab to pay extended benefits that
allow some long-term unemployed people to collect checks for up to 99 weeks in
states with the worst unemployment problems. If that program is not renewed at
the end of the year, 1.8 million people could lose benefits in January,
according to the National Employment Law Project, which advocates renewing the
Seven in 10 of the unemployed said that the government should pay benefits for
99 weeks or more. While a slight majority of Americans said that getting
unemployment benefits makes people less motivated to seek work, only 40 percent
of unemployed people said that it did, with half saying that it had no effect.
Three-quarters of the unemployed said that they were qualified, or
overqualified, for the jobs that they were seeking. Four in 10 said that they
would consider moving elsewhere to get jobs, but only 15 percent said that they
had applied for jobs elsewhere. More than a third said that they had taken
classes or trained for new jobs while unemployed.
One was Bobby Austin, 25, from Valdosta, Ga., who lost his job as a truck driver
two years ago and whose benefits will run out soon. “Now I’m back in school to
study nursing,” he said, “and I’m confident I will find a job when I finish next
employment report, released on Friday, is bleak on all counts, but at least it
leaves no doubt that the United States is in the grip of a severe and worsening
jobs crisis. That should lend a sense of urgency to the speech on jobs that
President Obama plans to deliver this week.
The economy added no jobs in August — zero — and the anemic numbers for June and
July were revised downward. The unemployment rate is stuck at 9.1 percent, but
it would be 16.2 percent if it included the swelling ranks of those who find
only part-time work and the millions who have given up looking for jobs that
simply do not exist.
In his speech on Thursday, Mr. Obama does not need to alert Americans to the
dire situation; they have been telling pollsters for months that job creation —
not budget cuts — should be policy makers’ top priority. This is his chance to
present a plan big enough to ramp up job growth in the near term, while
initiating long-term fixes to improve the economy and sustain employment.
He should not calibrate his policies to fit what he hopes will be acceptable to
his Republican opponents. The House Republicans are never going to give Mr.
Obama anything, and they are ideologically opposed to the government’s acting on
the scale that is needed.
The American people will understand if Mr. Obama makes his case clearly and
powerfully. The Republicans will refuse to, and the president should speak
candidly about their disregard for workers. (Last week, the Republicans showed
their disregard for the presidency by fighting over the timing of the address.)
The first step is to not make matters worse. The main cause of unemployment now
is a lack of consumer demand. Americans — unemployed, underemployed, underwater
in their debts, and understandably anxious about the future — are unwilling or
unable to spend. To counteract that, it is vital to extend federal unemployment
benefits and the temporary payroll tax cut for employees beyond year’s end, a
move that would put some $160 billion into Americans’ pockets and preserve some
1.5 million jobs.
The next step is to create jobs. The highway trust fund must be reauthorized
before it expires at the end of September, a step that would prevent furloughs
of current workers and create some 120,000 jobs a year over the next three years
via investments in transportation. In addition, a $50 billion school renovation
program would employ 500,000 workers, out of 1.5 million unemployed construction
workers, and could be easily scaled up.
The federal government must also stop the hemorrhaging of state budgets, which
has led to the elimination of nearly 700,000 teaching jobs and other government
positions in the last three years. Analysts estimate that for every government
job lost, at least one job is lost in the private sector, as laid-off government
workers stop spending and private contractors lose work. The fastest way to get
aid to states is to increase the federal Medicaid share. The states will then
have money to pay employees and contractors.
In August, joblessness was nearly 18 percent among Americans under 24. They need
more federal jobs in parks, community centers and on college campuses, as well
as in service programs like AmeriCorps.
It is vital that Mr. Obama push for mortgage relief, to boost consumer spending
and help repair household balance sheets.
Mr. Obama cannot order Fannie Mae and Freddie Mac, the government-run mortgage
companies, to refinance the mortgages of underwater borrowers in good standing.
But he can apply pressure by making it clear that it is profoundly in the public
interest that they do so. Mr. Obama should also support principal reductions for
troubled borrowers in bankruptcy, in legal settlements, and in other loan
Immediate measures must be accompanied by long-term plans. In particular,
Congress should heed Mr. Obama’s call for an infrastructure bank, to combine
public and private investment in large-scale projects.
Mr. Obama should explain that the efforts will be paid for, over time, by tax
increases and spending cuts that will begin as the economy recovers. For now,
they will require more borrowing, which is prudent, given the need and today’s
low interest rates.
Republicans will insist that the nation cannot afford to do the things necessary
to create jobs. We can’t afford not to. Mr. Obama must be clear about that on
The New York Times
By JENNIFER GONNERMAN
ON June 25,
2010, Frederick Deare punched out for the last time from his job driving a
forklift at the Old London factory in the Bronx. That summer, everyone at the
plant was being laid off: the oven operators, the assembly-line packers, the
forklift drivers, the sanitation workers. Total jobs lost: 228. Old London, the
snack manufacturer that invented the Cheez Doodle, was moving its operations to
North Carolina. At 53, Mr. Deare, known as Freddy or Teddy Bear to his
co-workers, would have to find a new job.
There was a time, not all that long ago, when the sound of factory whistles
could be heard throughout the five boroughs. In the Bronx, there were
Farberware, the pot manufacturer, which employed 700 people before shutting down
its plant in 1996; Everlast, the boxing glove maker, which closed its operation
in 2003; and Stella D’oro, the cookie-and-breadstick bakery that moved to Ohio
in 2009. A. L. Bazzini Company, the peanut factory that supplies snacks to
Yankee Stadium, will soon be leaving the city, too.
A century ago, about 40 percent of New York City workers held manufacturing
jobs, according to “Working-Class New York,” by Joshua B. Freeman. As Labor Day
rolls around again, that portion has shrunk to less than 4 percent, according to
the federal Bureau of Labor Statistics. And when Mr. Deare received his pink
slip, he joined a growing army of the unemployed in a borough that has been hit
hard by the nation’s financial turmoil. The Bronx has an unemployment rate of 12
percent, the highest in the state. For African-American men like Mr. Deare, the
city’s unemployment rate is even more disturbing: nearly 20 percent.
If getting a job is hard enough for a white-collar worker armed with a college
degree, then the challenge was even steeper for Mr. Deare, who has only a
G.E.D., lost 15 years to drug addiction and did a brief stint in prison. He had
reinvented himself at Old London, reporting to work day after day for a decade;
by the end, he was earning $16.61 an hour with health insurance. How does
someone with his background find a job in the new economy? Mr. Deare was about
to find out.
In those first weeks after he was laid off, Mr. Deare found that he liked
staying home — hanging out with his fiancée, Annette Amaro; eating her cooking;
zoning out in front of the television. With low rent and his three children all
grown, Mr. Deare was in better financial shape than many of his former
co-workers. And it helped that he had received a severance check of nearly
As the end of summer neared, he threw himself into job-hunting. He put in
applications everywhere he could think of, including Target and FedEx. He
contacted his former union to see if it could help. He asked everyone he knew
with a job to look out for him. The effort turned out to be an exercise in
rejection. Nobody offered to hire him; they didn’t even bother calling back.
To keep up his spirits, he called each morning into a 6 o’clock prayer line run
by his daughter, a minister in Massachusetts. Callers shared their worries, then
prayed together; some mornings, Mr. Deare revealed his job woes.
“The hardest part for him is not working, not being in the game,” Ms. Amaro
said. “He’s not a sit-around kind of guy.”
That fall, her mother came through with the best lead: somebody had told her
there might be an opening at one of the meat markets at Hunts Point in the
Bronx. Unsure which market needed help, Mr. Deare visited five or six. Most
wouldn’t even let him fill out an application — “Sorry, we’re not hiring” — but
he managed to leave his résumé at one place. When he returned the following
week, he talked his way into a job.
He started in October, working the midnight-to-8 a.m. shift. The job required
spending all night in frigid temperatures, moving in and out of freezers and
refrigerators, lifting 70-pound boxes. “I’m 53 years old, and this is some
strenuous work,” he said. “Everybody else is 23.”
When he got home in the morning, he would slide into a warm bath. The position
paid $15 an hour, but if he could hold on to it for a few months, he would move
up to $18 an hour, with benefits and a spot in the union.
Reese Grosett and Iraida Rivera had been two of Mr. Deare’s closest friends at
Old London. As of November, neither had a job, and one morning the two met up at
a McDonald’s near the Bronx Zoo. Ms. Rivera confessed that while she had enjoyed
her first five days out of work, Day 6 was different.
“I woke up in the morning, and when I looked at what time it was and I had
nothing to do, I literally cried,” she recalled. “I said, ‘What am I going to do
Of all the people Mr. Grosett and Ms. Rivera knew from Old London, Mr. Deare was
one of the very few who had found work. He had become a source of hope to
everyone else, his good fortune reminding them that even in these bleak times,
it was still possible to find a decent job. But now, a month after he started
work at Hunts Point, Mr. Deare’s fortunes had changed.
“Did he tell you?” Mr. Grosett asked, between sips of orange juice. “They laid
Mr. Deare had recounted to friends what the boss told him: “Business is very
slow right now. If it picks up, I have your number.” This conversation took
place at 5 a.m., and the boss asked if Mr. Deare could stay and finish his
shift. He was tempted to storm off, but considering the state of the economy, it
seemed a bad idea to anger any potential employer, even one who had just let him
go. So he completed the shift.
In many ways, this second layoff stung even more than the first. “I thought I
was on that track again to be a worker, and then — boom! — this happens,” he
said. “It was a low blow.” He was back where he had started: phoning friends for
job leads, filling out applications, waiting for calls. But by now his severance
was gone. He would have to survive on his unemployment benefits: $353 a week.
Some nights, he couldn’t sleep. Other times, he woke at 4 a.m., reached for his
cellphone and played video games for an hour or two, until he grew so tired that
the phone fell from his hand and he was dozing once again. It was hard to say
exactly what caused the insomnia — anxiety about unpaid bills, fear of never
finding another job, an internal time clock accustomed to working the night
shift — but it was a problem he shared with many of his former co-workers.
Once, he woke at 3 a.m. and groped in the dark for his phone. “Should be
sleeping,” he wrote on his Facebook page. “I guess there’s a lot on the mind.”
Dhyalma Diaz, a friend from Old London, responded, “Don’t worry teddy we all
have a lot in our minds.”
That winter, Mr. Deare jumped on every lead that came his way. A friend told him
about a laundry company looking for a truck driver. The job paid $10 an hour
with no benefits, but Mr. Deare reasoned that he was in no position to be picky.
So he pulled on his parka, headed over to the employment agency and spent an
hour in the waiting room, only to learn that the company wanted someone with
experience driving a truck, not a forklift.
Mr. Deare tried for months to get hired at a school for troubled children where
his cousin works, in Westchester County. Finally, he managed to land an
interview for a teacher’s aide position. It sounded as if the job was his, as
long as he didn’t fail a drug test. He urinated into a cup, passed the test,
then waited for the call. One week went by. Then two weeks. Then three weeks. He
left messages, but nobody phoned back.
He was not one to complain, but the strain of not having a job was starting to
show. His moods swung from frustration to depression to rage. To lift his
spirits, his fiancée would tell him: “You know the kind of worker you are — and
you know you’re out there putting in the applications; you’re doing the
footwork. It’s not you. This is what the country is going through.” She made
this point often, but it was hard not to take each rejection personally.
As week after week went by with no good news, his efforts became more
scattershot. In March, he applied for a job at a shoe store. He also filled out
forms for positions in health care and child care. At this point, he figured, he
would take just about anything. It was the attitude of a desperate man: there
was a certain logic to it, but, of course, finding a job in a field where you
have no experience or personal contacts can be next to impossible.
Mr. Deare had kept in touch with about 25 co-workers from Old London, and by
spring none had found new jobs. Still, he was determined to beat the odds.
“Somebody is hiring somewhere, and I’m going to find that person,” he told
He had stayed in touch with his former union, Local 1102 of the Retail,
Wholesale and Department Store Union. During one conversation with a contact
there in late March, he heard about a job opening: forklift driver at a coffee
warehouse in Yonkers.
He got an interview, and the supervisor he met with sounded optimistic about his
chances of being hired. But there was no formal offer. Day after day went by.
For three weeks the wait stretched on. This time, however, he got the job. And
it was a union job, with benefits. He started on April 11 — 290 days after Old
London laid him off.
“You’re speaking to a happy man,” he said after his first day. “I am in my
glory. I mean, today was wonderful.”
There was only one downside: The work paid $10 an hour, 40 percent less than he
had made at Old London. After taxes, his paycheck was even less than the
unemployment benefits he had been collecting. But he tried not to dwell on this.
“I don’t let it bother me that I’m getting less, because of the simple fact I
have something, and a lot of people have nothing,” he said. “You have to crawl
before you can walk.” Four and a half months later, he is still on the job.
March 28, 2011
The New York Times
By MICHAEL COOPER
Michigan, whose unemployment rate has topped 10 percent longer than that of
any other state, is about to set another record: its new Republican governor,
Rick Snyder, signed a law Monday that will lead the state to pay fewer weeks of
unemployment benefits next year than any other state.
Democrats and advocates for the unemployed expressed outrage that a such a
hard-hit state will become the most miserly when it comes to how long it pays
benefits to those who have lost their jobs. All states currently pay 26 weeks of
unemployment benefits, before extended benefits paid by the federal government
kick in. Michigan’s new law means that starting next year, when the federal
benefits are now set to end, the state will stop paying benefits to the jobless
after just 20 weeks. The shape of future extensions is unclear.
The measure, passed by a Republican-led Legislature, took advocates for the
unemployed by surprise: the language cutting benefits next year was slipped
quietly into a bill that was originally sold as way to preserve unemployment
benefits this year.
The original bill was aimed at reducing unemployment fraud and making a
technical change so the state’s current long-term unemployed could continue
receiving extended unemployment benefits from the federal government for up to
99 weeks — benefits that would have been phased out next week without a change
in the state law to make the unemployed in the state eligible to continue
receiving benefits. Republican lawmakers amended it to cut the length of
benefits starting in January.
“It turns the clock back 50 years at a time when unemployment is at historic
highs since the Depression,” Representative Sander M. Levin, Democrat of
Michigan, said in an interview, adding that he worried that the state would set
a precedent that would be followed by other states, including Florida, that are
thinking of curtailing their unemployment programs. “I think that Michigan
should not be to unemployment insurance what Wisconsin has become to collective
But Republicans and business groups said that cutting benefits was necessary,
because the unemployment trust fund, which was ill-prepared to cope with the
recession, is insolvent. The state owes the federal government $4 billion that
it borrowed to keep its program afloat, and unemployment taxes on businesses
have already been raised, and will need to be raised more, to repay the money.
The Michigan Chamber of Commerce called the new law “a huge win for job
providers,” and said it could save up to $300 million a year.
Mr. Snyder issued a statement after signing the bill trumpeting the fact that it
would preserve the extended benefits this year — and making no mention of the
fact that it would cut state benefits beginning next year. “Snyder Signs Bill to
Protect Unemployed,” was the headline of the news release that his office sent
out. “Now that we have continued this safety net, we must renew our focus on
improving Michigan’s economic climate,” he said in the statement.
Sara Wurfel, a spokeswoman for Mr. Snyder, said in an e-mail that he signed the
bill because 35,000 Michiganders would have lost their extended benefits this
week, and an additional 150,000 would have lost them by year’s end, if the
state’s law had not been altered. She said that about 250,000 people collected
more than 20 weeks of benefits in 2010.
Advocates for the unemployed called it a bad trade. “We have a temporary change
to help some jobless workers that is imposing an indefinite or permanent cost on
future jobless workers,” said Rick McHugh, a staff lawyer for the National
Employment Law Project, which opposed the law. “And that does seem doubly unfair
when the temporary help for current jobless workers is almost totally paid for
by the federal government.”
But business groups saw the state’s need to change its unemployment law as an
opportunity to make the cuts to benefits that they have long sought.
“The business community, the chamber included, were opposed to a one-sided
benefits increase,” said Wendy Block, the Michigan Chamber of Commerce’s
lobbyist responsible for health policy and human resources initiatives, and
unemployment insurance. She said that while the extended benefits were currently
paid for by the federal government, the money comes from a fund that is financed
by federal unemployment taxes on employers. “Employers will ultimately see
higher federal unemployment taxes to pay for this,” Ms. Block said.
More than half the states together owe the federal government more than $46
billion that they borrowed to pay for their unemployment programs during the
downturn. Many states had salted away too little money in their unemployment
trust funds during good times — often because they cut taxes on employers — and
saw their funds depleted by the length and depth of the recession, and the slow
pace at which businesses have begun hiring again. Now some other states are
thinking about reducing unemployment benefits.
In Florida, where the unemployment rate hovers at 11.5 percent, even higher than
Michigan’s current rate of 10.4 percent, lawmakers are zeroing in on a similar
bill. The Florida House also approved a bill this month to reduce the number of
weeks unemployed workers could receive benefits to 20 weeks, from 26, and make
it easier for businesses to deny benefits to applicants. A Senate bill takes a
less stringent approach and does not cut the number of weeks workers can receive
benefits. (It is unclear how the differences will be resolved.) Doing so would
undo a consensus that emerged in the years after World War II that states should
pay up to 26 weeks of unemployment benefits. And it would come as the average
length of unemployment has risen.
Richard A. Hobbie, the executive director of the National Association of State
Workforce Agencies, said “at a time when long-term unemployment is worse than
ever, it doesn’t match up well with the trends in the labor market.”
One of the unemployed Michiganders who was warned that her extended benefits
could run out next week without action was Melissa Barone, 42, who lost her job
with a software company in August 2009, and has been collecting unemployment
since then. She has gone back to school to train to be a nurse.
“Maybe what they need to do is look at giving businesses more incentives,” Ms.
Barone said, “rather than taking from the guy that is unemployed and needs those
The New York Times
By ABBY GOODNOUGH
FALLS, R.I. — These are trying times for the people of Central Falls, a city so
close to fiscal collapse that the state seized control of City Hall last summer.
Taxes have risen nearly 20 percent to help solve the immediate crisis, unions
have agreed to givebacks and the city of 19,000 — all 1.29 square miles of it —
seems tinged with defeat.
But to hear Mayor Charles D. Moreau tell it, his suffering may be worst of all.
Mr. Moreau, a Democrat serving his fourth term, has not set foot in City Hall
since July 19, the day that a state-appointed receiver took control. The state
police knocked on his door that morning, he said, demanded his city-owned car
and cellphone and keys to City Hall and handed him a letter announcing that his
salary of $71,736 was being cut to $26,000. His role was now advisory, he was
“I was told they’d call if they needed me,” Mr. Moreau said recently in a rare
interview. “They haven’t called since.”
Across the nation, cities and states are trying myriad ways of righting their
fiscal ships as the recession plods on. But locking the mayor out of City Hall
is generally not one of them.
A number of local governments are so financially distressed that states have
assumed an oversight role. Several cities in Michigan have emergency financial
managers appointed by the state, for example, and in New York, a state board
seized control of Nassau County’s finances last month. But in those cases and
others, local elected officials have retained some role.
“The circumstances that have led to the difficulties in Central Falls may
actually be widespread,” said Christopher W. Hoene, director of research for the
National League of Cities. “But not very many cities are in that dire straits.”
Mr. Moreau, 47, is suing the state, asserting that the law allowing the takeover
of financially troubled cities violates his constitutional right to due process,
among other things. He appealed to the Rhode Island Supreme Court after losing
the first round and is awaiting a ruling. Meanwhile, the blunt-talking mayor is
working at his brother’s real estate office, down the street from City Hall, and
stewing about the situation he finds himself in. He has rebuffed calls to step
down and, in fact, said he was already planning his 2013 re-election campaign.
