Unemployment Benefits Set to Be Extended Again
In what will be happy news for millions of unemployed Americans, the government is set to extend unemployment benefits again. In what is now one of the longer recessions on record, some workers have been out of work and on government assistance for two years.
Republicans are trying to block the extension, saying that they will not give their support unless the government finds a way to pay for the estimated $34 billion plan without having to borrow money from China or elsewhere. Republicans want matching budget cuts in other areas.
Democrats argue that the most important thing is to get the aid to people who need it and that Republicans should stop stalling when they know that Democrats have enough votes to pass the measure.
Around 8 million Americans have lost jobs since the recession began. This bill will provide money to 2.5 million people who have collected for so long that they are now ineligible.
The looming vote comes as the Bureau of Labor Statistics (bls) officially reported that unemployment rates hover at 9.5 percent. The rate has fallen slightly lately, not due to job creation but to discouraged workers dropping from the unemployment rolls. The more comprehensive number, less published by the bls,shows unemployment at 16.5 percent. However, independent analysts, such as statistician John Williams, says that after accounting for the long-term unemployed, the actual jobless rate is 22 percent—not far from the 25 percent level of the Great Depression.
This number is almost identical to the slightly greater than 22 percent unemployment rate that TechnoMetrica Market Intelligence found based completely upon actual household surveys as opposed to government models which include complex formulas like the “birth-death model” that adds in jobs that are supposedly created but missed by surveys.
With unemployment stubbornly high and barely improving if at all, people are looking for answers.
To just tread water, the economy must generate 127,000 new jobs per month, simply to compensate for college graduates entering the workforce. This pressure has intensified as the recession has forced older Americans to work longer before retiring.
JP Morgan Chase chief investment officer Michael Cembalest has another theory as to why the current administration has had such difficulty creating jobs. According to Cembalest, President Obama’s “current cabinet has almost no private-sector experience” (emphasis mine throughout).
Cembalest said that he collected data on presidential cabinets back to 1900. He compiled the prior private-sector experience of all 432 cabinet members from the individual administrations, focusing on those positions that would be involved in job creation efforts (secretaries of State, Commerce, Treasury, Agriculture, Interior, Labor, Transportation, Energy, and Housing and Urban Development).
According to Cembalest, one startling conclusion was evident: “The current administration, compared with past Democratic and Republican ones, marks a departure from the traditional reliance on a balance of public- and private-sector experiences.”
Cembalest’s analysis shows only 22 percent of President Obama’s cabinet-level appointments have had previous meaningful experience working in the private sector. The rest have spent most of their lives working for the government. That compares (approximately) to the cabinets of:
Small businesses create the majority of jobs in America. Yet the majority of government officials appointed to promote job creation have very little experience in the real world. The men making the laws and regulations governing businesses in America haven’t actually had to run a business themselves.
If you wanted to learn how to operate a commercial farm, would you consult a dietitian—or an actual farmer?
Yet, the decision to pack the current cabinet with government bureaucrats was likely a calculated decision. At a time when America was furious with Wall Street and hundred-billion-dollar bailouts, the administration may have wanted to distance itself from big business. As Cembalest pointed out, one of U.S. Treasury Secretary Timothy Geithner’s own deputies once remarked: “Why would we consult the very executives who got us into this mess?” Congressman Barney Frank said, “The private sector got us into this mess. The government has to get us out of it.“
The unemployed are surely grateful that politicians are extending unemployment benefits: Estimates vary, but according to the Federal Reserve, unless things rapidly improve, it will take five years for the unemployment rate to return to pre-crisis levels.