In times of economic recession many individuals laid off for no fault of their own resort to odd jobs like landscaping and cleaning houses to make ends meet and to supplement unemployment insurance that in every case is only a small fraction of the paycheck they were accustomed to bringing home.
Industrious individuals that are ready, willing, and able to do whatever is necessary to provide for their families are often times unjustly penalized for doing everything in their power to put food on the table by scraping together a few extra dollars wherever they can. In an effort to curtail abuse of the unemployment insurance fund almost every state mandates that anyone filing unemployment report any income earned during the period that unemployment is being collected.
At first glance policies requiring people collecting unemployment to report other income may seem like a perfectly logical way to insulate state unemployment departments from unlawful abuse of the system. Sadly, due to the multitude of grey areas with regards to what constitutes employment many families are far worse off trying to earn a very modest living on their own as opposed to quietly collecting unemployment funds for as long as necessary until a position offering similar compensation to their previous full time job comes along.
Unemployment insurance rules vary widely from state to state with regards to everything from the amount of compensation ($900 per week in Massachusetts and only $230 per week in Mississippi) to guidelines for filing and continuing to collect funds. Among the many confusing grey areas are: what constitutes full time work, freelance work, part time work, seasonal work, etc. For example, a laid off worker who accepts a job offer for contract work that only lasts a couple of weeks very much puts him or herself at risk of losing future unemployment compensation once the very short term job is complete. In this common scenario the individual faced with the decision of accepting or declining short term work may likely find themselves very soon in the position of not having a job and this time there may not be any unemployment benefits to fall back on. In times of extreme economic hardship an experienced worker can be forced to resort to considering an adult internship when the only other alternative is no productive work at all.
Staff members of state unemployment departments are largely very reasonable and compassionate people. Unfortunately, much of the filing of unemployment claims is automated in such a way that computer systems and bureaucracies can easily cause disruptions where normal human logic would otherwise prevail. Individuals claiming unemployment dollars should make an appointment to sit down and speak face to face with an unemployment representative and go over the multitude of part time work scenarios in order to better understand how those jobs would impact both their immediate and continued ability to collect unemployment funds.
In early November, president Obama signed a legislation to extend unemployment benefits by another 13 weeks in most States and by 20 weeks where unemployment rates is 8.5% or more.
Unemployed workers who have exhausted all of their unemployment benefits this year should start receiving instructions this week on how to claim the new federal unemployment benefits extension.
The Michigan Unemployment Insurance Agency is sending letters to some 70,000 to 80,000 jobless workers who may be eligible for the extension approved earlier this month.
There is also the issue of the end-of-the-year filing deadline. The bill signed by Obama earlier this month, H.R. 3548, grants an additional six weeks of unemployment aid to jobless workers who will have exhausted their benefits by the end of 2009 and live in a state with an unemployment rate at or above 8.5 percent. But because the new law treats the 20-week extension as two separate extensions (one of 14 weeks and one of six weeks) with participants required to exhaust the first 14 weeks before applying for the next six, the December 31 application deadline prevents anyone from collecting the full allotment. (The end of the year is seven weeks away, so no one will have exhausted their initial 14 weeks by then.)
Currently, no fix has been introduced. But some members of Congress are open to the possibility of another broad unemployment extension that could address the deadline glitch and provide additional help to those who lose their insurance after the New Year. And it might be housed in the “jobs bill” Senate Majority Leader Harry Reid (D-NV) talked up last week, although specifics about the scope of the plan were not announced. Keep an eye out on that front.
On Nov 21st President Bush signed into law a bill that Congress approved to keep unemployment checks flowing to jobless Americans through the holiday season.
The legislation provides seven additional weeks of payments to people who have exhausted their benefits or will exhaust them soon. Those in states where the unemployment rate is above 6 percent will be entitled to an additional 13 weeks above the 26 weeks of regular benefits. Benefit checks average about $300 a week nationwide.