“My bumper stickers are ready to be printed,” he said. “I’d win re-election with
90 percent of the vote if the election was today.”
His confidence seemed striking, in part because Mr. Moreau is the subject of a
state and federal corruption inquiry involving his hiring of a friend to board
up dozens of abandoned buildings in town for about $2 million. The friend, a
contractor, also installed a new furnace in the mayor’s house in 2009, according
to The Providence Journal, possibly charging less than it was worth.
Mr. Moreau, a factory worker’s son and former restaurant owner known around town
as Chuckie, would not discuss the investigation except to call it “all
political” and “all nonsense.” He said he had done nothing wrong.
Mr. Moreau’s administration took the state by surprise by declaring fiscal
insolvency last May. The city became the first in Rhode Island history to seek
state bankruptcy protection, citing a deficit and retiree benefit obligations so
profound as to seem insurmountable.
That alarmed the state, which feared that other beleaguered cities would follow
suit, and bond rating agencies, which downgraded Central Falls’s debt to junk
status. So the legislature swiftly enacted a law allowing indefinite state
oversight, a measure Mr. Moreau initially supported.
The receiver, Mark A. Pfeiffer, a retired state judge, did not move into Mr.
Moreau’s office when he arrived on the job, laying claim to a conference room
instead. The office remains locked, a curtain over the door.
Mr. Pfeiffer said he saw no choice but to demote Mr. Moreau to advisory status.
“You couldn’t have somebody come in and perform the duties of the mayor and have
somebody else being the mayor,” he said. “It doesn’t work very well, and
particularly it doesn’t work well in a distressed community.”
Mr. Pfeiffer tried to build a relationship with the City Council, but within
months it deteriorated and he reduced its members to advisory status. He went to
court in September to stop the mayor and the Council from making new
appointments, and soon after, Mr. Moreau sued. He said he had hired lawyers with
his own money; Mr. Pfeiffer said he had refused to authorize city funds.
The suit calls the receivership law “undemocratic,” saying it violates the
separation of powers doctrine by giving Mr. Pfeiffer executive and legislative
“Obviously here the people have been completely disenfranchised,” said Michael
Kelly, Mr. Moreau’s lawyer. “We have what I would suggest is a form of
A Superior Court judge upheld the law as constitutional in October, partly
because the receivership was temporary, although without a specific term. The
law is not without precedent — Massachusetts put the city of Chelsea under
receivership in 1991, removing the elected mayor and reducing other officials to
At oral arguments before the Supreme Court this month, some justices appeared
skeptical of Mr. Kelly’s reasoning, with one saying of Mr. Moreau and the City
Council, “Those were the people in charge when the ship hit the shoals.”
Yet the justices also questioned the state’s lawyer aggressively, asking what
was to stop Mr. Pfeiffer from unilaterally changing city policies, like zoning,
that had nothing to do with finance. They also questioned whether anyone would
run for office if the city remained under receivership, with Justice Francis X.
Flaherty, a former mayor himself, asking, “What do you run for? Advisory mayor?”
His status notwithstanding, Mr. Moreau said he still talked to the city’s police
chief and public works director daily, met with constituents and pursued
economic development projects. Asked whether other city officials and residents
still addressed him as mayor, he cracked, “They’d better.”
Mr. Moreau is known around town as a bare-knuckled politician who rewards allies
— often, critics say, with city jobs — and punishes enemies. Early in his
tenure, he made waves by ordering a search of computers at the city library for
campaign materials that favored a political opponent. Later, he championed the
expansion of a detention center, cracked down on street violence and easily won
Mr. Moreau said he had not bothered reading a lengthy report that Mr. Pfeiffer
submitted to the state in December with recommendations for averting fiscal
collapse, including the possibility of merging the city with neighboring
Pawtucket. The report said the city’s problems were rooted in more than a decade
of elected leaders’ approving generous union contracts without figuring out how
to pay for them.
The troubles worsened because of state aid reductions and inaccurate budget
assumptions. For example, the city anticipated $1.2 million in revenue from the
detention center in 2009-10 and got none. The city has started paying its bills
again, but Mr. Pfeiffer warned that Central Falls, with an annual budget of
about $18 million, faced annual deficits of $5 million and combined pension and
retiree health benefit obligations of about $80 million.
“I think it’s all nonsense,” Mr. Moreau said of Mr. Pfeiffer’s recommendations.
Mr. Moreau also said he was galled by Mr. Pfeiffer’s salary of $200 an hour, and
while at one point he said his court battle was “not about the money,” he also
lamented that his wife had been forced to return to work and his youngest child
to enter day care.
“This was not my family plan,” he said.
Some residents clearly share the mayor’s outrage, while others are hopeful about
the receivership or indifferent. Sparky Chippis, a restaurant owner and Moreau
ally who has known the mayor since childhood, described Mr. Moreau’s situation
as “an injustice.”
“The guy was elected by people,” Mr. Chippis said. “He had the trust of the
people to be in the office over there.”
But James Diossa, the only Council member who did not join Mr. Moreau’s lawsuit,
said many residents appreciated the change. “The prior administration didn’t do
a great job as far as keeping the community informed, and the community really
lost faith,” said Mr. Diossa, who heads an advisory council to the receiver.
Mr. Pfeiffer said few citizens had complained to him, but Mr. Moreau said that
was because people were afraid. “They should be marching in the streets as to
what’s been done to me,” he said.
Mr. Pfeiffer stepped down earlier this month; his term was up and the new
governor, Lincoln D. Chafee, an independent, wanted to appoint “a trusted
adviser,” a spokesman said. With the pick, Robert G. Flanders Jr., a former
State Supreme Court justice, in charge, Mr. Moreau said he was hoping to get a
“I will send him a letter and be very frank with him that I’m here to help,” he
• Sharp rise in 16-17 year-olds unemployed
• Fears over abolition of EMA grant
• Gordon Brown urges G20 to tackle 'generational timebomb'
• Unemployment claimants fall to 1.46m
• Overall jobless level drops below 2.5m
19 January 2011
This article was published on guardian.co.uk
at 12.02 GMT on Wednesday 19
It was last modified at 13.35 GMT
on Wednesday 19 January 2011.
It was first published at 10.50 GMT
on Wednesday 19 January 2011.
unemployment has hit a record high, fanning fears that Britain's young people
could become a "lost generation" who cannot find work despite the recession
ending a year ago.
The total number of adults under 25 who are out of work moved close to the 1
million mark in the three months to November, rising by 32,000 to 951,000. This
pushed the youth unemployment rate up to 20.3%, which is also the highest level
since records began in 1992.
There was a particularly sharp rise in the number of 16 and 17-year-olds classed
as unemployed, rather than in employment or education, up to 204,000 from
177,000 in the previous quarter.
With the Educational Maintenance Allowance (EMA) being abolished, and the Future
Jobs Fund closing in March, analysts fear the youth unemployment crisis will
deepen further in the months ahead.
"Britain is now perilously close to seeing 1 million young people struggling to
find work," warned Martina Milburn, chief executive of youth charity The
"At this time when there is huge pressure on the public purse, government,
charities and employers must work together to help young people into jobs and
save the state billions," Milburn added.
Brian Johnson, insolvency practitioner at HW Fisher & Company, warned that many
companies remain very reluctant to take on new trainees or staff with little
"These are anxious times for many employees and anyone unfortunate to have lost
their job but it is also a terrible time for graduates and school leavers
entering the jobs market. Over the past few years we have lost businesses and
banks and now, before our very eyes, we are losing an entire generation," said
Youth unemployment is becoming an increasingly serious global problem, with the
number of under-25s out of work worldwide recently estimated at 81 million.
Bob Crow, head of the RMT union, claimed that "a whole generation is being cut
adrift on a tidal wave of austerity cuts that will have huge economic and social
ramifications well into the future".
Gordon Brown will tomorrow call on world leaders to address this issue, warning
of a "timebomb" that could damage both the developed world and emerging
economies. The former prime minister is urging the G20 to make youth
unemployment a priority.
Claimant count falls
The latest youth unemployment data emerged as the Office for National Statistics
reported that the number of people claiming unemployment benefit fell last
The claimant count dropped by 4,100 people in December to 1.46 million, and the
ONS also revised November's claimant count figure to show a 3,200 decline.
City economists has expected the claimant count to be broadly flat in December,
as hiring by private companies was countered by the government's cuts to public
However, the number of people who have been claiming Jobseeker's Allowance for
up to six months increased by 7,200 to reach 960,300.
Today's data also showed that the number of people out of work has inched back
below the 2.5 million mark. The ILO Labour Force measure showed that 49,000
people lost their jobs in the three months to November. That put the
unemployment rate at 7.9%, up from 7.7% in the preceding quarter. The total
number of people out of work came in at 2.498m, down from the 2.502m hit last
month, but higher than the 2.448m over the June-August period.
Ross Walker of RBS warned that employment showed little signs of recovery, a
year after Britain officially emerged from recession.
And Howard Archer of IHS Global Insight cautioned that unemployment is still
likely to rise this year, due to lacklustre economic growth and increasing job
losses in the public sector.
There were also signs that many people would like to work more than they are
able to. The ONS reported that the number of employees and self-employed people
who were working part-time because they could not find a full-time job increased
by 26,000 in the three months to November, to 1.16 million. This is the highest
figure since comparable records began in 1992.
The number of people in employment aged 16 and over fell by 69,000 on the
quarter to reach 29.09 million, the ONS said. Today's data also showed that
total pay, including bonuses, rose by 2.1% over the last year. This is
significantly lower than the rising cost of living, with inflation hitting 3.7%
on an annual basis last month.
The New York Times
By DAVID LEONHARDT
the world’s economic powers, the United States is suffering through a deep jobs
slump that can’t be explained by the rest of the economy’s performance.
The gross domestic product here — the total value of all goods and services —
has recovered from the recession better than in Britain, Germany, Japan or
Russia. Yet a greatly shrunken group of American workers, working harder and
more efficiently, is producing these goods and services.
The unemployment rate is higher in this country than in Britain or Russia and
much higher than in Germany or Japan, according to a study of worldwide job
markets that Gallup will release on Wednesday. The American jobless rate is also
higher than China’s, Gallup found. The European countries with worse
unemployment than the United States tend to be those still mired in crisis, like
Greece, Ireland and Spain.
Economists are now engaged in a spirited debate, much of it conducted on popular
blogs like Marginal Revolution, about the causes of the American jobs slump.
Lawrence Katz, a Harvard labor economist, calls the full picture “genuinely
That the financial crisis originated here, and was so severe here, surely plays
some role. The United States had a bigger housing bubble than most other
countries, leaving a large group of idle construction workers who can’t easily
switch industries. Many businesses, meanwhile, are reluctant to commit to hiring
workers out of a fear that heavily indebted households won’t spend much in
But beyond these immediate causes, the basic structure of the American economy
also seems to be an important factor. This jobless recovery, after all, is the
third straight recovery since 1991 to begin with months and months of little job
Why? One obvious possibility is the balance of power between employers and
Relative to the situation in most other countries — or in this country for most
of the last century — American employers operate with few restraints. Unions
have withered, at least in the private sector, and courts have grown friendlier
to business. Many companies can now come much closer to setting the terms of
their relationship with employees, letting them go when they become a drag on
profits and relying on remaining workers or temporary ones when business picks
Just consider the main measure of corporate health: profits. In Canada, Japan
and most of Europe, corporate profits have still not recovered to precrisis
levels. In the United States, profits have more than recovered, rising 12
percent since late 2007.
For corporate America, the Great Recession is over. For the American work force,
Unfortunately, fixing the job market will take years. Even if job growth
accelerated to the rapid pace of the late 1990s and remained there, the
unemployment rate would not fall below 6 percent (which some economists consider
full employment) until 2016. We could now be in only the first half of the
longest stretch of high unemployment since World War II.
The best way to put people back to work is to lift economic growth. For
Washington, lifting growth will first mean avoiding the mistakes of 2010, when
the Fed, the White House and some members of Congress prematurely assumed that a
solid recovery was under way. The risk this year is that they will start
reducing the budget deficit immediately by cutting federal programs, rather than
having the cuts take effect in future years.
Policy makers could also help the unemployed by spreading economic pain more
broadly among the population. I realize this idea may not sound so good at
first. Who wants pain to spread? But the fact is that this downturn has
concentrated its effects on a relatively narrow group of Americans.
In Germany and Canada, some companies and workers have averted layoffs by
agreeing to cut everyone’s hours and, thus, pay. In this country, average wages
for the employed have risen faster than inflation since 2007, which is highly
unusual for a downturn. Yet unemployment remains terribly high, and almost half
of the unemployed have been out of work for at least six months. These are the
people bearing the brunt of the downturn.
Germany’s job-sharing program — known as “Kurzarbeit,” or short work — has won
praise from both conservative and liberal economists. Senator Jack Reed,
Democrat of Rhode Island, has offered a bill that would encourage similar
programs. So far, though, the White House has not pursued it aggressively.
Perhaps Gene Sperling, the new director of the National Economic Council, can
put it back on the agenda.
Restoring some balance to the relationship between employers and employees will
be more difficult. One problem is that too many labor unions, like the auto
industry’s, have been poorly run, hurting companies and, ultimately, workers. Of
course, many other companies — AT&T, General Electric, Southwest Airlines — have
thrived with unionized workers, and study after study has shown that unions
usually do benefit workers. As one bumper sticker says, “Unions: The folks who
brought you the weekend.”
Today, unions are clearly playing on an uneven field. Companies pay minimal
penalties for illegally trying to bar unions and have become expert at doing so,
legally and otherwise. For all their shortcomings, unions remain many workers’
best hope for some bargaining power.
The list of promising solutions to the jobs slump can go on and on. Reforming
the disability insurance system so it does not encourage long-term joblessness
would help. “Once people enter the system,” as Mr. Katz of Harvard says, “they
basically never come back.” Improving high schools and colleges — reclaiming the
global lead in education — would help even more. Remember, the jobless rate for
college graduates is only 4.8 percent, and some highly skilled jobs continue to
The jobs slump has become too severe to disappear anytime soon. It will be part
of the American economy and American politics for years to come. But there is no
reason to treat it as a problem that’s immune from solutions. For starters, it
would be worth figuring out what other countries are doing right.
Severe welfare shakeup will introduce
claimant contract with up to three years'
for refusing a job
Thursday 11 November 2010
Patrick Wintour in Seoul and Randeep Ramesh
This article appeared on p1
of the Main section section of the Guardian
Thursday 11 November 2010.
It was published on guardian.co.uk at 00.05 GMT
on Thursday 11 November 2010.
It was last modified at 00.27 GMT
on Thursday 11 November 2010.
A tougher-than-expected squeeze on the unemployed is to be announced today as
the jobless face the threat of losing all benefits for as long as three years if
they refuse community work or the offer of a job, or fail to apply for a job if
advised to do so.
In the most severe welfare sanctions ever imposed by a British government,
unemployed people will lose benefits for three months if they fail to take up
one of the options for the first time, six months if they refuse an offer twice,
and three years if they refuse an offer three times.
Downing Street sources said the new "claimant contract" will come into force as
soon as legislation is passed, and may not wait for the introduction of a
streamlined universal credit system in 2013-14.
Iain Duncan Smith, the work and pensions secretary, will tell MPs that he is
introducing the biggest shakeup of the welfare system since the Beveridge
reforms ushered in the welfare state after the second world war. He will say
that a new universal credit system will make 2.5 million of the poorest people
better off and reduce the number of workless households by 300,000.
The welfare white paper is deemed so groundbreaking that David Cameron chose to
laud the measures as he landed at the G20 summit in South Korea.
He said: "The message is clear. If you can work then a life on benefits will no
longer be an option. If people are asked to do community work they will be
expected to turn up. If people are asked to apply for a job by an adviser they
will be expected to put themselves forward. If people can work and they are
offered work, they will be expected to take it. This is the deal. Break the deal
and they will lose their unemployment benefit. Break it three times and they
will lose it for three years."
The regime will apply to all 1.6 million jobseeker's allowance claimants,
irrespective of how long they have been unemployed. JSA is worth only £64.45 a
week for over-25s, and No 10 said it expected the sanction to be enforced, once
warranted, as a matter of course.
Job advisers should not use discretion to let people stay on benefit, Downing
Street said, arguing that too many advisers do not make use of the sanctions
available to them.
The new workfare regime is certain to be criticised for expecting the jobless to
take work at a time when unemployment is forecast to rise. The move could
potentially leave thousands of people receiving no benefits other than some
money to cover their housing costs.
Many charities and local government leaders will be wary of offering work to
unemployed people, especially if they have been in effect forced to take the
work or lose benefit. The community jobs set aside for the jobless include
clearing up litter and doing charity work.
Cameron argues that the new regime is necessary to prevent a dependency culture.
He believes a new universal credit system bringing together tax credits and a
range of benefits simplifies the system so much that it will ensure work will
always pay in comparison with staying unemployed. Ministers say that, with 5
million people on out-of-work benefits and almost 2 million people growing up in
workless households, they have to embark on "root and branch reform".
The new universal credit, costed at £2bn for this parliament, is designed to
remove the financial disincentives to work, ensuring that someone keeps a
minimum 35p in every extra pound earned. Cameron said: "It simply has to pay to
work. You cannot have a situation where if someone gets out of bed and goes and
does a hard day's work they end up worse off. That is not fair and sends
entirely the wrong message."
Duncan Smith will cast his reforms as a "once-in-a-generation" attempt to get
the jobless back to work. But the man credited by Duncan Smith as his greatest
influence on poverty reduction criticised the changes . Bob Holman, an academic
and community worker from Glasgow who has worked for Duncan Smith's thinktank,
the Centre for Social Justice, accused the work and pensions secretary of
forcing people into "degrading" jobs.
Asked his opinion about Duncan Smith and his plans for welfare reform, Holman
said: "Well, my view has taken a bit of a dent. When Iain came to Easterhouse in
2002, one of the things he expressed admiration for were unemployed people who
were working or giving their time as volunteers to our project … now he seems to
have turned that on its head.
"He seems to be regarding them with disrespect and saying you're not really a
part of society. We're going to force you to do these, what are really degrading
jobs, which won't equip them for anything, but in a way are punishing them for
not working and in a climate in which jobs are hard to get."
September 19, 2010
The New York Times
By MOTOKO RICH
VASHON ISLAND, Wash. — Patricia Reid is not in her 70s, an age when many
Americans continue to work. She is not even in her 60s. She is just 57.
But four years after losing her job she cannot, in her darkest moments, escape a
nagging thought: she may never work again.
College educated, with a degree in business administration, she is experienced,
having worked for two decades as an internal auditor and analyst at Boeing
before losing that job.
But that does not seem to matter, not for her and not for a growing number of
people in their 50s and 60s who desperately want or need to work to pay for
retirement and who are starting to worry that they may be discarded from the
work force — forever.
Since the economic collapse, there are not enough jobs being created for the
population as a whole, much less for those in the twilight of their careers.
Of the 14.9 million unemployed, more than 2.2 million are 55 or older. Nearly
half of them have been unemployed six months or longer, according to the Labor
Department. The unemployment rate in the group — 7.3 percent — is at a record,
more than double what it was at the beginning of the latest recession.
After other recent downturns, older people who lost jobs fretted about how long
it would take to return to the work force and worried that they might never
recover their former incomes. But today, because it will take years to absorb
the giant pool of unemployed at the economy’s recent pace, many of these older
people may simply age out of the labor force before their luck changes.
For Ms. Reid, it has been four years of hunting — without a single job offer.
