Articles Posted in ‘ Economy ’ Category
Filing for Unemployment – Now the white collar workers turn
Tuesday, December 16th, 2008Number 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.