The Hidden Crisis of Unemployment
The United States is reliant on tax payers and business in order for it to function and provide for the needs of the country. Through taxes military, security and poor is helped. This study will look into if the governments during the recession of 2009 if the government handled the unemployment crisis or should they have done more. The study will show that clearly they have not done nearly enough to prevent, correct or avoid jobs loss since 2007. The government should have taken this as a severe crisis that needed immediate corrections. In 2007 the United States began what is noted as a recession. The recession caused the economy to be effected in many ways. The banking system needing bailing out, the budgets for states and local government to take cuts as well as the federal government to address the best way to cushion the pain and prevent a depression. The United States has not seen a depression since the 20’s during the Great Depression. During that time the Federal Government created WPA programs to allow people to find work to support their families while building infrastructure in America. This allowed for demand and money to flow into the economy as well as people to support their families during a time where bread lines was something a family looked forward to daily in order to feed their family that day. In 2008 with American workers losing their jobs at a fast pace the government extended Unemployment benefits by adding emergency Tiers onto the already standard 26 week program in order to maintain families and keep the economy from crashing further. This was the first time in the history of America and since Unemployment Compensation was created, tiers 1-4 were created for a total of 99 weeks.
The crisis of job losses started in 2008; it peaked in 2009 and has slowly improved according to BLS reports. However, look closer into those numbers there is some debate as to if the numbers have improved due to people locating jobs and opportunities or just left the workforce. The BLS Website In 2008 the Unemployment rate started off in January at 5.0% and by the end of the year rose to 7.3% with a continuing loss trend through 2009. January 2009 the Unemployment rate started at 7.9% and ended the year at 9.9%. The following year the unemployment rate remained in the 9% range both reaching highs and lows in that percentage range. It took until 2012 for the unemployment rate to move out of the 9% range into the 8% range and excluding September through December rates which was 7.8% for September, October and November and 7.9% for December ending the year. In 2013 the Unemployment rate dipped again into the 7% range and remained there until December where it dipped to 6.7%. In 2014 the rate is still slowly dropping but still remains in the high 6% range which is still higher than pre-recession years. In total America has lost the most jobs in one quarter in 2009 than in the history of records being kept by the Department of Labor. The best information explaining this was found on the department of Labor site in an article post by the department itself.
The U.S. economy lost 4.7 million nonfarm jobs in 2009. (See chart 2.) In absolute terms, no other calendar year in the history of the CES survey has seen as many jobs lost. In relative terms, 3.5 percent of payroll jobs were lost over the year, the greatest rate of decline since 1945, when nonfarm businesses cut 6.6 percent of payroll jobs.
The largest monthly losses occurred at the beginning of the year, marking the start of a divergence from the job loss trend set by the previous two recessions. (See chart 3.) Employment declined by 753,000, on average, during each of the first 3 months of the year. Between April and June, however, average job losses slowed to 478,000 per month. The last 6 months of 2009 showed more signs of moderation in job losses. The third quarter saw an average decline of 2 60,000 jobs per month and was followed by an average monthly decline of 90,000 in the fourth quarter. Early in the year, the losses were widespread. The diffusion index over a 1-month span for total private employment reached 16.5 in March 2009, indicating that only about 16.5 percent of industries were adding payroll jobs, while about 83.5 percent were cutting jobs. The index had risen to 39.6 in December.
The reports also tells us that besides job losses workers hours were cut by 0.4 % to 33.8 hours for those who still had a job. This trend has stayed active through to 2014 where more minimum wages, part time jobs have grown exponentially. Before the recession the Unemployment benefit package was 26 weeks. Giving 6 months to find a new position, under normal economic climates 6 months was more than enough time to replace the job loss for an individual. While the country was bleeding out jobs at a rate of 800,000 jobs a month and the only thing workers was experiencing was job loss there was no job creation to be located people started to use their savings and retirement to pay their bills and stay afloat. The unemployed discovered that they was in a job crisis that needed to be addressed so the push for emergency help began. The government added tiers of emergency benefits. To this date of 2014, there has been 13 extensions passed and the 14th is in debate in the house who is demanding job creation be added to this. If job creation is added this will be the first time in the history of this jobs crisis that the federal government doesn’t just pass the band aid but also starts to help with a solution on how to grow jobs in The United States. There has been very little focus on the need for job creation when it comes to Washington Leaders.
Part of the concern for many Americans is that although the UI rate is falling slowly there have been studies that show that in fact, the rate is not falling but Americans are leaving the workforce. The Unemployment rate that the Department of Labor focuses on is also known as the U3 number. In a report written by the foreign policy Journal, just one of the many that explains U1-U6 numbers it states:
Now there are several different measures of unemployment calculated by the BLS ranging from U1 to U6 which parse different aspects of the unemployment situation. When you hear the unemployment rate mentioned, it is most likely referring to the U3 measure. This rate counts only unemployed workers who actively searched for a new job within the past 4 weeks. The other most used measure is the U6, which is not strictly a measure of unemployment because it groups the unemployed, along with the involuntarily part-time and the no-longer-looking. The U6 is the broadest measure of labor market agony we have. And this is what some call the more reflective measure of unemployment. It’s been around 15 percent for the past three years.