She buzzes energetically as she describes the countless applications she has
lobbed through the Internet, as well as the online courses she is taking to
burnish her software skills.
Still, when she is pressed, her can-do spirit falters.
“There are these fears in the background, and they are suppressed,” said Ms.
Reid, who is now selling some of her jewelry and clothes online and is late on
some credit card payments. “I have had nightmares about becoming a bag lady,”
she said. “It could happen to anyone. So many people are so close to it, and
they don’t even realize it.”
Being unemployed at any age can be crushing. But older workers suspect their
résumés often get shoved aside in favor of those from younger workers. Others
discover that their job-seeking skills — as well as some technical skills sought
by employers — are rusty after years of working for the same company.
Many had in fact anticipated working past conventional retirement ages to gird
themselves financially for longer life spans, expensive health care and reduced
The most recent recession has increased the need to extend working life. Home
values, often a family’s most important asset, have been battered. Stock
portfolios are only now starting to recover. According to a Gallup poll in
April, more than a third of people not yet retired plan to work beyond age 65,
compared with just 12 percent in 1995.
Older workers who lose their jobs could pose a policy problem if they lose their
ability to be self-sufficient. “That’s what we should be worrying about,” said
Carl E. Van Horn, professor of public policy and director of the John J.
Heldrich Center for Workforce Development at Rutgers University, “what it means
to this class of the new unemployables, people who have been cast adrift at a
very vulnerable part of their career and their life.”
Forced early retirement imposes an intense financial strain, particularly for
those at lower incomes. The recession and its aftermath have already pushed down
some older workers. In figures released last week by the Census Bureau, the
poverty rate among those 55 to 64 increased to 9.4 percent in 2009, from 8.6
percent in 2007.
But even middle-class people who might skate by on savings or a spouse’s income
are jarred by an abrupt end to working life and to a secure retirement.
“That’s what I spent my whole life in pursuit of, was security,” Ms. Reid said.
“Until the last few years, I felt very secure in my job.”
As an auditor, Ms. Reid loved figuring out the kinks in a manufacturing or parts
delivery process. But after more than 20 years of commuting across Puget Sound
to Boeing, Ms. Reid was exhausted when she was let go from her $80,000-a-year
Stunned and depressed, she sent out résumés, but figured she had a little time
to recover. So she took vacations to Turkey and Thailand with her husband, who
is a home repairman. She sought chiropractic treatments for a neck injury and
helped nurse a priest dying of cancer.
Most of her days now are spent in front of a laptop, holed up in a lighthouse
garret atop the house that her husband, Denny Mielock, built in the 1990s on a
breathtaking piece of property overlooking the sound.
As she browses the job listings that clog her e-mail in-box, she refuses to give
in to her fears. “If I let myself think like that all the time,” she said, “I
could not even bear getting out of bed in the morning.”
With her husband’s home repair business pummeled by the housing downturn, the
bills are mounting. Although the couple do not have a mortgage on their
3,000-square-foot house, they pay close to $7,000 a year in property taxes. The
roof is leaking. Their utility bills can be $300 a month in the winter, even
though they often keep the thermostat turned down to 50 degrees.
They could try to sell their home, but given the depressed housing market, they
“We are circling the drain here, and I am bailing like hell,” said Ms. Reid,
emitting an incongruous cackle, as if laughter is the only response to her
plight. “But the boat is still sinking.”
It is not just the finances that have destabilized her life.
Her husband worries that she isolates herself and that she does not socialize
enough. “We’ve both been hard workers our whole lives,” said Mr. Mielock, 59.
Ms. Reid sometimes rose just after 3 a.m. to make the hourlong commute to
Boeing’s data center in Bellevue and attended night school to earn a master’s in
management information systems.
“A job is more than a job, you know,” Mr. Mielock said. “It’s where you fit in
Here in the greater Seattle area, a fifth of those claiming extended
unemployment benefits are 55 and older.
To help seniors polish their job-seeking skills, WorkSource, a local consortium
of government and nonprofit groups, recently began offering seminars. On a
recent morning, 14 people gathered in a windowless conference room at a local
community college to get tips on how to age-proof their résumés and deflect
questions about being overqualified.
Motivational posters hung on one wall, bearing slogans like “Failure is the path
of least persistence.”
Using PowerPoint slides, Liz Howland, the chipper but no-nonsense session
leader, projected some common myths about older job-seekers on a screen: “Older
workers are less capable of evaluating information, making decisions and
problem-solving” or “Older workers are rigid and inflexible and have trouble
adapting to change.”
Ms. Howland, 61, ticked off the reasons those statements were inaccurate. But a
clear undercurrent of anxiety ran through the room. “Is it really true that if
you have the energy and the passion that they will overlook the age factor?”
asked a 61-year-old man who had been laid off from a furniture maker last
Gallows humor reigned. As Ms. Howland — who suggested that applicants remove any
dates older than 15 years from their résumé — advised the group on how to
finesse interview questions like “When did you have the job that helped you
develop that skill?” one out-of-work journalist deadpanned: “How about ‘during
the 20th century?’ ”
During a break, Anne Richard, who declined to give her age, confessed she was
afraid she would not be able to work again after losing her contract as a house
director at a University of Washington sorority in June. Although she had 20
years of experience as an office clerk in Chattanooga, Tenn., she feared her
technology skills had fallen behind.
“I don’t feel like I can compete with kids who have been on computers all their
lives,” said Ms. Richard, who was sleeping on the couch of a couple she had met
at church and contemplating imminent homelessness.
Older people who lose their jobs take longer to find work. In August, the
average time unemployed for those 55 and older was slightly more than 39 weeks,
according to the Labor Department, the longest of any age group. That is much
worse than in August 1983, also after a deep recession, when someone unemployed
in that age group spent an average of 27.5 weeks finding work.
At this year’s pace of an average of 82,000 new jobs a month, it will take at
least eight more years to create the 8 million positions lost during the
recession. And that does not even allow for population growth.
Advocates for the elderly worry that younger people are more likely to fill the
new jobs as well.
“I do think the longer someone is out of work, the more employers are going to
question why it is that someone hasn’t been able to find work,” said Sara Rix,
senior strategic policy adviser at AARP, the lobbying group for seniors. “Their
skills have atrophied for one thing, and technology changes so rapidly that even
if nothing happened to the skills that you have, they may become increasingly
less relevant to the jobs that are becoming available.”
In four years of job hunting, Ms. Reid has discovered that she is no longer
technologically proficient. In one of a handful of interviews she has secured,
for an auditing position at the Port of Seattle, she learned that the job
required skills in PeopleSoft, financial software she had never used. She
assumes that deficiency cost her the job.
Ms. Reid is still five years away from being eligible for Social Security. But
even then, she would be drawing early, which reduces monthly payments. Taking
Social Security at 62 means a retiree would receive a 25 percent lower monthly
payout than if she worked until 66.
Ms. Reid is in some ways luckier than others. Boeing paid her a six-month
severance, and she has health care benefits that cover her and her husband for
$40 a month.
And she admits some regrets: she had a $180,000 balance in her 401(k) account,
and paid $80,000 in penalties and taxes when she cashed it out early. She did
not rein in her expenses right away. And now, her $500-a-week unemployment
benefits have been exhausted.
She has since cut back, forgoing Nordstrom shopping sprees and theater
subscriptions, but also cutting out red meat at home and putting off home
In order to qualify for accounting posts, she is taking an online training
course in QuickBooks, a popular accounting software used by small businesses.
She recently signed up for a tax course at an H&R Block tax preparation office
And she is plugging ahead with her current plan: to send out 600 applications to
accounting firms in the area, offering her services for the next tax season.
Eventually, she wants to open her own business.
With odd jobs and her husband’s — albeit shriveled — earnings, she could stagger
along. For now, she stitches together an income by gardening for neighbors,
helping fellow church members with their computers, and participating in
Internet surveys for as little as $5 apiece.
“You don’t necessarily have to go through the door,” Ms. Reid said. “You can go
around it and go under it. I can be very creative. I think that I will
eventually manage to pull this together.”
There was a
time when everyone took it for granted that unemployment insurance, which
normally terminates after 26 weeks, would be extended in times of persistent
joblessness. It was, most people agreed, the decent thing to do.
But that was then. Today, American workers face the worst job market since the
Great Depression, with five job seekers for every job opening, with the average
spell of unemployment now at 35 weeks. Yet the Senate went home for the holiday
weekend without extending benefits. How was that possible?
The answer is that we’re facing a coalition of the heartless, the clueless and
the confused. Nothing can be done about the first group, and probably not much
about the second. But maybe it’s possible to clear up some of the confusion.
By the heartless, I mean Republicans who have made the cynical calculation that
blocking anything President Obama tries to do — including, or perhaps
especially, anything that might alleviate the nation’s economic pain — improves
their chances in the midterm elections. Don’t pretend to be shocked: you know
they’re out there, and make up a large share of the G.O.P. caucus.
By the clueless I mean people like Sharron Angle, the Republican candidate for
senator from Nevada, who has repeatedly insisted that the unemployed are
deliberately choosing to stay jobless, so that they can keep collecting
benefits. A sample remark: “You can make more money on unemployment than you can
going down and getting one of those jobs that is an honest job but it doesn’t
pay as much. We’ve put in so much entitlement into our government that we really
have spoiled our citizenry.”
Now, I don’t have the impression that unemployed Americans are spoiled;
desperate seems more like it. One doubts, however, that any amount of evidence
could change Ms. Angle’s view of the world — and there are, unfortunately, a lot
of people in our political class just like her.
But there are also, one hopes, at least a few political players who are honestly
misinformed about what unemployment benefits do — who believe, for example, that
Senator Jon Kyl, Republican of Arizona, was making sense when he declared that
extending benefits would make unemployment worse, because “continuing to pay
people unemployment compensation is a disincentive for them to seek new work.”
So let’s talk about why that belief is dead wrong.
Do unemployment benefits reduce the incentive to seek work? Yes: workers
receiving unemployment benefits aren’t quite as desperate as workers without
benefits, and are likely to be slightly more choosy about accepting new jobs.
The operative word here is “slightly”: recent economic research suggests that
the effect of unemployment benefits on worker behavior is much weaker than was
previously believed. Still, it’s a real effect when the economy is doing well.
But it’s an effect that is completely irrelevant to our current situation. When
the economy is booming, and lack of sufficient willing workers is limiting
growth, generous unemployment benefits may keep employment lower than it would
have been otherwise. But as you may have noticed, right now the economy isn’t
booming — again, there are five unemployed workers for every job opening.
Cutting off benefits to the unemployed will make them even more desperate for
work — but they can’t take jobs that aren’t there.
Wait: there’s more. One main reason there aren’t enough jobs right now is weak
consumer demand. Helping the unemployed, by putting money in the pockets of
people who badly need it, helps support consumer spending. That’s why the
Congressional Budget Office rates aid to the unemployed as a highly
cost-effective form of economic stimulus. And unlike, say, large infrastructure
projects, aid to the unemployed creates jobs quickly — while allowing that aid
to lapse, which is what is happening right now, is a recipe for even weaker job
growth, not in the distant future but over the next few months.
But won’t extending unemployment benefits worsen the budget deficit? Yes,
slightly — but as I and others have been arguing at length, penny-pinching in
the midst of a severely depressed economy is no way to deal with our long-run
budget problems. And penny-pinching at the expense of the unemployed is cruel as
well as misguided.
So, is there any chance that these arguments will get through? Not, I fear, to
Republicans: “It is difficult to get a man to understand something,” said Upton
Sinclair, “when his salary” — or, in this case, his hope of retaking Congress —
“depends upon his not understanding it.” But there are also centrist Democrats
who have bought into the arguments against helping the unemployed. It’s up to
them to step back, realize that they have been misled — and do the right thing
by passing extended benefits.
Since June 1, when federal unemployment benefits began to expire, an
estimated 325,000 jobless workers have been cut off. That number will swell to
1.25 million by the end of the month unless Congress extends the benefits. The
Senate, so far, has failed to act.
Some senators, including Democrats, have balked at an unrelated provision that
would begin to close a tax loophole enjoyed by some of the richest Americans.
You heard right. Desperately needed unemployment benefits have been held hostage
to a tax break for the rich, and the Senate’s Democratic leadership has had to
delay and finagle to get its own caucus in line.
State-provided unemployment benefits generally last for 26 weeks, and the
federal government picks up the tab after that, provided Congress approves the
extensions. There is no disagreement over the need: 46 percent of the nation’s
15 million jobless workers have been unemployed for more than six months — a
higher level than at any time since the government began keeping track in 1948.
There is not even any genuine debate about how to pay for extended benefits. An
extension through November would cost about $40 billion. But unemployment
benefits are correctly considered emergency spending — they are a vital safety
net, and the money is crucial to supporting consumer demand in a weak economy —
and exempt from pay-as-you-go budget rules.
Nonemergency provisions in the bill do need to be paid for, including renewal of
several generally useful business tax breaks, like the research-and-development
tax credit, totaling $32 billion over 10 years. To help cover those costs,
Democratic lawmakers in the House and Senate started out with the sound idea to
close an egregious tax loophole that allows wealthy fund managers at private
equity firms and other investment partnerships to pay a top tax rate of just 15
percent on much of their earnings — versus a top rate of 35 percent for all
other higher-income Americans.
Closing the loophole would raise an estimated $25 billion over 10 years. Many
private equity mavens, venture capitalists and other partnerships have lobbied
to keep as much of the loophole as they can. Most Republicans and some
Democratic senators — including John Kerry of Massachusetts, Mark Warner of
Virginia and Maria Cantwell of Washington — are doing their bidding.
In its version of the bill, the House closed part of the loophole: fund managers
would retain the special low rate on 25 percent of their privileged earnings.
The loophole measure was watered down even more in the Senate. And investment
partnerships are still lobbying.
Senators aren’t likely to vote on the bill until the end of this week. Then it
would need to be reconciled with the House-passed version. In the meantime,
hundreds of thousands more jobless Americans will lose benefits.
The Senate bill is also urgently needed because it includes a provision to
provide $24 billion in emergency fiscal aid to states, which is vital to
preventing further mass layoffs and damaging budget cuts on the state and local
The right thing to do is obvious. The House and Senate should immediately extend
unemployment benefits and aid to states and close the fund-managers’ tax
loophole — completely.
That so many senators have balked is a bad sign for the economy and for the most
vulnerable Americans. The fact that lawmakers are not willing to ask the
nation’s wealthiest to pay their fair share of taxes also makes a mockery of all
their talk about deficit reduction.
February 21, 2010
The New York Times
By PETER S. GOODMAN
BUENA PARK, Calif. — Even as the American economy shows
tentative signs of a rebound, the human toll of the recession continues to
mount, with millions of Americans remaining out of work, out of savings and
nearing the end of their unemployment benefits.
Economists fear that the nascent recovery will leave more people behind than in
past recessions, failing to create jobs in sufficient numbers to absorb the
record-setting ranks of the long-term unemployed.
Call them the new poor: people long accustomed to the comforts of middle-class
life who are now relying on public assistance for the first time in their lives
— potentially for years to come.
Yet the social safety net is already showing severe strains. Roughly 2.7 million
jobless people will lose their unemployment check before the end of April unless
Congress approves the Obama administration’s proposal to extend the payments,
according to the Labor Department.
Here in Southern California, Jean Eisen has been without work since she lost her
job selling beauty salon equipment more than two years ago. In the several
months she has endured with neither a paycheck nor an unemployment check, she
has relied on local food banks for her groceries.
She has learned to live without the prescription medications she is supposed to
take for high blood pressure and cholesterol. She has become effusively
religious — an unexpected turn for this onetime standup comic with X-rated
material — finding in Christianity her only form of health insurance.
“I pray for healing,” says Ms. Eisen, 57. “When you’ve got nothing, you’ve got
to go with what you know.”
Warm, outgoing and prone to the positive, Ms. Eisen has worked much of her life.
Now, she is one of 6.3 million Americans who have been unemployed for six months
or longer, the largest number since the government began keeping track in 1948.
That is more than double the toll in the next-worst period, in the early 1980s.
Men have suffered the largest numbers of job losses in this recession. But Ms.
Eisen has the unfortunate distinction of being among a group — women from 45 to
64 years of age — whose long-term unemployment rate has grown rapidly.
In 1983, after a deep recession, women in that range made up only 7 percent of
those who had been out of work for six months or longer, according to the Labor
Department. Last year, they made up 14 percent.
Twice, Ms. Eisen exhausted her unemployment benefits before her check was
restored by a federal extension. Last week, her check ran out again. She and her
husband now settle their bills with only his $1,595 monthly disability check.
The rent on their apartment is $1,380.
“We’re looking at the very real possibility of being homeless,” she said.
Every downturn pushes some people out of the middle class before the economy
resumes expanding. Most recover. Many prosper. But some economists worry that
this time could be different. An unusual constellation of forces — some embedded
in the modern-day economy, others unique to this wrenching recession — might
make it especially difficult for those out of work to find their way back to
their middle-class lives.
Labor experts say the economy needs 100,000 new jobs a month just to absorb
entrants to the labor force. With more than 15 million people officially
jobless, even a vigorous recovery is likely to leave an enormous number out of
work for years.
Some labor experts note that severe economic downturns are generally followed by
powerful expansions, suggesting that aggressive hiring will soon resume. But
doubts remain about whether such hiring can last long enough to absorb anywhere
close to the millions of unemployed.
A New Scarcity of Jobs
Some labor experts say the basic functioning of the American economy has changed
in ways that make jobs scarce — particularly for older, less-educated people
like Ms. Eisen, who has only a high school diploma.
Large companies are increasingly owned by institutional investors who crave
swift profits, a feat often achieved by cutting payroll. The declining influence
of unions has made it easier for employers to shift work to part-time and
temporary employees. Factory work and even white-collar jobs have moved in
recent years to low-cost countries in Asia and Latin America. Automation has
helped manufacturing cut 5.6 million jobs since 2000 — the sort of jobs that
once provided lower-skilled workers with middle-class paychecks.
“American business is about maximizing shareholder value,” said Allen Sinai,
chief global economist at the research firm Decision Economics. “You basically
don’t want workers. You hire less, and you try to find capital equipment to
During periods of American economic expansion in the 1950s, ’60s and ’70s, the
number of private-sector jobs increased about 3.5 percent a year, according to
an analysis of Labor Department data by Lakshman Achuthan, managing director of
the Economic Cycle Research Institute, a research firm. During expansions in the
1980s and ’90s, jobs grew just 2.4 percent annually. And during the last decade,
job growth fell to 0.9 percent annually.
“The pace of job growth has been getting weaker in each expansion,” Mr. Achuthan
said. “There is no indication that this pattern is about to change.”
Before 1990, it took an average of 21 months for the economy to regain the jobs
shed during a recession, according to an analysis of Labor Department data by
the National Employment Law Project and the Economic Policy Institute, a
labor-oriented research group in Washington.
After the recessions in 1990 and in 2001, 31 and 46 months passed before
employment returned to its previous peaks. The economy was growing, but
companies remained conservative in their hiring.
Some 34 million people were hired into new and existing private-sector jobs in
2000, at the tail end of an expansion, according to Labor Department data. A
year later, in the midst of recession, hiring had fallen off to 31.6 million.
And as late as 2003, with the economy again growing, hiring in the private
sector continued to slip, to 29.8 million.
It was a jobless recovery: Business was picking up, but it simply did not
translate into more work. This time, hiring may be especially subdued, labor
Traditionally, three sectors have led the way out of recession: automobiles,
home building and banking. But auto companies have been shrinking because
strapped households have less buying power. Home building is limited by fears
about a glut of foreclosed properties. Banking is expanding, but this seems
largely a function of government support that is being withdrawn.
