I sense another round of disconnect from the media’s report of today’s jobless claims numbers coming in worse than “expected” at 480,000.
Initial jobless claims rose by 7,000 to 480,000 in the week ended Dec. 12, from a revised 473,000 the prior week, Labor Department figures showed today in Washington. The number of people receiving unemployment insurance was little changed in the prior week, while those getting extended payments increased.
Why are these numbers unexpected? I think they should be expected considering the state of the economy. The following will be discussed:
- People are spending less on holiday gifts
- The Federal Reserve can do no more to cut unemployment
- 15 million unemployed are cutting back spending
- Job seekers per job opening are at record levels.
With all those situations remaining in play, I would expect the jobless claims to remain at a high level, since jobs can’t be created with people and businesses cutting back on spending.
[E]arly data are gloomy. ShopperTrak reported that Black Friday sales rose just 0.5 percent from last year. According to the National Retail Federation, more people are shopping — 195 million shoppers hit stores or Web sites over the crucial Thanksgiving weekend, way up from 172 million last year. But they spent less. Average spending fell 7.9 percent, from $372.57 per household last year to $343.31 this year.
We get the steady beat of the jobless recovery from the former head of the Federal Reserve, Alan Greenspan:
The Federal Reserve has done all it can do to reduce unemployment and needs to worry more about the risk of inflation from the stimulus it poured into the economy, former Fed Chairman Alan Greenspan said on Sunday…..
Greenspan said he expected the U.S. unemployment rate, which is currently at 10 percent, to “be significantly lower a year from now” but still very high.
The U.S. Census Bureau’s plan to hire close to 800,000 workers by April will take several tenths of a percent off the unemployment rate, he said.
So what Mr. Greenspan is saying is that the hiring of 800,000 part-time, temporary workers will improve the unemployment rate. Maybe a few months of $12 an hour will help some people, but most families can’t live on that kind of salary that doesn’t include benefits. Sure the unemployment rate may head down because of these temporary jobs, but it will head right back up once the census is completed.
In fact, you are in many cases better off staying on unemployment benefits than taking a Census job. Here in NY you can currently collect $430 a week and be eligible for COBRA subsidies. Collecting $430 a week on unemployment, if broken down by a 40-hour week, would be similar to making $10.75 an hour. Now let’s include the COBRA subsidy – saving 65% of healthcare insurance. You may be paying $420 a month for a plan that would normally cost $1200 a month. Why would you even apply for a Census job with similar weekly pay without health insurance?
Unless Congress decides to extend unemployment and COBRA benefits past the current extension, there will be millions who fall off the rolls in short order. Those individuals would be much better off with a Census position, but that still leaves healthcare to be paid on a $12 an hour salary.
Greenspan, and now Bernanke have spent their entire Federal Reserve careers bailing out the large banks and investment houses at the expense of the taxpayer. Those $trillions in banking bailouts would have been much better spent on the average taxpayer. Why do I say that, because a recent poll by the NY Times shows the true depths of despair that the unemployed are facing. Here are just a couple of highlights:
- Half of the unemployed have cut back on doctor visits or medical treatments because they are out of work.
- 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.
- 55 percent have suffered from insomnia.
- Nearly half of respondents said they did not have health insurance.
- 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.
We have a Federal Reserve that pumps trillions at irresponsible banks, but leaves those without work to fend on their own. While more than 50% of the 15 million without work aren’t eligible to collect unemployment, our government doesn’t have a problem with continuing to pour billions into banks. We are on a slippery slope where the middle class is disappearing while the privileged and connected continue to reap outsized rewards.
It’s not like there are a lot of jobs out there for those in desperate straits. In October there were 6.3 job seekers per available job opening, which is a new record!
In October, according to the BLS, there were only 1.9 million job openings for 11,970,000 looking for work. I’m not sure why the figure is 11,970,000, since there are 15 million unemployed, but that what the government stats indicate. If you use 15 million unemployed as the number of people looking for work the picture is even bleaker with 7.9 job seekers per available job opening.
There are about 6.3 unemployed workers competing, on average, for each job opening, a Labor Department report shows. That’s the most since the department began tracking job openings nine years ago, and up from only 1.7 workers when the recession began in December 2007.
If you were looking for bright and cheery job market assessment, you may have to wait for the next government report, Oval Office speech, or media pump. We need to demand that our elected representatives act as if they have our interests in mind and not just the next campaign contribution from the financial sector. Until there is some sort of representation parity, we are bound to receive more hot air from Washington than the jobs desperately needed.
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