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Monday January 25, 2010 - 18:00:41 GMT
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Initial Jobless Claims and Long Term Unemployment
Two of the most cited economic indicators over the past year
have been first time jobless claims and continuing jobless claims. Both have
declined by a third since their respective peaks in the spring and summer of
In one five day period in March 2009 674,000 newly unemployed
workers filed for compensation. By January 15th the number of new filers had
fallen to 482,000. Continuing claims in June were 6.904 million, by the first
week of January they had dropped to 4.617 million. From these two statistics it
would seem that not only are fewer people being laid off but that many fewer
require extended government support. The first assumption is true, the second is
Initial and continuing claims are only the two best known of a
series of statistics collected by the Bureau of Labor Statistics (BLS) relating
to jobless claims and unemployment insurance. Two lesser known figures, extended
claims and emergency claims illustrate the long term hold that government
unemployment assistance has taken in the work force. When the emergency claims
figures in particular are included in the picture of unemployment the image is
not one of steady improvement but of rapid and substantial deterioration. More
people than ever are unable to leave the government insurance rolls because they
cannot find work. The analytical focus on initial and continuing claims has
given a false reading on the nature of the recovery and the jobs dilemma.
Initial jobless claims record the actual number of people who file for
state unemployment benefits in any week under the joint federal and state
program established in 1935. Recipients must meet state requirements that vary
with the jurisdiction but fit within Federal guidelines. The programs are
jointly funded by the Federal and state governments and administered under local
law. Eligibility periods vary from state to state but all are time limited.
Before the recession most states restricted the collection to 26 weeks. Under
pressure of rising unemployment both levels of government have enacted several
extensions of this jobless insurance program.
Continuing claims track
the number of people who have received unemployment benefits for at least two
weeks. These people remain on the continuing roll until their eligibility
period, which stems from the initial filing and as extended by law, has expired.
This number has been falling, as noted above, in tandem with initial claims.
However, when unemployment insurance eligibility from that initial claim
expires people may qualify for two additional programs that prolong the payment
of compensation. These are called by the BLS â€˜extended unemployment insurance
benefitsâ€™ and â€˜emergency unemployment compensation benefitsâ€™. Eligibility
criteria for the three programs are not identical and the extensions may require
a separate application, though generally they do not. The number of people
enrolled in the larger of these two programs, emergency benefits, has been
rising at a faster rate than the continuing claims and extended benefits rolls
have been shrinking.
From the June peak of 6.904 million continuing
claims have dropped by one third to 4.617 million in the January 1st week, the
last for which all three long term benefits have data. Likewise the number of
folks receiving extended benefits has slid from 522,000 to 263,000, a 50%
improvement. But at the same time the number of recipients of emergency benefits
has skyrocketed. In that June week 2.597 million were on the emergency list, by
the first week of the New Year that total was 5.655 million, the highest to
date, and more than double in six months.
The total number of workers
receiving some type of unemployment compensation under these three programs has
gone up by more than half a million in six months, from 10.023 million in June
to 10.535 by January. If one looks a little further back to late March when the
three roll total was 8.069 million, the group of workers needing help has
expanded by 2.5 million, a 30% burst in nine months.
US job destruction
may have largely ceased but employment is not improving; it is worsening.
Individuals have not left the unemployment rolls and returned to work, they have
simply shifted from one statistical category to another as their terms expired.
They have gone from the continuing claims and extended rolls to the emergency
The net job drought is almost complete. Long term unemployment is
rising. The longer joblessness remains elevated the more it threatens to create
a higher structural unemployment rate. Job skills and even the interest in
working deteriorate over time. If the economy does not begin to produce jobs
soon then people at the margins of the employment world may become unemployable
and permanent wards of the state.
IMPORTANT NOTICE: These comments are
for information purposes only. Past results are not necessarily indicative of
future results. FX Solutions, LLCÂ® believes that customers should be aware of
the risks associated with over-the-counter, spot Forex. Forex trading is highly
speculative in nature which can mean currency prices may become extremely
volatile. Forex trading is highly leveraged, since low margin deposits normally
are required, an extremely high degree of leverage is obtainable in foreign
exchange trading. A relatively small market movement will have a proportionately
larger impact on the funds you have deposited. You may sustain a total loss of
your funds. Since the possibility of losing your entire cash balance does exist,
speculation in the Forex market should only be conducted with risk capital you
can afford to lose which will not dramatically impact your lifestyle.
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