At the same time, the continued bite of the financial crisis has crimped the
flow of money to small businesses and new ventures, which tend to be major
sources of new jobs.
All of which helps explain why Ms. Eisen — who has never before struggled to
find work — feels a familiar pain each time she scans job listings on her
computer: There are positions in health care, most requiring experience she
lacks. Office jobs demand familiarity with software she has never used. Jobs at
fast food restaurants are mostly secured by young people and immigrants.
If, as Mr. Sinai expects, the economy again expands without adding many jobs,
millions of people like Ms. Eisen will be dependent on an unemployment insurance
already being severely tested.
“The system was ill prepared for the reality of long-term unemployment,” said
Maurice Emsellem, a policy director for the National Employment Law Project.
“Now, you add a severe recession, and you have created a crisis of historic
Some poverty experts say the broader social safety net is not up to cushioning
the impact of the worst downturn since the Great Depression. Social services are
less extensive than during the last period of double-digit unemployment, in the
On average, only two-thirds of unemployed people received state-provided
unemployment checks last year, according to the Labor Department. The rest
either exhausted their benefits, fell short of requirements or did not apply.
“You have very large sets of people who have no social protections,” said Randy
Albelda, an economist at the University of Massachusetts in Boston. “They are
landing in this netherworld.”
When Ms. Eisen and her husband, Jeff, applied for food stamps, they were turned
away for having too much monthly income. The cutoff was $1,570 a month — $25
less than her husband’s disability check.
Reforms in the mid-1990s imposed time limits on cash assistance for poor single
mothers, a change predicated on the assumption that women would trade welfare
checks for paychecks.
Yet as jobs have become harder to get, so has welfare: as of 2006, 44 states cut
off anyone with a household income totaling 75 percent of the poverty level —
then limited to $1,383 a month for a family of three — according to an analysis
by Ms. Albelda.
“We have a work-based safety net without any work,” said Timothy M. Smeeding,
director of the Institute for Research on Poverty at the University of
Wisconsin, Madison. “People with more education and skills will probably figure
something out once the economy picks up. It’s the ones with less education and
skills: that’s the new poor.”
Here in Orange County, the expanse of suburbia stretching south from Los
Angeles, long-term unemployment reaches even those who once had six-figure
salaries. A center of the national mortgage industry, the area prospered in the
real estate boom and suffered with the bust.
Until she was laid off two years ago, Janine Booth, 41, brought home roughly
$10,000 a month in commissions from her job selling electronics to retailers. A
single mother of three, she has been living lately on $2,000 a month in child
support and about $450 a week in unemployment insurance — a stream of checks
that ran out last week.
For Ms. Booth, work has been a constant since her teenage years, when she
cleaned houses under pressure from her mother to earn pocket money. Today, Ms.
Booth pays her $1,500 monthly mortgage with help from her mother, who is herself
living off savings after being laid off.
“I don’t want to take money from her,” Ms. Booth said. “I just want to find a
Ms. Booth, with a résumé full of well-paid sales jobs, seems the sort of person
who would have little difficulty getting work. Yet two years of looking have
yielded little but anxiety.
She sends out dozens of résumés a week and rarely hears back. She responds to
online ads, only to learn they are seeking operators for telephone sex lines or
people willing to send mysterious packages from their homes.
She spends weekdays in a classroom in Anaheim, in a state-financed training
program that is supposed to land her a job in medical administration. Even if
she does find a job, she will be lucky if it pays $15 an hour.
“What is going to happen?” she asked plaintively. “I worry about my kids. I just
don’t want them to think I’m a failure.”
On a recent weekend, she was running errands with her 18-year-old son when they
stopped at an A.T.M. and he saw her checking account balance: $50.
“He says, ‘Is that all you have?’ ” she recalled. “ ‘Are we going to be O.K.?’ ”
Yes, she replied — and not only for his benefit.
“I have to keep telling myself it’s going to be O.K.,” she said. “Otherwise, I’d
go into a deep depression.”
Last week, she made up fliers advertising her eagerness to clean houses — the
same activity that provided her with spending money in high school, and now the
only way she sees fit to provide for her kids. She plans to place the fliers on
porches in some other neighborhood.
“I don’t want to clean my neighbors’ houses,” she said. “I know I’m going to
come out of this. There’s no way I’m going to be homeless and poverty-stricken.
But I am scared. I have a lot of sleepless nights.”
For the Eisens, poverty is already here. In the two years Ms. Eisen has been
without work, they have exhausted their savings of about $24,000. Their credit
card balances have grown to $15,000.
“I don’t know how we’re still indoors,” she said.
Her 1994 Dodge Caravan broke down in January, leaving her to ask for rides to an
She does not have the money to move to a cheaper apartment.
“You have to have money for first and last month’s rent, and to open utility
accounts,” she said.
What she has is personality and presence — two traits that used to seem enough.
She narrates her life in a stream of self-deprecating wisecracks, her punch
lines tinged with desperation.
“See that,” she said, spotting a man dressed as the Statue of Liberty. Standing
on a sidewalk, he waved at passing cars with a sign advertising a tax
preparation business. “That will be me next week. Do you think this guy ever
thought he’d be doing this?”
And yet, she would gladly do this. She would do nearly anything.
“There are no bad jobs now,” she says. “Any job is a good job.”
She has applied everywhere she can think of — at offices, at gas stations.
“I’m being seen as a person who is no longer viable,” she said. “I’m chalking it
up to my age and my weight. Blame it on your most prominent insecurity.”
Two Incomes, Then None
Ms. Eisen grew up poor, in Flatbush in Brooklyn. Her father was in maintenance.
Her mother worked part time at a company that made window blinds.
She married Jeff when she was 19, and they soon moved to California, where he
had grown up. He worked in sales for a chemical company. They rented an
apartment in Buena Park, a growing spread of houses filling out former orange
groves. She stayed home and took care of their daughter.
“I never asked him how much he earned,” Ms. Eisen said. “I was of the mentality
that the husband took care of everything. But we never wanted.”
By the early 1980s, gas and rent strained their finances. So she took a job as a
quality assurance clerk at a factory that made aircraft parts. It paid $13.50 an
hour and had health insurance.
When the company moved to Mexico in the early 1990s, Ms. Eisen quickly found a
job at a travel agency. When online booking killed that business, she got the
job at the beauty salon equipment company. It paid $13.25 an hour, with an
annual bonus — enough for presents under the Christmas tree.
But six years ago, her husband took a fall at work and then succumbed to various
ailments — diabetes, liver disease, high blood pressure — leaving him confined
to the couch. Not until 2008 did he secure his disability check.
And now they find themselves in this desert of joblessness, her paycheck
replaced by a $702 unemployment check every other week. She received 14 weeks of
benefits after she lost her job, and then a seven-week extension.
For most of October through December 2008, she received nothing, as she waited
for another extension. The checks came again, then ran out in September 2009.
They were restored by an extension right before Christmas.
Their daughter has back problems and is living on disability checks, making the
church their ultimate safety net.
“I never thought I’d be in the position where I had to go to a food bank,” Ms.
Eisen said. But there she is, standing in the parking lot of the Calvary Chapel
church, chatting with a half-dozen women, all waiting to enter the Bread of Life
When her name is called, she steps into a windowless alcove, where a smiling
woman hands her three bags of groceries: carrots, potatoes, bread, cheese and a
hunk of frozen meat.
“Haven’t we got a lot to be thankful for?” Ms. Eisen asks.
For one thing, no pinto beans.
“I’ve got 10 bags of pinto beans,” she says. “And I have no clue how to cook a
Local job listings are just as mysterious. On a bulletin board at the
county-financed ProPath Business and Career Services Center, many are written in
jargon hinting of accounting or computers.
“Nothing I’m qualified for,” Ms. Eisen says. “When you can’t define what it is,
that’s a pretty good indication.”
Her counselor has a couple of possibilities — a cashier at a supermarket and a
night desk job at a motel.
“I’ll e-mail them,” Ms. Eisen promises. “I’ll tell them what a shining example
of humanity I am.”
December 15, 2009
The New York Times
By MICHAEL LUO
and MEGAN THEE-BRENAN
More than half of the nation’s unemployed workers have
borrowed money from friends or relatives since losing their jobs. An equal
number have cut back on doctor visits or medical treatments because they are out
Almost half have suffered from depression or anxiety. About 4 in 10 parents have
noticed behavioral changes in their children that they attribute to their
difficulties in finding work.
Joblessness has wreaked financial and emotional havoc on the lives of many of
those out of work, according to a New York Times/CBS News poll of unemployed
adults, causing major life changes, mental health issues and trouble maintaining
even basic necessities.
The results of the poll, which surveyed 708 unemployed adults from Dec. 5 to
Dec. 10 and has a margin of sampling error of plus or minus four percentage
points, help to lay bare the depth of the trauma experienced by millions across
the country who are out of work as the jobless rate hovers at 10 percent and, in
particular, as the ranks of the long-term unemployed soar.
Roughly half of the respondents described the recession as a hardship that had
caused fundamental changes in their lives. Generally, those who have been out of
work longer reported experiencing more acute financial and emotional effects.
“I lost my job in March, and from there on, everything went downhill,” said
Vicky Newton, 38, of Mount Pleasant, Mich., a single mother who had been a
customer-service representative in an insurance agency.
“After struggling and struggling and not being able to pay my house payments or
my other bills, I finally sucked up my pride,” she said in an interview after
the poll was conducted. “I got food stamps just to help feed my daughter.”
Over the summer, she abandoned her home in Flint, Mich., after she started
receiving foreclosure notices. She now lives 90 minutes away, in a rental house
owned by her father.
With unemployment driving foreclosures nationwide, a quarter of those polled
said they had either lost their home or been threatened with foreclosure or
eviction for not paying their mortgage or rent. About a quarter, like Ms.
Newton, have received food stamps. More than half said they had cut back on both
luxuries and necessities in their spending. Seven in 10 rated their family’s
financial situation as fairly bad or very bad.
But the impact on their lives was not limited to the difficulty in paying bills.
Almost half said unemployment had led to more conflicts or arguments with family
members and friends; 55 percent have suffered from insomnia.
“Everything gets touched,” said Colleen Klemm, 51, of North Lake, Wis., who lost
her job as a manager at a landscaping company last November. “All your
relationships are touched by it. You’re never your normal happy-go-lucky person.
Your countenance, your self-esteem goes. You think, ‘I’m not employable.’ ”
A quarter of those who experienced anxiety or depression said they had gone to
see a mental health professional. Women were significantly more likely than men
to acknowledge emotional issues.
Tammy Linville, 29, of Louisville, Ky., said she lost her job as a clerical
worker for the Census Bureau a year and a half ago. She began seeing a therapist
for depression every week through Medicaid but recently has not been able to go
because her car broke down and she cannot afford to fix it.
Her partner works at the Ford plant in the area, but his schedule has been
sporadic. They have two small children and at this point, she said, they are
“saving quarters for diapers.”
“Every time I think about money, I shut down because there is none,” Ms.
Linville said. “I get major panic attacks. I just don’t know what we’re going to
Nearly half of the adults surveyed admitted to feeling embarrassed or ashamed
most of the time or sometimes as a result of being out of work. Perhaps
unsurprisingly, given the traditional image of men as breadwinners, men were
significantly more likely than women to report feeling ashamed most of the time.
There was a pervasive sense from the poll that the American dream had been
upended for many. Nearly half of those polled said they felt in danger of
falling out of their social class, with those out of work six months or more
feeling especially vulnerable. Working-class respondents felt at risk in the
Nearly half of respondents said they did not have health insurance, with the
vast majority citing job loss as a reason, a notable finding given the tug of
war in Congress over a health care overhaul. The poll offered a glimpse of the
potential ripple effect of having no coverage. More than half characterized the
cost of basic medical care as a hardship.
Many in the ranks of the unemployed appear to be rethinking their career and
life choices. Just over 40 percent said they had moved or considered moving to
another part of the state or country where there were more jobs. More than
two-thirds of respondents had considered changing their career or field, and 44
percent of those surveyed had pursued job retraining or other educational
Joe Whitlow, 31, of Nashville, worked as a mechanic until a repair shop he was
running with a friend finally petered out in August. He had contemplated going
back to school before, but the potential loss in income always deterred him. Now
he is enrolled at a local community college, planning to study accounting.
“When everything went bad, not that I didn’t have a choice, but it made the
choice easier,” Mr. Whitlow said.
The poll also shed light on the formal and informal safety nets that the jobless
have relied upon. More than half said they were receiving or had received
unemployment benefits. But 61 percent of those receiving benefits said the
amount was not enough to cover basic necessities.
Meanwhile, a fifth said they had received food from a nonprofit organization or
religious institution. Among those with a working spouse, half said their spouse
had taken on additional hours or another job to help make ends meet.
Even those who have stayed employed have not escaped the recession’s bite.
According to a New York Times/CBS News nationwide poll conducted at the same
time as the poll of unemployed adults, about 3 in 10 people said that in the
past year, as a result of bad economic conditions, their pay had been cut.
In terms of casting blame for the high unemployment rate, 26 percent of
unemployed adults cited former President George W. Bush; 12 percent pointed the
finger at banks; 8 percent highlighted jobs going overseas and the same number
blamed politicians. Only 3 percent blamed President Obama.
Those out of work were split, however, on the president’s handling of job
creation, with 47 percent expressing approval and 44 percent disapproval.
Unemployed Americans are divided over what the future holds for the job market:
39 percent anticipate improvement, 36 percent expect it will stay the same, and
22 percent say it will get worse.
Marina Stefan and Dalia Sussman contributed reporting.
December 5, 2009
The New York Times
By JAVIER C. HERNANDEZ
In the strongest jobs report since the recession began, the government
reported Friday that the nation’s employers had all but stopped shedding jobs in
November, taking some of the pressure off of President Obama to come up with a
jobs creation program.
The Labor Department reported Friday that the United States economy shed 11,000
jobs in November, and the unemployment rate fell to 10 percent, down from 10.2
percent in October.
The government also significantly revised September and October numbers.
September was adjusted to show a loss of 139,000 jobs instead of 219,000, and
October 111,000 instead of 190,000.
Though the pace has been declining since a peak in January, the November number
was surprising. Economists have been expecting a turning point to come in the
late spring or summer, with employers finally adding workers as a recovery takes
hold. The last time the number was this good was December 2007, when the economy
added 120,000 jobs.
“We’re moving toward stability in the labor market and the end of the tremendous
firing that has plagued America,” said Allen L. Sinai, the founder of Decision
Economics, a research firm. “But it’s going to be bleak for years. While it is
going to be better than what we’ve seen, it’s still going to be terrible.”
A large number of employees are working fewer hours than they would like because
many companies are operating below capacity and have resisted adding staff until
orders turn up and the incipient recovery seems likely to endure. Indeed, a
broader measure of unemployment fell in November to 17.2 percent, from 17.5
percent in October. This broader measure covers not only those seeking work but
those whose hours have been cut and those too discouraged to look for work.
The number of Americans facing long-term unemployment, which includes people who
cannot find work for 27 weeks or more, has been at record highs in recent
months, reaching 5.6 million in October. It was more than 5.9 million people in
November, or 38.3 of percent of those unemployed. Once hiring resumes, those
workers are likely to be among the last to land jobs.
“You create this class of people who essentially become permanently unemployed
and can’t get back in,” said Nigel Gault, chief domestic economist at IHS Global
Insight. “You have people who have lost contact with the labor market, whose
skills are not relevant for jobs for the future, who employers regard with
skepticism because they have been out of work for so long.”
In recent months, the economy has shown modest signs of stability in
manufacturing and construction — each a big source of job loss in the nearly two
years since the recession began. But consumer spending remains tepid even as
holiday shopping gets under way.
On Thursday, President Obama convened a jobs summit and said he would announce
proposals next week to strengthen employment. “We cannot hang back and hope for
the best,” the president said, though he added “our resources are limited.”
Economists generally say that the worst of the recession has passed, and most
forecast mild growth into next year. But that does not change the economic
reality for millions of Americans, who must deal with piles of unpaid bills,
worries about unexpected medical expenses and concerns about losing their homes.
Kathy M. Henry, 39, who lives in a subsidized apartment on the South Side of
Chicago, was laid off from her job as an administrative assistant at an
advertising agency two years ago. Since then, she says, she has applied for more
than 500 jobs. She has received a $1,200 monthly unemployment check since August
of last year, which she describes as not enough to support herself and two of
her children who live with her.
“It’s a constant cycle,” she said. “I’ve applied everywhere, from big
corporations to minute corporations, and I don’t even get an e-mail back. I’m
worried people see me as old and out of touch and decrepit.”
Earlier this week, Ms. Henry’s son, a high school senior, came home with a
packet of class photographs. The $40 cost was beyond her means, she said, so she
decided against purchasing a memento of her son’s senior year.
In Canada on Friday, the government reported that the country’s economy added
more jobs than expected in November, erasing the losses in October. Statistics
Canada reported a net employment gain of 79,000 in November, topping
expectations of a 15,000 gain. The unemployment rate fell to 8.5 percent from
8.6 percent in October.
October 24, 2009
The New York Times
By STEVEN GREENHOUSE
It is well known that during the nation’s gale-force recession, many older
Americans who dreamed of retirement continued to work, often because their
401(k)’s had plunged in value.
In fact, there are more Americans 65 and older in the job market today than at
any time in history, 6.6 million, compared with 4.1 million in 2001.
Less well known, though, is that nearly half a million workers 65 and older want
to work but cannot find a job — more than five times the level early this decade
and this group’s highest unemployment level since the Great Depression.
The situation is made more dire because of numerous recent trends: many people
over 65 have lost their jobs as seniority protections have weakened, and like
most other Americans, a higher percentage of them took on debt than in previous
The expectation once was to pay off your 30-year mortgage before you retired, or
come close. Instead, the level of indebtedness among older Americans has risen
faster than in any other age group, partly because so many obtained second
mortgages to take money out of their homes.
This financial squeeze is one reason President Obama has proposed giving a
special $250 one-time payment to all Social Security recipients.
Many out-of-work older Americans complain that they face foreclosure or have had
to give up their car.
“It’s a big deal for a lot of these people not to find a job,” said David
Certner, legislative policy director for AARP. “That so many of them are still
trying to find work shows how bad the economic situation is. A lot of people
normally give up at that age.”
The unemployment rate for older Americans is still much better than for others —
6.7 percent compared with 9.8 percent in the general population. But 6.7 percent
is more than double the level of two years ago — and far higher than the
minuscule 1.9 percent rate early this decade.
And unemployed older workers stay out of work longer — 36.5 weeks on average, 40
percent longer than for the unemployed in general.
Patricia Warmhold, who has worked as a translator and telemarketer, would love
to retire, but at age 67, she says that is out of the question.
Her mortgage payment is nearly $1,500 a month, and her car payments and auto
insurance are another $350. She receives $1,071 a month in Social Security and
$918 in pension.
“I have very little after the mortgage,” she said.
Ms. Warmhold, who speaks German, French and Creole, was laid off a year ago from
her job as an interpreter for a law firm. “I’ve been looking for jobs ever
since,” she said. “I applied to Nassau County and Suffolk County, and they don’t
A divorce worsened her financial situation, although her mother, who is in her
90s, helps by sometimes sending her $100.
“In a month’s time, I sent out 101 job applications,” she said, including more
than 50 to school districts, to no avail.