There are active groups of unemployed known as the 99ers who argue continuously that they are not counted but still looking for employment. The way the government derives the unemployment figures is archaic and needs updating for the growth in population and to modern technology. The millions of people left out of the numbers do not give a clear indication of the people out of work due to no fault of their own. The picture that is hidden is causing more harm to economy than the federal government realizes or just willfully ignores, Rhonda Taylor Stated, who is a national Advocate for the 99ers.
The solutions to the Jobs crisis that has been brought up are few and far between over the last 6 years. Some of those proposed are a WPA program like they did during the Great Depression. The federal government and the parties don’t seem to agree on solutions at all the Democrats want to grow unions by offering more federal jobs and building infrastructure in America.
The republicans want to lower taxes on business that will take off the handcuffs for businesses to grow. The problem with both parties is their ideas are small minded and not fail proof. The government created a climate where they rewarded companies for outsourcing during a time where America had plenty of jobs here. Companies discovered how much cheaper it was to do business overseas. Where labor laws are not enforced and benefit packages are nonexistent. The solutions for unemployed in the United States is first to recognize it’s a crisis. The next is to agree what caused the crisis and how ignoring it has multiplied it much farther than it needed to go. Job creation is an important feature that needs to be added to the agenda of Washington DC. First we need to stop rewarding all companies that ship their jobs overseas, next we need to reward companies for jobs that are offered here in the United States to Americans. We need to create a well-rounded jobs bill that includes not excludes people not collecting Unemployment compensation anymore since that pool that falls under the U6 number and the chart for out of the workforce is the largest pool of people who need to get back into the economy. To offer bills that are limited to only vets, or unions or private sector will only magnify the hurt on those who don’t fall into the specific category of jobless. We need small business to grow so by offering them aide to help them hire employees that they can’t afford to because people are not creating demand due to the economy lacking and no one having money to spend on items their selling has to be done. Both parties need to realize the bills offered are not curing the solution for all unemployed but only the special agendas that the parties cater to. No credits should be given without it being attached to a job created for an American Citizen.
There is a bill offered by Senator Thune in the Senate that had a few elements that would help like offering credits for hiring the longest of the long term unemployed as well as a moving loan so that the long term unemployed can afford to move to where the jobs are located. There is also a bill offered by Senator Whitehouse that would tax the corporations who ship jobs overseas. Both sides have ideas that are needed to cure the jobs crisis. Combine the good ideas improve them so that they are not open ended and we will begin to build the people back up from the jobs crisis we are in now. To ignore this means we will continue for more middle class people to fall into poverty and destine them to poverty for the rest of their lives. Most of them have to start their retirement savings over at the age of 50. The other issue that needs to be addressed is the discrimination of the unemployed not only by length of unemployment but as well as age. Age discrimination seems to be something not many want to talk about but if you look at the average person who lost their jobs in 2008, 2009 and 2010, they was over the age of 40. The withdrawal penalty that the unemployed are paying to withdraw their retirement should be waived if they are unemployed and not receiving an Unemployment Check as well.
There is not one best solution for a crisis that has lasted 6 years and affected millions of citizens. It will take a combination of ideas so that all unemployed are given the opportunity to find work again. There is many solutions above, the one that is best to start is by acknowledging the huge crisis of out of work unemployed and addressing how to get them all back to work. How to get companies involved in growing this economy for everyone.
Convincing companies it’s about their profit margin just as much as the well-being of the country. You don’t have profits if you don’t have customers that can afford to purchase your product. So the best solution is one where Washington DC stops cheering the recovery that when it comes to jobs doesn’t exist. 8 million jobs created since the recession began in Dec 2007 that is not enough to keep up with the new entrants into the workforce. So the best solution is to address the problem. Experts have argued over the solutions but the experts can’t seem to agree on the solutions to the problem. The solutions seem to be more political than practical. So the best resource I can find for solutions are the long term unemployed themselves who are living the crisis. That group is otherwise known as the 99ers and they seem to not need a research team to tell them what will get them back to work, they know what they up against. The Climate and Stigma to getting people back to work has not helped opportunities for the long term unemployed. So Until Washington gets honest with the crisis the solutions are farther away than anyone realizes. Unlike the Great Depression where Washington acknowledges the problem and immediately addressed it, the jobs crisis that started in Dec 2007 has been a vicious circle that is holding the United States economy and recovery back.
So in summary the solution that must be met first and foremost is getting honest with the number of unemployed people we have in the United States of America. The next solution is recognizing the causes and the effects of unemployment. Coming up with a plan for the road to recovery will take more than a one answer solution. For starters let’s get honest about the crisis.