This extension will help unemployed Americans looking for jobs. However this is not a blanket rule, and states such as Virginia that have lower unemployment rates do not offer the extension.
The benefits provided would be in addition to 13 weeks of federally funded extended benefits Congress approved last June.
Unemployment insurance is a joint program between states and the federal government that is almost completely funded by employer taxes, either state or federal.
The number of Americans filing for unemployment insurance for the first time rose to a 26-year high on the week ending Dec 21, 2008. This seem to confirm that employers are stepping up job cuts as the worst recession of the recent years deepens.
Initial claims for unemployment benefits rose 5.4 percent to 586,000, the largest number of new claims since November 1982, according to national figures released Wednesday by the U.S Dept. of Labor. The number was higher than economists had predicted and up 30,000 from the Dec. 13 count.
Employers including automakers accelerated firings in the final months of 2008, and job losses for the year are forecast to exceed 2 million. The deteriorating labor market prompted President-elect Barack Obama this week to expand his economic stimulus goals and call for creating or saving 3 million jobs over the next two years.
The Commerce Department said consumers reduced their spending by 0.6 per cent last month, following a 1 per cent drop in October. But the steep plunge in gasoline prices, which is good news for consumers, made the declines look worse.
Excluding price changes, consumer spending would have dropped by 0.5 per cent in October and actually risen by 0.6 per cent in November. The November increase excluding inflation was the best showing in more than three years.
Number of people filing for unemployment insurance benefits rose to 573,000 last week. That means 58,000 more Americans claimed compensation at state unemployment offices than the previous week. What is astonishing is that the unemployment rate reached 26 years record high. Current unemployment insurance claims rate is the highest since Nov. 27, 1982 when initial filings hit 612,000.
US economy was unofficially in recession ever since financial markets meltdown began. It is now official that US economy is in recession and obviously unemployment rates have begun to raise as more and more companies take conservative route by trimming costs to the bare minimum. The economy shed 533,000 jobs in November thereby raising unemployment rate to 6.7%. Some economists are predicting that unemployment will hit 9% by the end of 2009.
This has a viral effect. As companies and individuals cut back on spending, fewer number of goods and services get traded. As number of new trading orders decrease, companies will have to trim their expenses and more job cuts step in. Except for the companies that offer basic necessities such as utilities, medicine, food etc., most companies have no option but to cut down.
State Level Unemployment Picture
Center on Budget and Policy Priorities, a govt. agency reported that 43 states are not able to balance their budget this year, and as unemployment claims raise, states are pinched further. Unemployment benefits are primarily provided by states in partnership with the federal govt. Although unemployment insurance fund is financed by private companies through payroll taxes, state governments will not be able to cope with raising unemployment for too long as they continue to lose tax revenues and will be in a difficult position unless federal govt. comes to the rescue. California state governor has already warned about possible bankruptcy if they don’t receive federal assistance on time. Ohio, Michigan, Florida and several other states are hit hardest due to blue collar job losses.
Unemployment and White Collar Workers
The job loss effect is not just limited to blue collar workers. Fiscal Policy Institute (FPI) of New York state released New York City Unemployment in 2009 report shows that the impact of current economical crisis has spread all over including white-collar jobs, retail, construction, and the service sector.
In New York City, the number of white-collar workers outside the financial industry receiving unemployment insurance benefits has increased by more than 40 percent and the number of college graduates claiming for unemployment benefits is increased by 50 percent in since last year.
Is the economy in such a bad crisis?
Several technical factors could have boosted initial claims last week, a Labor Department spokesman said. The week after Thanksgiving is traditionally the one with the biggest increase in first-time claims, and the government’s seasonal adjustment factors may be overstating the increase this year. Part of the increase in filings last week could simply be administrative catch-up from Thanksgiving week, when most state unemployment offices were closed for two days.
So, just one week’s unemployment report may not provide a full picture and we will have to consider several weeks of data and get past holidays season to get season neutral unemployment rates.
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