The recession has battered young, middle-aged and old, although several modern
trends have left older workers more vulnerable than in the past — for instance,
the shift toward 401(k)’s and away from traditional pensions that give retirees
a monthly stipend for life has pressured many Americans to continue working well
Another force pushing Americans to delay retirement is that the percentage of
companies that provide health coverage to retirees is half what it was two
decades ago. Moreover, the age to obtain full Social Security benefits has
increased to at least 66 for people born after 1942, from its traditional 65.
The median income for those 65 and over was just $18,208 in 2008 — a quarter of
them had incomes under $11,139, according to Patrick Purcell, an expert on older
workers and pensions with the Congressional Research Service.
The average Social Security recipient age 65 and over receives just $12,437 in
annual benefits, he said, and among individuals 65 and older who received income
from financial assets, half received less than $1,542 last year.
While Social Security keeps most seniors above the poverty line, there are a
substantial number near poverty “who are just getting by,” said Richard W.
Johnson, a senior fellow at the Urban Institute. Many economists say it is good
that Americans are working later in life — many are living longer and able to
Still, many older job seekers insist they are losing out because of age
discrimination. Last year, nearly 25,000 workers filed age discrimination
complaints, a 29 percent jump over 2007, according to the Equal Employment
“I often get told that I’m overqualified,” said Barbara Brooks, 71, who retired
in 2003 after 30 years as an administrative assistant at the University of
California, Los Angeles. She said being told that is code language for “you’re
too old.” But Ms. Brooks said she wanted to work — and needed to — citing her
monthly mortgage of $1,500, which eats up half her monthly pension.
“I would like to be able to treat myself to a couple of dinners, maybe a movie,”
Ms. Brooks said. “I think as long as people have excellent skills, and they can
get around like a 40-year-old — I’ve been told I look 40 or 50 — why shouldn’t I
For years, unemployment among older Americans was largely ignored because so few
of them were jobless. But now more than a million Americans over age 60 are
unemployed, two-and-a-half times the level two years ago.
And at least jobless workers 65 and over are guaranteed health coverage through
Medicare. Workers laid off before that age often have to fend for themselves to
obtain health insurance, which is often prohibitively expensive for those over
One such worker is Michael Husar, 62, a former engineering manager who spent 38
years with General Motors and then its Delphi auto parts spinoff. Mr. Husar, a
resident of Scottsdale, Ariz., retired in 2003 at age 56, but as a result of
Delphi’s bankruptcy, he now has to purchase his own health insurance. He pays
$1,600 a month, which translates to $19,200 a year.
Despite two engineering degrees, his search for consulting work has come up
empty in recent months.
“There are two reasons I feel a need to continue working,” he said. “One, I
still have a lot to offer, and two, I need the money.”
Alicia H. Munnell, director of the Center for Retirement Research at Boston
College, says older workers have fared better by and large than younger workers
in this recession. The percentage of workers ages 25 to 54 with jobs has fallen
to 75 percent, from nearly 80 percent two years ago, while the percentage of
older Americans with jobs has risen slightly, to 16.3 percent.
But that is fewer than the number who want to work.
Patricia Piazza, 66, who worked for Chrysler for 30 years as an analyst, knows
that all too well.
She and her 72-year-old husband, a longtime employee at General Motors
Acceptance Corporation, had planned to retire by now, but she is hunting for
job, and he recently landed one with the local transit system.
Their home in Warren, Mich., has dropped $100,000 in value, Ms. Piazza said,
while their pensions, as former nonunion employees, will be far less than
anticipated because of the auto company bankruptcies.
Chrysler recently took away her life insurance policy and optical coverage, she
“It’s like the bottom fell out of everything” she said. “This isn’t the way we
Unemployment, one would reasonably assume, is the state of not being
employed. Following this logic, by adding together all the employed people and
unemployed people of working age in Britain you would expect to get all the
people of working age in Britain. According to official statistics, the
employment rate is 74.2 per cent. But the unemployment rate is just 6 per cent –
That leaves one person in five unaccounted for: neither employed, nor
unemployed. It gets more confusing.
According to another set of official statistics, the unemployment rate is just
above one million. Grouping people (who are messy) into categories (which are
distinct) has always been the statistician’s downfall. Is an ex-Lehman’s banker,
currently drinking last year’s bonus in a Goan beach bar, unemployed? What about
an ex-miner, who would like to do light work but lives in an industrial area and
claims incapacity benefits?
There are 1,071,900 people currently claiming jobseeker’s allowance. Everyone
agrees that they are unemployed. But most statisticians also agree that there
are plenty of unemployed people who are not on the dole. If your partner works,
if you have savings above a certain level, or if you are outside a set age
range, then you may not qualify for jobseeker’s allowance. And some people just
decide, for whatever reason, not to claim.
The best estimate of unemployment is calculated by the Office for National
Statistics. It uses a definition set by a United Nations agency, the
International Labour Organisation. This rate counts people who want to work, are
available to work, and are actively seeking employment – based on survey data.
This brings the rate for August to October – the earliest period for which data
is available – to 6 per cent, the highest since 1999.
What, though, of the missing one in five? For the same period, there were 7.9
million people over 16 and below retirement age who were classed as
“economically inactive”; 2 million of those were students; 2.3 million said they
were looking after a family or home; and another 2 million were long-term sick.
None of them is counted as unemployed, whatever definition is used.
But, when questioned, 2.1 million of them said they would like a job. If they
were included, the unemployment rate would rise to just under 4 million.
December 15, 2008
The New Tork Times
By JENNIFER STEINHAUER
With unemployment claims reaching their highest levels in decades, states are
running out of money to pay benefits, and some are turning to the federal
government for loans or increasing taxes on businesses to make the payments.
Thirty states are at risk of having the funds that pay out unemployment benefits
become insolvent over the next few months, according to the National Association
of State Workforce Agencies. Funds in two states, Indiana and Michigan, have
already dried up, and both states are borrowing from the federal government to
make payments to the unemployed.
Unemployment taxes are collected by states from employers, but the rate varies
from state to state per employee. In good times states build up trust funds so
that when unemployment is high there is enough money to cover the requests for
benefits, which are guaranteed by the federal government.
“You don’t expect the loans to happen this early in a jobs slump,” said Andrew
Stettner, the deputy director of the National Employment Law Project, an
advocacy organization for low-wage workers. “You would expect that the states
should, even when they are not well prepared, to have savings.”
The Labor Department said last week that initial applications for jobless
benefits rose to 573,000, the highest reading since November 1982. It is
recommended that states keep at least one year of peak-level benefits in their
trusts, but many have not, and already some states are far worse off than
Indiana’s unemployment trust fund went insolvent last month, and has borrowed
twice from Washington since then — the first such loans to the state since 1983.
It also expects to request an additional $330 million early next year.
Michigan, which has been borrowing money from the federal government for the
past few years to replenish its fund, is now $508.8 million in the hole and
unable to repay it. Next month the state, where the unemployment rate is more
than 9 percent, will begin levying a special “solvency tax” against some
employers to replenish its trust fund.
California, New York, Ohio, Rhode Island and other states are inching toward
insolvency as well, and may have to borrow from the federal government to get
through at least the first quarter of 2009.
In South Carolina, officials recently requested a $15 million line of credit.
“Right now we have $40 million in our trust fund, and we are paying out around
$11 million a week,” said Allen Larson, deputy executive director for the
unemployment insurance program at the South Carolina Employment Security
Commission. “So we think it is going to be very close as to whether or not we
can get through this year. We have never experienced anything like this.”
Officials in New York said the state’s trust fund has about $314 million,
compared with $595 million last year, and will most likely have to borrow from
the federal government in January.
The situation puts states, many of them facing huge deficits, in an even tighter
vise. As more people lose their jobs, the revenue base that the benefits are
drawn from shrinks, making it harder to pay claims. Adding to that burden is
that states will eventually have to pay back what they borrow.
Some states are worried about next year because the lion’s share of unemployment
taxes are collected early in each year, and they are not sure the money will
stretch through the end of the next year. The maximum amount of income the
federal government can tax employers for each worker is $7,000. (The amount
ranges from about $7,000 to about $25,000 for state taxes.)
“It is something that we are concerned about,” said Kim Brannock, a spokeswoman
for the Office of Employment and Training in Kentucky, where the unemployment
trust fund balance now sits at $133 million, compared with $250 million a year
ago. The fund has not borrowed money from the federal government since the
1980s. “At this point we are solvent,” she said, “but we are monitoring the
States that come up short have the option of borrowing from the federal
government, but if the loan is not paid back within the federal fiscal year, 4.7
percent interest is accrued, which cuts into states’ general funds.
“With longer term solvency issues due to the sharp increase in unemployment,
federal borrowing quickly becomes expensive,” said Loree Levy, a spokeswoman for
the Employment Development Department in California, which is already facing a
multibillion dollar budget gap. “We are anticipating interest payments of $20
million in 2009-10 and if nothing is done to revise the revenue generation model
the interest would be $150 million in 2010-11.”
As such, they are then forced to raise taxes or cut services, or both.
Robert Vincent, a spokesman for the Gtech Corporation, a technology company for
the lottery industry based in Rhode Island, said, “Unemployment taxes are one of
a number of taxes that make it difficult to do business here.”
In many cases, states that have kept unemployment tax rates artificially low —
or in some instances decreased them — find themselves in the worst pickle now.
Indiana legislators, for example, reduced the tax rates to businesses by 25
percent in 2001.
“So, frankly, they created the perfect storm,” said John Ruckelshaus, the deputy
commissioner for the Indiana Department of Workforce Development. “The
Legislature will have to go in and look at the whole unemployment trust find
first thing when they begin their session.”
At the same time payments have gone up in some states.
To recalibrate the balance, several states are raising taxes on businesses —
often through an automatic increase that is triggered when fund levels are
endangered — to keep the unemployment checks flowing. An example is the Michigan
solvency tax, which will be levied against employers whose workers have received
more in benefits than the companies have contributed in unemployment insurance
taxes, to the tune of $67.50 per employee.
In Rhode Island, where the unemployment rate is 9.3 percent, the taxable wage
base will go to $18,000 from $14,000 in 2009, the highest rate in a decade.
“There is a possibility that we might be slightly under the funds we need come
the end of the first quarter,” said Raymond Filippone, the assistant director of
income support at the Rhode Island Department of Labor and Training. The state
has not borrowed from the federal government since 1980, he said.
“Many states have not raised that tax in years,” said Scott Pattison, executive
director of the National Association of State Budget Officers in Washington.
“Some states have automatic triggers. But then of course you have businesses
saying, ‘Whoa, you are raising taxes on me when we are having a tough time and
it is a recession, too.’ ”
Still, some said they were thinking beyond the dollars.
“In these times of financial stress every extra cost is a concern,” said Linda
Shelton, the spokeswoman for Lifespan, a large health care system in Rhode
Island. “However there are many things that worry us even more. We are much more
concerned about Rhode Island’s budget crisis, about rising unemployment, the
rising number of uninsured and the continuing cuts to health care.”
December 9, 2008
The New York Times
By REED ABELSON
As increasing numbers of the unemployed and uninsured turn to
the nation’s emergency rooms as a medical last resort, doctors warn that the
centers — many already overburdened — could have even more trouble handling the
heart attacks, broken bones and other traumas that define their core mission.
Even before the recession became evident, many emergency rooms around the
country were already overcrowded, with dangerously long waits for some patients
and the frequent need to redirect ambulances to other hospitals.
“We have no capacity now,” said Dr. Angela F. Gardner, the president-elect of
the American College of Emergency Physicians, which represents 27,000 emergency
doctors. “There’s no way we have room for any more people to come to the table.”
In a report to be released Tuesday, her group warns that the nation’s system of
emergency rooms is in “serious condition.” Dr. Gardner argues that any public
discussion of overhauling the current health system must include the nation’s
The number of patients coming to emergency departments has been steadily
increasing. Helping push up that volume have been the growing ranks of the
uninsured, because emergency rooms are legally obliged to see all patients who
enter their doors, regardless of their ability to pay. But even insured patients
who have no quick access to regular doctors are also showing up — among them
older people, who represent the fastest growing population of emergency room
So far, there are no firm figures on the recent influx. But even two years ago,
when a government survey found that the annual volume of visits to emergency
departments had reached 120 million — a third higher than a decade earlier —
doctors considered many emergency rooms overburdened.
Now the recession, whose full impact is yet to be seen, threatens to make
conditions even worse, emergency doctors say. Hospitals are absorbing increasing
amounts in unpaid medical bills, and some are already experiencing much higher
numbers of patients without insurance.
For example, Denver Health, a public hospital system, had a 19 percent increase
in emergency visits by uninsured patients in November — to 3,325, up from 2,792
a year earlier.
“Virtually every time I work a nine-hour shift, I encounter a couple of patients
who have never been here before because they’ve just lost their insurance,” said
Dr. Vincent J. Markovchick, the director of the hospital’s emergency medical
They include patients like Matthew Armijo, 29, who was laid off from his client
services job at a technology company in August and could continue his health
insurance only through October. He showed up at Denver Health’s urgent care
center, a part of the emergency department, suffering from increasing abdominal
pain. Mr. Armijo said he went there because he would not have to pay anything.
Denver Health expects the amount of care it delivers for which it will never be
paid to grow to more than $300 million this year, compared with $276 million in
Some patients are people who have delayed seeking medical care as long as they
can, like those who arrive during an asthma attack after deferring treatment.
“I am definitely seeing patients coming in presenting worse in their illness
because they are further along,” said Dr. Katherine A. Bakes, the director of
the program’s emergency services for children.
Other doctors around the country also report treating people who seem to have no
other option. One emergency room doctor in Iowa, Dr. Thomas E. Benzoni, said he
recently saw a mother come in with her two children for what he thought was
routine care. When he asked her why she had not gone to her family doctor, she
said she did not have health insurance.
“I don’t know what else she was supposed to do,” Dr. Benzoni said.
The increase is not affecting all emergency rooms. Some emergency physicians, in
fact, said there had actually been a recent decline in visits. A report by the
American Hospital Association for July, August and September found a slight
overall decrease in hospital traffic, including emergency visits, as some people
apparently sought to avoid spending money on anything they did not deem
But as the recession continues, many officials of the college of emergency
doctors predict it is only a matter of time until the rising number of uninsured
and the delays in getting primary care create a crisis.
“I think we’re seeing the tip,” said Dr. Nicholas J. Jouriles, the group’s
current president. Patients, he said, will have no choice but to come to the
emergency department when they have no money or insurance. “They will get turned
away elsewhere,” he said.
One of the doctors’ major concerns is the long waits by patients requiring a
hospital bed. The doctors group, surveying its members last year, learned of at
least 200 deaths related to the practice of “boarding” — in which patients on
stretchers line the corridors until they can be moved into a bed.
“Crowding is a national public health problem,” said Dr. Jesse M. Pines, an
emergency physician in Philadelphia.
Patients forced to wait for hours on end for a bed clearly suffer.
“It was pure hell,” recalled Robert Roth, whose 90-year-old mother, Kato, last
year spent 36 hours at the emergency department of a Queens hospital, near her
home in Jackson Heights, waiting for a room after going to the emergency room in
the middle of the night. Mrs. Roth, who had a recent series of falls, said she
had been hearing music in her ears, and both her son and the doctor he called
were worried about a possible stroke.
After the first five hours of waiting, she became increasingly disoriented and
delusional. Mr. Roth was unable to stay with her during the entire wait. After
he left and returned, he said, the hospital staff told him they had no idea
where she was. She turned up in an empty room off the emergency department, and
her physical and mental condition had clearly deteriorated, Mr. Roth said. She
believed that she had been kidnapped.
When she had to go several weeks later to another emergency department in
Manhattan, she endured a 20-hour wait for a room, again becoming disoriented
after several hours, forcing her to be sedated.
The emergency staffs “just seemed overwhelmed, overwhelmed,” said Mr. Roth, who
wondered why emergency departments could not handle the elderly in a special
Dr. Ann S. O’Malley is a physician and senior researcher for the Center for
Studying Health System Change, a nonprofit group in Washington that has studied
emergency services in different communities. While some hospitals have taken
steps to reduce crowding and move patients more efficiently from the emergency
department into rooms, Dr. O’Malley said, others have responded by expanding
their facilities — attracting more patients.
“Emergency departments,” she said, “are a kind of barometer of the general
health of the rest of the system.”
Dr. Eric J. Lavonas, an emergency physician in Denver, said: “The nation’s
emergency rooms are the end of the line. We will strain and stretch and bulge
under the weight.”
Dr. Gardner, of the emergency doctors’ group, said the question now is whether
the emergency room safety net will break — how often people with heart attacks
will not be able to get care in time to be saved. Her group’s report, she said,
is meant to alert people to the precarious nature of the system.
“What they don’t understand,” she said, “is that the system is fundamentally
flawed and will fail.”
December 8, 2008
The New York Times
By MONICA DAVEY
CHICAGO — The scene inside a long, low-slung factory on this city’s North
Side this weekend offered a glimpse at how the nation’s loss of more than
600,000 manufacturing jobs in a year of recession is boiling over.
Workers laid off Friday from Republic Windows and Doors, who for years assembled
vinyl windows and sliding doors here, said they would not leave, even after
company officials announced that the factory was closing.
Some of the plant’s 250 workers stayed all night, all weekend, in what they were
calling an occupation of the factory. Their sharpest criticisms were aimed at
their former bosses, who they said gave them only three days’ notice of the
closing, and the company’s creditors. But their anger stretched broadly to the
government’s costly corporate bailout plans, which, they argued, had forgotten
about regular workers.
“They want the poor person to stay down,” said Silvia Mazon, 47, a mother of two
who worked as an assembler here for 13 years and said she had never before been
the sort to march in protests or make a fuss. “We’re here, and we’re not going
anywhere until we get what’s fair and what’s ours. They thought they would get
rid of us easily, but if we have to be here for Christmas, it doesn’t matter.”
The workers, members of Local 1110 of the United Electrical, Radio and Machine
Workers of America, said they were owed vacation and severance pay and were not
given the 60 days of notice generally required by federal law when companies
make layoffs. Lisa Madigan, the attorney general of Illinois, said her office
was investigating, and representatives from her office interviewed workers at
the plant on Sunday.
At a news conference Sunday, President-elect Barack Obama said the company
should follow through on its commitments to its workers.
“The workers who are asking for the benefits and payments that they have
earned,” Mr. Obama said, “I think they’re absolutely right and understand that
what’s happening to them is reflective of what’s happening across this economy.”
Company officials, who were no longer at the factory, did not return telephone
or e-mail messages. A meeting between the owners and workers is scheduled for
Monday. The company, which was founded in 1965 and once employed more than 700
people, had struggled in recent months as home construction dipped, workers
Still, as they milled around the factory’s entrance this weekend, some workers
said they doubted that the company was really in financial straits, and they
suggested that it would reopen elsewhere with cheaper costs and lower pay.
Others said managers had kept their struggles secret, at one point before
Thanksgiving removing heavy equipment in the middle of the night but claiming,
when asked about it, that all was well.
Workers also pointedly blamed Bank of America, a lender to Republic Windows,
saying the bank had prevented the company from paying them what they were owed,
particularly for vacation time accrued.
“Here the banks like Bank of America get a bailout, but workers cannot be paid?”
said Leah Fried, an organizer with the union workers. “The taxpayers would like
to see that bailout go toward saving jobs, not saving C.E.O.’s.”
In a statement issued Saturday, Bank of America officials said they could not
comment on an individual client’s situation because of confidentiality
obligations. Still, a spokeswoman also said, “Neither Bank of America nor any
other third party lender to the company has the right to control whether the
company complies with applicable laws or honors its commitments to its
Inside the factory, the “occupation” was relatively quiet. The Chicago police
said that they were monitoring the situation but that they had had no reports of
a criminal matter to investigate.
About 30 workers sat in folding chairs on the factory floor. (Reporters and
supporters were not allowed to enter, but the workers could be observed through
an open door.) They came in shifts around the clock. They tidied things. They
shoveled snow. They met with visiting leaders, including Representatives Luis V.
Gutierrez and Jan Schakowsky, both Democrats from Illinois, and the Rev. Jesse
Throughout the weekend, people came by with donations of food, water and other
The workers said they were determined to keep their action — reminiscent, union
leaders said, of autoworkers’ efforts in Michigan in the 1930s — peaceful and to
preserve the factory.
“The fact is that workers really feel like they have nothing to lose at this
point,” Ms. Fried said. “It shows something about our economic times, and it
says something about how people feel about the bailout.”
Until last Tuesday, many workers here said, they had no sense that there was any
problem. Shortly before 1 p.m. that day, workers were told in a meeting that the
plant would close Friday, they said. Some people wept, others expressed fury.
Many employees said they had worked in the factory for decades. Lalo Muñoz, who
was among those sleeping over in the building, said he arrived 34 years ago. The
workers — about 80 percent of them Hispanic, with the rest black or of other
ethnic and national backgrounds — made $14 an hour on average and received
health care and retirement benefits, Ms. Fried said.
“This never happens — to take a company from the inside,” Ms. Mazon said. “But
I’m fighting for my family, and we’re not going anywhere.”
December 7, 2008
The New York Times
By ROBERT PEAR
ASHLAND, Ohio — As jobless numbers reach levels not seen in 25 years, another
crisis is unfolding for millions of people who lost their health insurance along
with their jobs, joining the ranks of the uninsured.
The crisis is on display here. Starla D. Darling, 27, was pregnant when she
learned that her insurance coverage was about to end. She rushed to the
hospital, took a medication to induce labor and then had an emergency Caesarean
section, in the hope that her Blue Cross and Blue Shield plan would pay for the
Wendy R. Carter, 41, who recently lost her job and her health benefits, is
struggling to pay $12,942 in bills for a partial hysterectomy at a local
hospital. Her daughter, Betsy A. Carter, 19, has pain in her lower right jaw,
where a wisdom tooth is growing in. But she has not seen a dentist because she
has no health insurance.
Ms. Darling and Wendy Carter are among 275 people who worked at an Archway
cookie factory here in north central Ohio. The company provided excellent health
benefits. But the plant shut down abruptly this fall, leaving workers without
coverage, like millions of people battered by the worst economic crisis since
About 10.3 million Americans were unemployed in November, according to the
Bureau of Labor Statistics. The number of unemployed has increased by 2.8
million, or 36 percent, since January of this year, and by 4.3 million, or 71
percent, since January 2001.
Most people are covered through the workplace, so when they lose their jobs,
they lose their health benefits. On average, for each jobless worker who has
lost insurance, at least one child or spouse covered under the same policy has
also lost protection, public health experts said.
Expanding access to health insurance, with federal subsidies, was a priority for
President-elect Barack Obama and the new Democratic Congress. The increase in
the ranks of the uninsured, including middle-class families with strong ties to
the work force, adds urgency to their efforts.
“This shows why — no matter how bad the condition of the economy — we can’t
delay pursuing comprehensive health care,” said Senator Sherrod Brown, Democrat
of Ohio. “There are too many victims who are innocent of anything but working at
the wrong place at the wrong time.”
Some parts of the federal safety net are more responsive to economic distress.
The number of people on food stamps set a record in September, with 31.6 million
people receiving benefits, up by two million in one month.
Nearly 4.4 million people are receiving unemployment insurance benefits, an
increased of 60 percent in the past year. But more than half of unemployed
workers are not getting help because they do not qualify or have exhausted their
About 1.7 million families receive cash under the main federal-state welfare
program, little changed from a year earlier. Welfare serves about 4 of 10
eligible families and fewer than one in four poor children.
In a letter dated Oct. 3, Archway told workers that their jobs would be
eliminated, and their insurance terminated on Oct. 6, because of “unforeseeable
business circumstances.” The company, owned by a private equity firm based in
Greenwich, Conn., filed a petition for relief under Chapter 11 of the Bankruptcy
Archway workers typically made $13 to $20 an hour. To save money in a tough
economy, they are canceling appointments with doctors and dentists, putting off
surgery, and going without prescription medicines for themselves and their
Archway cited “the challenging economic environment” as a reason for closing.
“We have been operating at a loss due largely to the significant increases in
raw material costs, such as flour, butter, sugar and dairy, and the record high
fuel costs across the country,” the company said. At this time of year, the
Archway plant is usually bustling as employees work overtime to make Christmas
cookies. This year the plant is silent. The aromas of cinnamon and licorice are
missing. More than 40 trailers sit in the parking lot with nothing to haul.
In the weeks before it filed for bankruptcy protection, Archway apparently fell
behind in paying for its employee health plan. In its bankruptcy filing, Archway
said it owed more than $700,000 to Blue Cross and Blue Shield of Illinois, one
of its largest creditors.
Richard D. Jackson, 53, was an oven operator at the bakery for 30 years. He and
his two daughters often used the Archway health plan to pay for doctor’s visits,
imaging, surgery and medicines. Now that he has no insurance, Mr. Jackson takes
his Effexor antidepressant pills every other day, rather than daily, as
Another former Archway employee, Jeffrey D. Austen, 50, said he had canceled
shoulder surgery scheduled for Oct. 13 at the Cleveland Clinic because he had no
way to pay for it.
“I had already lined up an orthopedic surgeon and an anesthesiologist,” Mr.
In mid-October, Janet M. Esbenshade, 37, who had been a packer at the Archway
plant, began to notice that her vision was blurred. “My eyes were burning,
itching and watery,” she said. “Pus was oozing out. If I had had insurance, I
would have gone to an eye doctor right away.”
She waited two weeks. The infection became worse. She went to the hospital on
Oct. 26. Doctors found that she had keratitis, a painful condition that she may
have picked up from an old pair of contact lenses. They prescribed antibiotics,
which have cleared up the infection.
Ms. Esbenshade has two daughters, ages 6 and 10, with asthma. She has explained
to them why “we are not Christmas shopping this year — unless, by some miracle,
mommy goes back to work and gets a paycheck.”
She said she had told the girls, “I would rather you stay out of the hospital
and take your medication than buy you a little toy right now because I think
your health is more important.”
In some cases, people who are laid off can maintain their group health benefits
under a federal law, the Consolidated Omnibus Budget Reconciliation Act of 1986,
known as Cobra. But that is not an option for former Archway employees because
their group health plan no longer exists. And they generally cannot afford to
buy insurance on their own.
Wendy Carter’s case is typical. She receives $956 a month in unemployment
benefits. Her monthly expenses include her share of the rent ($300), car
payments ($300), auto insurance ($75), utilities ($220) and food ($260). That
leaves nothing for health insurance.
Ms. Darling, who was pregnant when her insurance ran out, worked at Archway for
eight years, and her father, Franklin J. Phillips, worked there for 24 years.
“When I heard that I was losing my insurance,” she said, “I was scared. I
remember that the bill for my son’s delivery in 2005 was about $9,000, and I
knew I would never be able to pay that by myself.”
So Ms. Darling asked her midwife to induce labor two days before her health
“I was determined that we were getting this baby out, and it was going to be
paid for,” said Ms. Darling, who was interviewed at her home here as she cradled
the infant in her arms.
As it turned out, the insurance company denied her claim, leaving Ms. Darling
with more than $17,000 in medical bills.
The latest official estimate of the number of uninsured, from the Census Bureau,
is for 2007, when the economy was in better condition. In that year, the bureau
says, 45.7 million people, accounting for 15.3 percent of the population, were
M. Harvey Brenner, a professor of public health at the University of North Texas
and Johns Hopkins University, said that three decades of research had shown a
correlation between the condition of the economy and human health, including
“In recessions, with declines in national income and increases in unemployment,
you often see increases in mortality from heart disease, cancer, psychiatric
illnesses and other conditions,” Mr. Brenner said.
The recession is also taking a toll on hospitals.
“We have seen a significant increase in patients seeking assistance paying their
bills,” said Erin M. Al-Mehairi, a spokeswoman for Samaritan Hospital in
Ashland. “We’ve had a 40 percent increase in charity care write-offs this year
over the 2007 level of $2.7 million.”
In addition, people are using the hospital less. “We’ve seen a huge decrease in
M.R.I.’s, CAT scans, stress tests, cardiac catheterization tests, knee and hip
replacements and other elective surgery,” Ms. Al-Mehairi said.
CHICAGO (AP) — Workers laid off from their jobs at a factory have occupied
the building and are demanding assurances they'll get severance and vacation pay
that they say they are owed.
About 200 employees of Republic Windows and Doors began their sit-in Friday,
the last scheduled day of the plant's operation.
Leah Fried, an organizer with the United Electrical Workers, said the
Chicago-based vinyl window manufacturer failed to give 60 days' notice required
by law before shutting down.
Workers also were angered when company officials didn't show up for a meeting
Friday that had been arranged by U.S. Rep Luis Gutierrez, a Chicago Democrat,
During the peaceful takeover, workers have been shoveling snow and cleaning the
building, Fried said.
"It's a rarely used tactic," Fried said. "But we're in very drastic time and the
workers have taken measures necessary to win what they're owed."
Representatives of Republic Windows did not immediately respond Saturday to
calls and e-mails seeking comment.
Police spokeswoman Laura Kubiak said authorities were aware of the situation and
officers were patrolling the area.
Crain's Chicago Business reported that the company's monthly sales had fallen to
$2.9 million from $4 million during the past month. In a memo to the union,
obtained by the business journal, Republic CEO Rich Gillman said the company had
"no choice but to shut our doors."
December 6, 2008
The New York Times
By LOUIS UCHITELLE, EDMUND L. ANDREWS
and STEPHEN LABATON
This article was reported by Louis Uchitelle,
Edmund L. Andrews and Stephen
and written by Mr. Uchitelle.
The government’s report of a giant job loss in November, the biggest monthly
decline in a generation, puts more pressure on Congress and the administration
to move quickly on a stimulus package, mortgage relief and perhaps financial aid
for Detroit’s big automakers.
The nation’s employers cut 533,000 jobs in November, the Bureau of Labor
Statistics reported Friday.
Not since December 1974, toward the end of a severe recession, have so many jobs
disappeared in a single month — and the current recession, far from ending,
appears to be just gathering steam.
“We are caught in a downward spiral in which employment, incomes and spending
are collapsing together,” said Nigel Gault, chief domestic economist for IHS
Global Insight. “With private spending frozen, we have no choice but to rely on
a stimulus package to revive the economy.”
The unemployment rate rose to 6.7 percent, up just two-tenths of a percentage
point from October, but up six-tenths over the last three months. More than
420,000 men and women who had been working or seeking work in October left the
labor force in November.
More significantly, the unemployment rate does not include those too discouraged
to look for work any longer or those working fewer hours than they would like.
Add those people to the roster of the unemployed, and the rate hit a record 12.5
percent in November, up 1.5 percentage points since September.
Noting that 1.9 million jobs have been lost since the start of the recession a
year ago — two-thirds of them since September — President-elect Barack Obama
invoked public spending as the best way to get a dead-in-the-water economy
moving again. “This painful crisis,” he said in a statement, is an opportunity
“to improve the lives of ordinary people by rebuilding roads and modernizing
schools for our children,” and by investing in clean energy projects.
A goal of all this spending is to generate 2.5 million jobs over the next two
years, he said, repeating an earlier pledge. Given the accelerating job losses,
hitting that target would barely recover the jobs that have disappeared over the
As part of Friday’s announcement, the government revised higher its estimates of
jobs lost in September and October. Instead of 524,000 jobs disappearing in
those months, 723,000 were lost, or a total of 1.2 million jobs in just three
months. In all, jobs have been lost in each of the last 11 months.
“Obama is being deliberately unclear about those 2.5 million jobs,” said Robert
Pollin, a University of Massachusetts economist. “He is not going to add 2.5
million on top of recovering the 1.9 million that have been lost so far this
Despite the deterioration of the labor market, Democrats in Congress and a
lame-duck president remain in a standoff over rescue measures.
At its core, the stalemate between the Republicans and the Democrats springs
from fundamentally different views about the nature of the crisis and the role
of government in resolving it. The White House contends that it has rightly
focused on the credit and housing markets, while the Democrats see economic
problems that can be resolved only through broader intervention.
New efforts to adopt a broad economic package are likely to wait until the new
president takes office and Democrats have bigger majorities in Congress. That
delay poses the possibility of a deeper recession, according to some experts.
President Bush, appearing in front of cameras on Friday morning at the White
House, said he was “concerned about our workers who have lost jobs.” But he
offered no hint of softening his opposition to either a stimulus package or a
bailout of the automobile industry, saying that the measures already put in
place by the Treasury Department and the Federal Reserve to ease credit problems
would take time to work.
Shortly after his appearance, a White House spokesman, Scott Stanzel, dashed any
expectation of a change in policy when he said that officials expected a
stimulus package would “happen in the next administration.”
Support is building for a significant stimulus package as the economy slips into
a deep recession. Most forecasters expect the gross domestic product to contract
in the current fourth quarter at an annual rate of 4 or 5 percent, and continue
to contract through most of next year, shrinking by 2 percent for all of 2009 —
a contraction that has occurred only once since World War II: in 1982, a year of
“If there was any doubt that a very large fiscal stimulus is required, then the
numbers we have been getting recently should dispel that doubt,” said Jan
Hatzius, chief domestic economist for Goldman Sachs. To offset the private
sector retrenchment, he added, “we will need a stimulus package of $600 billion
at an annual rate, or $1.2 trillion over two years.”
Economists and policy makers increasingly share his estimate of what it will
take to revive America’s $14 trillion economy, with Democratic leaders talking
recently about a stimulus package of $400 billion or more.
Though any broad economic package seems to be delayed, Democrats still had faint
hopes of approving next week a rescue package for the car companies. Their goal
would be to prevent far more rapid deterioration in the job market.
The latest job numbers were stark evidence of a breakdown in consumer spending
and business investment since mid-September, when the Treasury Department and
the Federal Reserve decided to let Lehman Brothers fail, delivering a shock to
the financial sector. Almost simultaneously, stock prices began a free fall,
undermining the wealth and the retirement accounts of millions of Americans.
“We have recorded the largest decline in consumer confidence in our history,”
said Richard T. Curtin, director of the Reuters/University of Michigan Survey of
Consumers, which started its polling in the 1950s.
Job loss has played a big role in this erosion, he acknowledged. But so have
fewer hours of work, smaller bonuses, less overtime, falling home prices,
falling stock prices and a drumbeat of job cut announcements — the most recent,
this week, from big names like AT&T, Viacom, CVS, DuPont and the Avis Budget
The Dow Jones industrial average, down more than 20 percent since mid-September,
fell Friday morning in response to the November jobs report, but recovered later
and gained 259.18 points, or 3 percent, by the end of trading, to close at
With home prices still in decline, one in 10 mortgage holders was either
delinquent on loans in September or in foreclosure, the Mortgage Bankers
Association reported Friday. That was up from 9.2 percent in June and the
highest percentage since the association began to collect this data 30 years
The mortgage crisis makes lenders ever more reluctant to lend for the purchase
of homes, autos and other big consumer items. In more normal times, lenders
bundle these loans into securities and sell them. The buyers of these securities
have disappeared in the current credit crisis, however, and the Federal Reserve
is considering ways for lenders to borrow from the Fed, using the securities as
Jobs disappeared last month from every sector of the economy except health care
and state government, which mainly added educators. The biggest losses were in
manufacturing, construction, retailing — despite the first month of Christmas
shopping — financial services, hotel and restaurant work and temporary workers.
Over the course of the recession, 604,000 jobs — nearly one-third of the total —
have been eliminated in manufacturing, and the Big Three automakers promise more
layoffs to qualify for a federal bailout.
“Business shut down in November,” said Mark Zandi, chief economist at Moody’s
Economy.com. “Businesses are in survival mode and are slashing jobs and
investment to conserve cash. Unless credit starts flowing soon, big job losses
will continue well into next year.”
The administration says its recent actions are beginning to make credit flow
more easily. “We are pulling some very significant levers on the economy right
now, through what we’re doing with Treasury and what we’re doing with the Fed,”
said Tony Fratto, a White House spokesman.
December 6, 2008
The New York Times
By LOUIS UCHITELLE
With the economy deteriorating rapidly, the nation’s employers shed 533,000
jobs in November, the 11th consecutive monthly decline, the government reported
Friday morning, and the unemployment rate rose to 6.7 percent.
The decline, the largest one-month loss since December 1974, was fresh evidence
that the economic contraction accelerated in November, promising to make the
current recession, already 12 months old, the longest since the Great
Depression. The previous record was 16 months, in the severe recessions of the
mid-1970s and early 1980s.
“We have recorded the largest decline in consumer confidence in our history,”
said Richard T. Curtin, director of the Reuters/University of Michigan Survey of
Consumers, which started its polling in the 1950s. “It is being driven down by a
host of factors: falling home and stock prices, fewer work hours, smaller
bonuses, less overtime and disappearing jobs.”
The jobless rate was up from 6.5 percent in October. The job losses far exceeded
the 350,000 figure that was the consensus expectation of economists.
Over all, the job losses since January now total more than 1.9 million, with
most coming in the last three months as consumers and businesses cut back
sharply in response to the worsening credit crisis.
The report on Friday by the Bureau of Labor Statistics included sharp upward
revisions in job-loss figures for October (to 320,000 from the previously
reported 240,000) and for September (to 403,000 from 284,000).
The employment report increased the likelihood that Congress, with the support
of President-elect Barack Obama, will enact a stimulus package by late January
that could exceed $500 billion over two years. More than half that money would
probably be channeled into public infrastructure spending. Many economists
consider such investments an effective way to counteract, through federally
financed employment, the layoffs and hiring freezes spreading through the
“Basically $100 billion of public investment in such things as roads, bridges
and levees would generate two million jobs,” Robert N. Pollin, an economist at
the University of Massachusetts, said. “That would offset the two million jobs
that we are now on track to lose by early next year.”
The manufacturing sector has been particularly hard hit, losing more than half a
million jobs this year. That is nearly half the 1.2 million jobs lost since
employment peaked in December and, in January, began its uninterrupted decline.
The cutbacks seem likely to accelerate as the three Detroit automakers close
more factories and shrink payrolls even more as they try to qualify for the
federal loans they asked Congress this week to approve.
While manufacturing has led the way, the job cuts are rising in nearly every
sector of the economy. “My sense is there is just a collapse in demand,” said
Marc Levinson, research director for the union Unite Here, whose 450,000 members
are spread across apparel manufacturing, hotels, casinos, industrial laundries,
airport concessions and restaurants. “Our members are being laid off big time,”
Mr. Levinson said.
The latest jobs report came during a week of compelling evidence that the
American economy is falling precipitously. On Monday, the National Bureau of
Economic Research ruled that a recession — the 12th since the Depression — had
begun last December, even earlier than many people had thought.
That news was followed by fresh reports of cutbacks or declines in construction
spending, home sales, consumer spending, business investment and exports. And
companies in every industry sector announced layoffs this week, including AT&T,
the telecommunications company, with 12,000 job cuts; DuPont, the chemical
company, 2,500; and Viacom, the media company, 850.
Even retail sales in the Christmas season were off sharply. The International
Council of Shopping Centers on Thursday described November sales at stores open
at least a year as the weakest in more than 30 years.
With all this in mind, and particularly the shrinking employment rolls,
economists are estimating that the gross domestic product is contracting at an
annual rate of 4 percent or more in the fourth quarter, after a decline of 0.3
percent in the third quarter.
“Our G.D.P. forecast for 2009 is now minus 1.8 percent, rather than minus 1
percent,” HIS Global Insight, a forecasting and data gathering service, informed
its clients in an e-mail message this week, explaining that all the latest bad
news left it no choice but to issue a sharp downward revision.
“We see the unemployment rate at 8.6 percent by the end of 2009,” Global Insight
November 24, 2008
The New York Times
By DAMIEN CAVE
FORT LAUDERDALE, Fla. — They have little in common: Ron Jones, 52, short and
strong, a union carpenter with decades of work experience; and Jerome Grant, 20,
tall and thin, a Jamaican immigrant with a degree in culinary arts. But the
economy has pushed them to the same difficult place.
On a recent morning, they sat across from each other at a one-stop career center
here, feverishly applying for two months of temporary work with United Parcel
Service. The pay was $8.50 an hour. There were 150 slots, and more than 300
“You just hope you get your name called,” Mr. Grant said, eyeing the
interviewers. Mr. Jones agreed, saying, “You got to get in where you fit in.”
If a fit can be found anywhere, it would probably be here at one of 2,942
one-stop career centers that Congress established 10 years ago. They each play
host to a web of federal programs for the needy or unemployed, offering
training, job listings and, in most states, access to welfare programs like food
stamps and unemployment insurance.
Essentially, they are the emergency rooms of today’s sick economy — and they are
increasingly overwhelmed. Just a few feet from Mr. Jones, Lequila McGauley, a
single mother of two in heels, was also hoping for a chance to carry boxes.
Gregory Sapp was learning to use a computer for the first time at age 52.
A few years ago, they were working. Now, with the nation’s jobless claims at a
16-year high, they are among the 20 million people expected to use federal
workforce services in 2008, up from 14 million in 2005, according to the Labor
Congress has extended unemployment benefits, which helps, but the Department of
Labor also reports that this year’s federal budget for workforce programs was
cut by 1.74 percent, to $3.7 billion, continuing a decrease of 14 percent from
2000 to 2007.
Economists say the full impact is easy for lawmakers to miss. Many people apply
for unemployment through the Internet, cutting down on actual lines. And those
most in need are largely invisible — unskilled, less educated and
disproportionately black or from immigrant communities.
“It’s a mix of the most vulnerable and people who are in a state of shock,” said
Lawrence F. Katz, a former chief economist at the Labor Department who teaches
Here in Broward County, the real estate boom was bigger and so was the bust. As
a result, in the last three months, 36,000 people have come looking for jobs
through the one-stop system, an increase of 60 percent over last year, while the
number of jobs posted has declined by more than a third.
The number of families receiving public assistance has also jumped by 40
“The current state of things has affected just about everybody, from the lowest
to the highest,” said Kelly Allen, a vice president of Workforce One, the
public-private partnership that runs this one-stop and two others in the county.
“And it really puts those folks who may have been on the edge further behind.”
The race to survive begins every morning. On a recent day, long lines started to
form at the county’s largest one-stop office in Fort Lauderdale within an hour
of its 8 a.m. opening. Dozens of men and women waited patiently, standing or
sitting in blue chairs near a sign that said “America’s People ... America’s
Talent ... America’s Strength!”
Mr. Sapp, working on an assessment of his current skills (graphic arts, no;
finance, no), said he was hoping for an office job. He had worked most of his
life behind the wheel, or at a stove. “I was a jack of all trades,” Mr. Sapp
said, “but my specialty was cooking.”
He started to struggle in 2000, during the last economic dip, and in March of
last year, he was let go from a catering company. Temporary jobs became all he
could find: a swing shift working security; a Sunday missing church for a few
hours of manual labor. And now, he said, those jobs had dried up, too.
“I’m just tired of sitting around,” Mr. Sapp said. “I’m used to being active.”
And then he smiled, revealing a front tooth like an exclamation point. When
asked why, he said, “Things have to get better because it can’t get any worse.”
He said that he was more hopeful because President-elect Barack Obama would soon
be in the White House, and that he could wait a few years for the new president
to “put in action what he promised the American people.”
“I feel blessed,” he said. “Really blessed.”
His positive outlook was all the more striking with additional conversation. Mr.
Sapp, whose eyes brightened when he spoke about cooking, said he now went to
food pantries to stay fed. His divorce five years ago left him alone, and
because he could not afford to pay rent he lived in what he described as “a
barter situation.” He shares with a sick older man and woman, cooking, cleaning
and caring for them in exchange for lodging.
Others at the one-stop also said that cobbling life together with family and
friends had become the norm.
Mr. Grant, who came here from Jamaica five years ago with plans to send money
home, survives with the help of his girlfriend. Mr. Jones said he had gotten by
since February — the last time his carpentry skills brought him steady work —
with unemployment insurance, plus help from his 28-year-old daughter.
Ms. McGauley, meanwhile, said she could not survive without her sister and
mother. “The hardest part for me is the day care aspect,” she said.
Her daughter, Janiya, 2, stood quietly beside her digging through a pint-sized
purse. Like many others, they had been to the one-stop before. This time Ms.
McGauley arrived around 9 a.m. to apply for the U.P.S. job, to be a driver’s
assistant from now until Christmas. She waited several hours for an interview,
and unlike much of the competition she had relevant experience. From 2000 to
2004, she said, she had served in the Army working on supply logistics. She also
worked part time for DHL before being let go in July.
She said she would prefer a full-time job, doing just about anything. But she
also acknowledged the reality. Unemployment among blacks like herself, Mr.
Jones, Mr. Grant, Mr. Sapp and nearly every other customer in the Fort
Lauderdale one-stop reached 11.1 percent in October, far above the national
average of 6.5 percent.
The Princeton scholar Cornel West, who is black, highlighted such figures in a
recent appearance at the Miami book fair, noting that the election of Mr. Obama
could not make the nation “post-racial” or “race transcendent” when such
disparities still existed.
But like many others here, Ms. McGauley had more immediate concerns — her
expectations more kitchen table than ivory tower. “I just want to pay a bill,
and get some Christmas gifts,” she said. A few weeks out was as far ahead as she
could see. “I just want to get to next year and say, ‘O.K., it’s time to start
over,’ ” she said. “I just got to keep going until then.”
Later on, she said she had started receiving a little help from the government;
$336 a month in food stamps since June. But that was it — no unemployment, no
cash assistance. Like millions of other Americans coming through one-stop
centers across the country, she said she really just wanted work.
Her interview with the U.P.S. recruiter seemed to go well. So did the interviews
for Mr. Jones and Mr. Grant, who left with a smile as bright as his
sunshine-yellow shirt. “I got a 30-70 chance,” he said, seeming to stand taller.
“Seventy percent I’ll get it.”
The recruiters told them that a background check would be completed quickly and
that they would be notified in the next few days if they were hired. Ms.
McGauley said she was told to be ready to work as of the following Monday, and
initially she said she felt sure that she would get the job. But it was the 30th
position she had applied for since early November, and the longer she waited
without getting a call, the less sure she felt.
“I’m kind of skeptical now,” Ms. McGauley said a few days after applying. “I’m
going to check out another job at Home Depot.”
November 8, 2008
Filed at 3:52 a.m. ET
The New York Times
By THE ASSOCIATED PRESS
WASHINGTON (AP) -- The nation's jobless ranks zoomed past 10
million last month, the most in a quarter-century, as piles of pink slips shut
factory gates and office doors to 240,000 more Americans with the holidays
nearing. Politicians and economists agreed on a painful bottom line: It's only
going to get worse.
The unemployment rate soared to a 14-year high of 6.5 percent, the government
said Friday, up from 6.1 percent just a month earlier. And there was more grim
news from U.S. automakers: Ford Motor Co. and General Motors Corp., American
giants struggling to survive, each reported big losses and figured to be
announcing even more job cuts before long.
Barack Obama, in his first news conference as president-elect, said the nation
was facing the economic challenge of a lifetime but expressed confidence he
could deal with it.
''Immediately after I become president, I'm going to confront this economic
crisis head on by taking all necessary steps to ease the credit crisis, help
hardworking families, and restore growth and prosperity,'' he said after meeting
with economic advisers in Chicago. ''I'm confident a new president can have an
Wall Street revived somewhat after two days of big losses. The Dow Jones
industrials rose 248 points.
Still, the Labor Department's unemployment report provided stark evidence that
the economy's health was deteriorating at an alarmingly rapid pace. The jobless
rate was 4.8 percent just one year ago.
About 10.1 million people were unemployed in October, the most since the fall of
1983. More people have jobs now, since the population has grown, but it's still
a staggering jobless figure. With employers slashing jobs every month so far
this year, some 1.2 million positions have disappeared, over half in the past
three months alone.
Like Obama, President Bush expressed confidence that things would get better:
''Our economy has overcome great challenges before, and we can be confident that
it will do so again.''
But economists were much less upbeat than politicians.
''There is no light at the end of the tunnel, and the outlook is pitch black,''
said Richard Yamarone, economist at Argus Research.
And Bernard Baumohl, chief global economist at the Economic Outlook Group, said
the report ''depicts an economy still in free fall and without a safety net
anywhere in sight.''
All the economy's woes -- a housing collapse, mounting foreclosures, hard-to-get
credit and financial market upheaval -- will confront Obama when he assumes
office in January. Unemployment is expected to keep rising during his first year
in office, while record budget deficits will crimp his domestic agenda.
October's jobless rate was the highest since March 1994 and now has surpassed
the 6.3 percent 2003 high after the most recent recession. The government also
said job losses were worse than first reported for the preceding two months,
284,000 rather than 159,000 in September and 127,000 rather than 73,000 in
Many economists believe the unemployment rate will climb to 8 percent or 8.5
percent by the end of next year before slowly drifting downward. Some think
unemployment could even hit 10 or 11 percent -- if an auto company should fail.
In any case, the rate is likely to move higher even if the economy is on
somewhat stronger footing by the middle of next year as some hope. That's
because companies won't be inclined to ramp up hiring until they feel certain
that a recovery has staying power.
Joshua Shapiro, chief economist at consulting firm MFR Inc., said another reason
the unemployment rate can keep climbing -- even after a recession is over -- is
because people tend to flock back to the labor market when they sense their job
prospects might be better. ''It takes (people) awhile to figure out, 'Hey,
there's jobs out there,''' Shapiro said.
In the 1980-1982 recession -- considered the worst since the Great Depression in
terms of unemployment -- the jobless rate rose as high as 10.8 percent in late
1982 just as the recession ended, before inching down.
Friday's report was worse than analysts had expected. They had been forecasting
a jobless rate of 6.3 percent with payrolls falling about 200,000.
Factories, including auto makers, construction companies, especially home
builders, retailers, mortgage bankers, securities firms, hotels and motels and
educational services, all cut jobs. As did temporary help firms -- a barometer
of future hiring. All those losses more than swamped the few gains elsewhere,
including in the government, health care and in accounting and bookkeeping.
Private companies cut 263,000 jobs, the most since the country was beginning to
emerge from the 2001 recession. It marked the 11th straight month of such
The grim numbers spurred calls from Democrats on Capitol Hill to provide fresh
relief. House Speaker Nancy Pelosi said Democrats, in a lame-duck session later
this month, will push to enact another economic stimulus package of around $100
billion, possibly including provisions to create jobs through big public works
Obama said if the session doesn't bring passage, the measure will be his first
priority as president in January.
He has called for about $175 billion in new stimulus spending, including money
for roads, bridges and aid to hard-pressed states. He wants a rebate of $500 for
individuals, $1,000 for families and a new $3,000 tax credit for businesses for
each new job created.
Workers with jobs saw only modest wages gains in October. Average hourly
earnings rose to $18.21, a 0.2 percent increase from the previous month. Over
the past year, wages have grown 3.5 percent, but paychecks aren't stretching far
because high food, energy and other prices have propelled overall inflation at a
The economy has lost its footing in just a few months. It contracted at a 0.3
percent pace in the July-September quarter, signaling the onset of a likely
recession. It was the worst showing since the 2001 recession, and reflected a
massive pullback by consumers.
As consumers watch jobs disappear, they'll probably retrench even further,
spelling more trouble. Analysts say the economy is still shrinking in the
current October-December quarter and will contract further in the first quarter
of next year. All that more than fulfills a classic definition of a recession:
two straight quarters of contracting economic activity.
''The U.S. recession is deepening,'' said Michael Gregory, economist at BMO
Capital Markets Economics. The final quarter of this year is getting off to a
''particularly ugly'' start.
November 8, 2008
The new York Times
By PETER S. GOODMAN and MICHAEL M. GRYNBAUM
Squeezed by tight credit and plunging spending power, the
American economy is losing jobs at the fastest pace since 2001, and the losses
could accelerate to levels not seen since the deep recession of the early 1980s.
Employers shed 240,000 more jobs in October, the government reported Friday
morning, the 10th consecutive monthly decline and a clear signal that the
economic slowdown is troubling households and businesses.
Since August, the economy has lost 651,000 jobs — more than three times as many
as were lost from May to July. So far, 1.2 million jobs have been lost this
“Clearly, these are very bad numbers,” said Nigel Gault, chief domestic
economist at IHS Global Insight. “Businesses had been paring back for most of
the year, but I suspect that it had been more caution on hiring rather than
firing,” Mr. Gault said. “In September, they decided, ‘O.K., look, this isn’t
just a mini-recession, this is a full-blown recession. We better take some
action.’ And they did.”
The unemployment rate climbed to 6.5 percent, the highest level since 1994 and
up from 6.1 percent the month before.
The Labor Department also steeply revised down its employment numbers for the
third quarter. Employers slashed 284,000 jobs in September, far higher than the
159,000 that was initially reported. In August, 127,000 jobs were lost, compared
with the previous estimate of 73,000.
“The U.S. consumer, which for so many years was the global engine of growth, is
now the world economy’s Achilles heel,” Joshua Shapiro, an economist at MFR, a
research firm, wrote in a note.
The latest signs of distress seemed certain to inject more urgency into the
debate over another round of government stimulus to spur spending, and is more
evidence that President-elect Barack Obama will inherit a deeply troubled
Mr. Obama has in recent months called for another package of so-called stimulus
spending initiatives. Democratic leaders in the House suggested this week that
they might seek swift passage of $60 billion worth of measures that would extend
unemployment benefits and food stamps, while aiding states whose tax revenues
have plummeted. They would then pursue a broader package that could reach $200
billion in spending once Mr. Obama takes office.
The Bush administration has criticized Democratic proposals for immediate aid,
raising the specter of a veto.
On Friday, a spokeswoman for President Bush, Dana Perino, called the employment
numbers “a stark reminder of how critical it is we keep focused on utilizing”
the programs that Washington has put in place, including a $700 billion bailout
of the financial system.
“We know what the main problems are — tight credit and housing markets — and we
have the tools to solve them,” Ms. Perino said. “The programs we’re putting in
place will improve the flow of credit to consumers and businesses that will spur
economic growth, job creation and stabilization of our financial markets.”
Above all, the latest monthly snapshot of the job market reinforced how the
economy remains gripped by a potent combination of troubles — plunging housing
prices, tight credit and shrinking paychecks — with all three operating at once
in a downward spiral.
Companies have been hiring tepidly and laying off workers throughout the year as
business has slowed, while cutting working hours for those on the payroll.
Millions of Americans accustomed to borrowing against homes to finance spending
have lost that artery of cash as home prices have fallen.
Wages have effectively shrunk for most workers, as rising costs for food and
fuel have more than absorbed meager increases in pay. That has further crimped
American proclivities to spend.
In October, weekly wages for rank-and-file workers — those not in supervisory or
managerial positions — grew just 2.9 percent from October 2007, well below the
rate of inflation.
The health care industry and public schools were the only sectors of the economy
that showed more than notional growth last month. Otherwise, the losses were
deep and broad. The troubles in the auto industry led to thousands of layoffs at
car dealerships and factories that produce car parts. Tens of thousands of
workers at manufacturers and construction companies lost their jobs.
Janitors, administrative workers and temporary employees were hit hard, with
57,000 jobs lost in October. Even general merchandise stores, which have seen an
increase in business because of lower prices and more budget-minded consumers,
laid off 18,000 workers last month.
The 284,000 jobs lost in September was the biggest monthly toll since November
2001, in the aftermath of the terrorist attacks in New York and Washington.
All of this has cut into spending power. Consumer spending dropped between July
and September — the first quarterly decline in 17 years — further eroding the
motivation for businesses to hire.
Friday’s report offered signs that the pressures on workers are rapidly
intensifying. Between January and August, the economy lost about 75,000 jobs a
month, according to preliminary numbers from the Bureau of Labor Statistics. The
pace has more than doubled since then.
Many economists now expect the unemployment rate to reach 8 percent by the
middle of next year, a level not seen in 25 years. Most forecasts envision the
economy shrinking well into the next year and perhaps until 2010.
Recent days have offered new indications of trouble. On Thursday, several
retailers announced sharp declines in sales in October, suggesting that consumer
spending would continue to tighten. The annual pace of auto sales fell sharply
in October, down 15 percent compared with September, according to an analysis
from Goldman Sachs.
The widely watched Institute for Supply Management survey fell in October to
depths last seen 26 years ago, reflecting shrinking industrial activity and
suggesting weakening demand for goods as the economy slows.
That weakness has gone global, as many other major economies also are hit by the
slowdown — from Spain and Britain to Japan and Brazil — and as the financial
crisis now restricts economic activity in much of the world.
At the same time, banks continued to tighten their purse strings in October,
according to a survey of senior loan officers conducted by the Federal Reserve.
Economists construed the survey as an indication that even healthy companies and
many households were having difficulty securing capital, further braking the
economy and making prospects more difficult for American workers.
Many economists expect this picture to worsen as the consequences of the global
financial crisis ripple out to businesses and households. Though the $700
billion taxpayer-financed bailout has staved off fears of an imminent collapse
and restored some order to the financial system, it has not persuaded banks to
lend freely. Credit remains tight for businesses and homeowners.
November 6, 2008
Filed at 1:12 p.m. ET
The New York Times
By THE ASSOCIATED PRESS
WASHINGTON (AP) -- The number of out-of-work Americans
continuing to draw unemployment benefits has surged to a 25-year high, while
shoppers turned extra frugal, further proof of the damage from sinking economy,
credit problems and financial stresses.
The Labor Department reported Thursday that the number of people continuing to
draw unemployment benefits jumped by 122,000 to 3.84 million in late October. It
was the highest level since late February 1983, when the country was struggling
to recover from a long and painful recession.
New filings for jobless benefits last week dipped to 481,000, a still-elevated
level that suggests companies are in a cost-cutting mode.
The work force was much smaller in February 1983, when the number of people
continuing to claim benefits was 3.88 million.
At that time, about 87.2 million Americans were in the work force, compared to
almost 134 million today. That's one reason the unemployment rate was 10.4
percent in February 1983, compared to 6.1 percent last month.
Still, the increase in people continuing to draw unemployment benefits is an
indication that laid-off workers are having a harder time finding new jobs.
Democrats in Congress are pushing to include an extension of unemployment
benefits in a new stimulus package, which could be taken up this month. Benefits
typically last 26 weeks.
Congress approved a 13-week extension of benefits in June, and the department
said about 773,000 additional people claimed benefits through that program for
the week ending Oct. 18, the most recent data available. That extension is
scheduled to end next June.
Americans hit by layoffs, shrinking nest eggs and other stresses are pulling
back even more, sending sales at many big retailers down in what may have been
the weakest October in decades. That further darkened the outlook for the
holiday sales season.
Target Corp. and Costco were among the many retailers reporting sales declines
last month. Wal-Mart Stores Inc., the world's largest retailer, however, logged
a sales gain.
On Wall Street, stocks slumped. The Dow Jones industrials were down about 350
points in afternoon trading.
Hoping to prevent a deep recession, the Federal Reserve last week ratcheted down
interest rates last week to 1 percent and left the door open to further
The country's economic state has rapidly deteriorated in just a few months. The
economy contracted at a 0.3 percent pace in the July-September quarter,
signaling the onset of a likely recession. It was the worst showing since the
last recession, in 2001, and reflected a massive pull back by consumers.
With the economy sinking and consumers appetites flagging, employers have been
slashing jobs. They are expected to cut around 200,000 jobs when the government
releases the October employment report on Friday. The unemployment rate -- now
at 6.1 percent -- is expected to climb to 6.3 percent in October.
As American consumers watch jobs disappear and their wealth shrink, they'll
probably retrench even further.
That's why analysts predict the economy is still shrinking in the current
October-December quarter and will continue to contract during the first quarter
of next year. All that more than fulfills a classic definition of a recession:
two straight quarters of contracting economic activity.
Yet another report out Thursday showed the efficiency of U.S. workers slowed
sharply in the summer as overall production, or output, declined, reflecting the
hit to consumers from housing, credit and financial troubles.
Productivity -- the amount an employee produces for every hour on the job --
grew at an annual pace of 1.1 percent in the July-September quarter, down from a
3.6 percent growth rate in the second quarter, the Labor Department reported.
With productivity growth slowing, labor costs picked up. Unit labor costs -- a
measure of how much companies pay workers for every unit of output they
produce-- increased at a 3.6 percent pace in the third quarter, compared with a
0.1 percent rate of decline in the prior period.
The 1.1 percent productivity growth logged in the summer beat economists'
expectations for a 0.8 percent growth rate. The pickup in labor costs-- while
welcome to workers -- was faster than the 2.8 percent pace economists were
Economists often look at labor compensation for clues about inflation. These
days, however, the Federal Reserve and analysts are more concerned about the
economy's feeble state. While the pick up in labor costs might raise some
economists' eyebrows, the Fed is predicting inflation pressures will lessen as
the economy loses traction.
The 1.1 percent productivity gain was the smallest since the final quarter of
last year, while the increase in labor costs was the biggest since that time.
Internet company, eBay, announced Monday that it was laying off 10 percent of
its work force, or about 1,000 permanent employees and several hundred temporary
The announcement was largely unrelated to the potential economic impact of a
slowdown in ecommerce. Rather, it represented an attempt by eBay to improve the
performance of its core marketplace division, which has experienced declining,
single-digit growth in the last few years while the rest of e-commerce grows at
a double-digit clip. The company said it would take a pretax restructuring
charge of $70 million to $80 million, largely in the fourth quarter.
“While never an easy decision to make, these reductions will help improve our
operations and strengthen our ability to continue investing in growth,” John J.
Donahoe, eBay’s chief executive, said in a statement.
The company also announced on Monday that it was acquiring Bill Me Later, an
online payments firm based in Timonium, Md., for $945 million in cash and stock.
eBay will combine the company, which enables payments online for companies like
Wal-Mart Stores and Continental Airlines, with its rapidly growing PayPal
“We are making aggressive moves to strengthen our leadership positions in
e-commerce and payments to competitively position our company for long-term
growth,” Mr. Donahoe said. “Bill Me Later is a perfect complement to our
portfolio, a company that belongs with PayPal. Together, PayPal and Bill Me
Later will make online payments safer, easier and more convenient than ever.”
The company also announced that it was acquiring the popular Danish classified
advertising sites DBA.dk and BilBasen for $390 million. EBay has been building a
portfolio of European classified Web sites and already owns properties like
Kijiji, Gumtree, Marktplaats, LoQuo and mobile.de in Germany. EBay also owns a
minority stake in the American online classifieds leader Craigslist, but its
interest in buying the firm outright lead the companies to sue each other
earlier this year.
EBay’s interest in creating a global network of classified advertising business
is partly designed to create a complementary alternative to its sagging
traditional auctions business. Classified advertising sites are cheaper to
build, have few of the shipping hassles as global e-commerce sites, and do not
have the kind of volatile seller community that have reacted so vociferously to
recent changes in the core eBay marketplace. They also take relatively few
employees to operate.
The company said Monday that it expected to hit the low end of its third
quarterly earnings guidance. Earnings are scheduled to be released Oct. 15.
The New York Times
By PETER S. GOODMAN
American economy lost 159,000 jobs in September, the worst month of retrenchment
in five years, the government reported on Friday, amplifying fears that an
already painful downturn had entered a more severe stage that could persist well
into next year.
Employment has diminished for nine consecutive months, eliminating 760,000 jobs,
according to the Labor Department’s report. And that does not count the
traumatic events of recent weeks, as a string of Wall Street institutions
collapsed, prompting the $700 billion emergency rescue package approved by
Congress on Friday.
“It’s a dismal report, and the worst thing about it is that it does not reflect
the recent seizure that we’ve seen in the credit markets,” said Michael T.
Darda, chief economist at MKM Partners, a research and trading firm in
Greenwich, Conn. “There’s really nothing good about this report at all. We’ve
lost jobs in nearly every area of the economy, and this is going to get worse
before it gets better because the credit markets have deteriorated basically on
a daily basis for the last few weeks.”
Though the bailout may restore order to the financial system and eventually
filter through the economy by making it easier for businesses to secure capital,
few analysts expect it to swiftly reverse the nation’s fortunes. Housing prices
continue to fall, eroding household wealth just as millions suffer the weight of
unmanageable debt. The deteriorating job market has taken paychecks out of the
economy, reinforcing a predilection for thrift that has cut sales from car
showrooms to hair salons.
Banks should see their balance sheets improve as the government relieves them of
disastrous investments, yet they may remain skittish and reluctant to lend.
“At best, the bailout stops a much deeper decline in activity,” Mr. Darda said,
“but it’s not like they’re going to do this and all of the sudden the clouds
part and the skies are clear.”
Only a few weeks ago, many economists still held hopes that the economy might
recover late this year or early next. But with the job market now contracting
faster, and fear dogging the financial system, the broad assumption has taken
hold that 2008 is a lost cause.
Most economists have concluded that the economy will struggle well into next
year. More pessimistic forecasts envision the economy remaining weak through
most or all of next year.
“This is an economy in recession, and every dimension of the report confirms
that,” said Ethan S. Harris, an economist at Barclays Capital. “This has been
preceded by a slow-motion recession. Now we’re going into the full-speed
recession that will last somewhere between three and five quarters.”
For the first eight months of the year, the economy lost an average of 75,000
jobs each month. September’s report more than doubled the pace.
“A lot of companies came to the realization that there was no momentum in the
economy to pick them up in the second half of 2008,” said Steve Drexel, chief
executive of Corestaff Services, a staffing company in Houston. “They had been
hanging on to people and hoping things would improve, but now a lot companies
are just sort of retrenching.”
The unemployment rate remained steady at 6.1 percent in September, but
economists said that reflected how people who had given up looking for work were
not counted. Over the last year, the unemployment rolls have swelled by 2.2
million, to 9.5 million. On Friday, Goldman Sachs forecast that the jobless rate
would reach 8 percent by the end of next year, which would be the highest in 25
In Charlotte, Mich., Sean Schwartz, 26, has been out of a job for nearly two
months since his last stint as a construction worker. His $750-a-week paycheck
has been replaced by a $620.10 unemployment check every other week.
Mr. Schwartz and his wife — who works at Wal-Mart — have a 2-year-old daughter
and are expecting a baby in December. His job search has turned up little beyond
fast-food jobs at a fraction of his previous earnings. Mr. Schwartz is becoming
“We’re not getting the bills paid,” he said, estimating that his family is
behind $5,000 on medical bills for his daughter and his wife’s prenatal care.
“It’s rough. There’s nothing really out there.”
As the impact of Wall Street’s distress ripples out, economists expect
opportunities to grow leaner still. On Friday morning, banks needing to borrow
from other banks were paying nearly 4 percent more in interest than the Treasury
offers on savings bonds — a spread reflecting a general unwillingness to part
with cash. That spread was wider than after the 1987 stock market crash.
“It sets us up for some really grim news in the immediate future,” said Robert
Barbera, chief economist at the research and trading firm ITG. “Credit was
already hard to get in early September. But it’s really impossible to get now.”
The report amounted to a catalog of woes afflicting Americans who depend on
Manufacturing lost 51,000 jobs in September, bringing the decline so far this
year to 442,000. Retailers lost 35,000 jobs, and construction shed 35,000.
Employment in transportation and warehousing slid by 16,000.
Jobs in financial services dropped by 17,000, and have slipped by 172,000 since
employment peaked in that part of the economy in December 2006. Health care
remained a bright spot, adding 17,000 jobs in September. Mining added 8,000
Government payrolls grew by 9,000 jobs — a trend with a limited shelf life as
the economic slowdown shrinks tax revenue.
Doug Fleming has been out of work since last fall, when he lost his job as a
quality inspector for a home builder in Anderson, Ind. Nearly 800 résumés later,
he has received no offers. “Maybe it’s my age,” said Mr. Fleming, 41.
His wife has emphysema but has visited the doctor only once in the last year
because his family lacks health insurance, he said. His daughter, 15, was hoping
to talk her way into her high school’s homecoming football game on Friday
evening, unable to afford a ticket.
Unemployment rose to 11.4 percent among African-Americans in September, and to
19.1 percent among teenagers.
More than 21 percent of those receiving unemployment checks have been without
work for more than six months, up from 17.6 percent a year ago, the report said.
In the suburbs of Richmond, Va., Ginny Hoover, a single mother, has been out of
a job since November, when she lost her clerical position at a pharmaceutical
company. Her $500-a-week take-home pay became a $285-a-week unemployment check.
Barring an extension of those benefits by Congress — something blessed by the
House of Representatives on Friday — Ms. Hoover, 48, received her last check
“I’ve completely exhausted my savings, which was supposed to be a down payment
for a house,” she said.
Initially, Ms. Hoover sought another office position. “Now, I’ll apply for
anything that has a paycheck attached to it,” she said. Her current focus: a job
selling cellphone service at a kiosk at a Costco store for $7 an hour — less
than half of what she earned in her last position. “It won’t even cover my
rent,” she said.
The number of Americans working part time because their hours were cut or they
could not find a full-time job increased by 337,000 in September, to 6.1 million
— a jump of 1.6 million over the last year, and the highest number since 1993.
Average weekly wages for some 80 percent of the American work force have risen
by a meager 2.8 percent over the last year, with the gains more than reversed by
increases in the prices of food and fuel.
“This economy is just not creating near enough economic activity to generate
wage or income growth,” said Jared Bernstein, senior economist at the
labor-oriented Economic Policy Institute in Washington. “That has serious living
who rely on the state,
next year's rise hinges on the cost of living figures
published this week.
Patrick Collinson crunches the numbers
Saturday 16 October 2004
This article appeared on p6
of the Jobs & Money sectionof the Guardian
Saturday 16 October 2004.
It was published on guardian.co.uk at 01.12 BST
on Saturday 16 October 2004.
people on jobseeker's allowance and income support are likely to receive a rise
in their benefits next year of just 55p a week, the lowest increase since Labour
came to power in 1997.
This week saw the publication of the September inflation figures - the most
important ones of the year, as they are used to uprate state pensions and other
welfare benefits from next April.
The bad news for the unemployed is that the inflation figure used to determine
the level of jobseeker's allowance rose by just 1% over the year. That means the
weekly dole cheque for the 834,000 people currently claiming benefit is likely
to rise next April by just 55p to £56.20 from £55.65.
Pensioners will be slightly better off - they are likely to see the basic state
pension go up by 3.1%, but that is still below the increase in average earnings,
which is running at above 4%.
The government may, of course, decide to increase benefits by more than these
amounts. For example, in recent years it has increased pension credit in line
with average earnings, which suggests an increase of 4.3% in next year's minimum
income guarantee for pensioners. The official figures will not be released until
December, as part of the Chancellor's pre Budget report. But it has become
practice in Whitehall to base the April rerating of benefits on the September
The government published three sets of figures this week. One was the retail
prices index (all items) which showed a rise of 3.1% in the year to September.
This index is applied to benefits such as the state pension, child benefit,
incapacity benefit and disability living allowance.
The second figure was the consumer price index. Despite the rising oil price,
this fell to an annual rate of 1.1%, down from 1.3% in August. This index is
used as the key figure by the Bank of England when it is deciding interest
The third figure was the much-less noted Rossi index. This is the retail prices
index (all items), but excludes rent, mortgage interest payments, council tax
and depreciation costs. It is this index which is used to calculate increases in
jobseeker's allowance, housing benefit and income support.
In September, the Rossi index annual rate of change was just 1%. This is the
lowest figure since 1997. Last year it resulted in a rise in benefits of 1.8%,
and it has always been significantly lower than the rise in the retail prices
index, except for one year, 2000.
Katie Lane, policy adviser at Citizen's Advice, says the single unemployed have
become the forgotten corner of the welfare world.
"The government has tended to target poverty among pensioners, those with
children and the disabled. It means that people who don't fit into those
categories have been left behind."
Since 1997, the year Tony Blair came to power, jobseeker's allowance has gone up
If you're in work, your earnings are rising at their fastest rate for two years,
according to figures out this week. Annual growth in earnings rose to 4.3% in
August, the highest rate since April 2002. Behind the rise was a pick up in
wages in the private sector, which have lagged behind public sector pay. Average
salaries are around £24,700, suggesting that workers have enjoyed a £1,000 pay
rise this year, comfortably ahead of the inflation figures. Except that with
rising mortgage costs, gas and electric bills, petrol costs and council tax, it
doesn't feel that way.
Pensioners will receive a 3.1% rise in their basic pension from April next year,
if the government sticks to its formula of uprating benefits in line with the
rise in the RPI. This suggests a 3.1% rise from £79.60 to £82 a week for a
single pensioner, a gain of £124.80 over the year. For a couple, the state
pension should rise from £127.25 to £131.20, an increase of £205.40 over the
year. There will be better news if the government, like last year, increases the
pension credit in line with average earnings.
Child benefit is also linked to the September inflation rate as measured by the
RPI. This suggests that from April next year, the rate for the eldest child will
rise from its current level of £16.50 a week to £17. The rate for the second and
any subsequent children is also likely to rises by 30p a week from the current
rate of £11.05 to £11.40. It remains one of the few universal, non-means tested
Jobseeker's allowance is the cinderella benefit of welfare. In April it went up
just 1.8%, rising from £54.65 to £55.65 a week. Next year the increase will be
even smaller. If the government keeps to its formula of uprating in line with
the Rossi index, it will go up by just 1%. This suggests the allowance will rise
next April bya mere 55p to £56.20 a week. Jobseeker's allowance has crept up by
only tiny amounts during the Blair years, rising by only £7.75 a week since the
beginning of 1997.
After a decade of high unemployment, jobless men sang carols outside dole
offices on Christmas Day in 1938 and carried a black coffin down the Strand in
London on New Year's Eve. Below is a later protest in the series.
Six members of the National Unemployed Workers' Movement paraded in the
judging ring at Cruft's Dog Show at the Royal Agricultural Hall last night. A
large number of extra police were called, and after the men had mingled among
the crowd carrying placards they were escorted from the building.
The men paid for admission and then suddenly produced placards bearing such
slogans as "The dogs are O.K.: judge our condition"; "Luxury for dogs: poverty
for humans — give us work"; and "You breed dogs — unemployment assistance breeds
To the astonishment of officials and visitors the men walked into the judging
ring in which animals were still being paraded. For a few moments they were left
alone, walking around, then auxiliary policemen who had been on duty inside the
hall ordered them to leave the building. T. Connor, one of the men, told a
reporter that he had been unemployed for twelve months, and added: "We staged
the demonstration because we felt that it was not right for dogs to be pampered
and for 2,000 unemployed to exist under appalling conditions."
The reporter was told by uniformed men as the unemployed were leaving the hall,
"You are one of them. You leave too." When he refused to go and protested at
being pushed towards the exit by them, he was forcibly ejected.
Returning to the entrance, he spoke to an official of Cruft's Dog Show about the
uniformed men. "They are on loan for the duration of the show and are auxiliary
policemen," said the official. Photographers who attempted to take pictures of
the incident were prevented by another uni formed man, who blocked their view.
Members of the movement staged another demonstration at the Kensington Health
Exhibition at Lancaster Road Baths, London, yesterday. A lecturer on the subject
of keeping fit was demonstrating the art of weight-lifting and challenged any
member of the audience to lift the same weights'
A dozen unemployed men mounted the stage, and a few tried to lift the weights,
without success. They then produced posters which they had concealed in their
clothes, and displayed them. They read: "It's all right to keep fit, but we want
work and bread."
The police were called, but were not required, for the men, having made their
demonstration, filed quietly from the platform and left the building.
Some people think that
unemployment pay can be made up to reasonable income by aid from the Public
Assistance Committee, or they will say that the unemployed have relatives to
help them or other resources of some kind.
While it is still true that the poor help the poor to great extent, so many of
them are in the same plight nowadays that not much assistance can be obtained in
this direction, and the operation of the means test has cut out any casual
addition to the total income.
For the benefit of these people, and because those more charitably inclined may
like to know how it is possible to manage on the "dole", I have ascertained the
actual budget of a family of my acquaintance.
This family, consisting of man, wife, and two children, [have] 28s. 6d. per
week. This is the actual expenditure of this household every week, the menu
being varied as far as the narrow limits will permit:
Rent and rates, three-bedroomed controlled house, 12s. 6d.; Gas, used for
lighting kitchen, scullery only, 1s.; Coal and coke, one bag of each at 1s. 6d.
and 1s. 5d. respectively, 2s. 11d/; Wireless, batteries, &c, 6d.; Candles,
matches, soap, &c, 6d. Total 17s. 5d.
Eleven shillings is thus left for food and is expended as follows: Breakfast and
tea consist each day of toast and margarine. Bread, 10 2lb. loaves at 3½d. each,
2s. 11d. Milk, 1½ pints each at 3½d. a quart, 2s. 7½d.; Tea, 1lb. at 10d. a
pound, 10d.; Sugar, 2lb. at 2¼d. a pound, 4½d; Margarine, 1½lb. at 4d. a pound,
6d. Total 7s. 3d.
Dinners (3s. 9d. available). Monday, baked beans on toast, 1lb. at 5d. Tuesday,
tin of herrings, 4d. Wednesday, hotpot, half a lb. of steak at 1s., 2½lb of
potatoes at 5lb. for 4d, total 8d. Thursday, Soup, ½lb. steak at 1s., 2½lb.
potatoes, total 8d. Friday and Saturday, 1lb. beef sausage at 8d., 5lb.
potatoes, total 1s. Sunday: Hot-pot as above, 8d. Total 3s. 9d.
The diet is scanty and monotonous, the only allowance for entertainment is the
wireless; clothes, insurance, doctors' bills, and other necessities are totally
unprovided for. The husband has only been out of work for fifteen months, so the
clothes problem is not yet acute.
The wife suffers almost as much from the curse of compulsory idleness as the
husband. She has no materials for baking, sewing, or for decorating the house.
Cleaning materials must be used with the utmost care. It is as difficult for her
to keep up her courage under such circumstances as it is for the man.