Sunday, June 28, 2009

15 States have borrowed Federal Funds to pay UI benefits

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According to Data from May, 2009---14 states have borrowings from the federal government for funding of their depleted unemployment insurance funds---and in the coming months several more states will be added to the list.

Michigan, California, New York, Ohio and Indiana have borrowed the most money---while Arkansas, Kentucky, Missouri, New Jersey, North Carolina, Pennsylvania, Rhode Island, South Carolina and Wisconsin also have borrowed funds.

Saturday, June 27, 2009

Worst Unemployment Exhaustion Rate in over 25 Years

The US Department of Labor publishes numbers that detail how the annualized rate of exhausting unemployment insurance benefits changes over time.

The current rate is almost 50% of UI recipients are slated to have their benefits expire in the coming year. This is the highest rate since around 1940---And as you can see in the chart below---by far the highest rate seen in the last 25 years.

Click Image for a Clearer View

So what's the significance of this? On a social stand-point that means more and more people will be losing the government safety net this year and may be forced to look for other government assistance (food-stamps, welfare)---and it also means that in the coming months when economic reporters start telling us about how the "Continuing Claims" for UI benefits is declining, we'll have to be asking, "sure, but how many people have exhausted all their benefits rather than actually finding work?"

Thursday, June 25, 2009

Decade of Lost Jobs

Business Week recently published data that shows how many jobs were created and lost by industry during the last decade (May 1999 to May 2009).

The data is plotted below

Click image for a larger chart

What is most noticable is that 5.4 million jobs were lost in the American manufacturing sector---This is a result of cheaper foreign labor driving more Americans from the goods-producing sector and into the service sector.

In total, a little over 3 million jobs were created---With 2.9 million of thoes jobs coming from Private Health Care... It's easy to understand why---health care inflation has significantly outpaced overall inflation for the entire decade, and with the aging baby boomers---more and more people are qualifying for government care---People go to where the money is and money is in health care.

Wednesday, June 24, 2009

NPR Reports on Long Term Unemployment

NPR reports that the rate of Long Term Unemployed (people out of work for 6 months or more---has tripled in the last year to over 4 million people).

The 3 minute story also includes a couple of human interest stories about some jobless Americans.

Monday, June 22, 2009

Oregon Increases the Maximum Weekly Unemployment Benefit Payment

According to the Portland Business Journal, the maximum weekly unemployment insurance benefit for Oregon's jobless is going to climb to $493/week beginning June 28th, 2009.

Oregon reported an unemployment rate in May 2009 of 12.4%--This is one of the nation's worst unemployment rate and the state's jobless will really be able to put the increased weekly payments to meaningful use.

White House states the obvious--unemployment will breach 10%

According to the AP the White House has finally recognized something that seems completely obvious---"The United States will see 10% Unemployment in a few months".

Now with the may unemployment rate being 9.4% and more than a dozen states suffering from double-digit unemployment, it's all but guaranteed that you'll be seeing the average unemployment rate breach double-digits in July 2009.

Sunday, June 21, 2009

5 More States have Double-Digit Unemployment in May

Click for a larger Chart

Things continued to worsen in the month of May for many states. An additional 5 States (TN, IN, KY, FL & IL) and Washington DC saw their unemployment rates jump to over 10% in May 2009.

Now 13 states have unemployment rates breaching double digits with Michigan, Oregon, South Carolina, Rhode Island and California rounding out the top five.

In two short months the states that make up this list have seen, on average, their unemployment rate rise by 0.8 percentage points.

Click for a Larger Chart

The State of California reported that things got worse in May 2009 as the unemployment rate for the Golden State jumped to 11.5%.

This is the highest rate of unemployment since records began being kept over 30 years ago---And there are currently over 430,000 Californians who have been without a job for over 6 months... California is ground zero of a negative feedback loop where property prices are falling, causing more people to lose their jobs, cause more people to lose their homes.

Friday, June 19, 2009

China's solution to the unemployment problem

According to the AFP, Chinese government officials have an idea to reduce the ranks of the nation's unemployed.

China is likely have over 40 million people lose their jobs this year as manufacturing and construction jobs evaporate as the export heavy communist country suffers from a severe slow down in exports. So what's their idea to reduce the unemployment rate? Train people to become housekeepers---The thought is that as the ranks of China's middle class continues to grow and there are plenty of Dual-Income families, the demand for housekeepers is not currently kept.

My guess is that this initiative while it makes for interesting news---it won't cause a meaning decrease in the unemployment rate in China.

Wednesday, June 17, 2009

Michigan's Unemployment Rate in May tops 14%

Click for a Larger Chart

According to the Detroit News, the jobless rate in Michigan reached 14.1% in May 2009---This compares to 9.4% in the entire United States in May.

The unemployment rate for Michigan was the highest in nearly 3 decades and comes as both Chryler and GM entered bankruptcy.

Monday, June 15, 2009

$25 + $25 + $25 + $25 = -$200

According to US News and World Report there are many people that are actually hurting more after the Congress and Obama approved giving unemployed workers collecting unemployment insurance an additional $25/week.

Essentially, for some people in some states who were collecting unemployment and food-stamp benefits---they found themselves making "too much money" to qualifiy for food stamps after they started receiving the $25/week bonus payments. So---that means for an incremental $100/month, these select few are actually receiving $300 less in food stamp benefits---hense 4x$25 = -$200.

Thursday, June 11, 2009

BLS's Birth Death Model says that 1.2 million jobs were created in the last year

According to the Bureau of Labor Statistics almost 1.2 million jobs have been "born" since April 2008. I don't think I believe it.

First a little bit of information for why they use a Birth-Death model:

In 2008, the CES sample includes about 150,000 businesses and government agencies drawn from a sampling frame of Unemployment Insurance tax accounts which cover approximately 390,000 individual worksites. The active CES sample includes approximately one-third of all nonfarm payroll workers. The sample-based estimates are adjusted each month by a statistical model designed to reduce a primary source of non-sampling error which is the inability of the sample to capture, on a timely basis, employment growth generated by new business ormations.

There is an unavoidable lag between an establishment opening for business and its appearing on the sample frame and being available for sampling. Because new firm births generate a portion of employment growth each month, non-sampling methods must be used to estimate this growth.

In the last 14 months the BLS says that of the ~1.2 million jobs created, 156,000 have been in construction (doubtful with complete crash of the housing market), 153,000 in the "Trade, Transportation and Utilities industry, 200,000 in Professional & Business Services, and 458,000 in Leisure & Hospitality.

Call it intuition---but since the Great Recession started, I find it hard to believe that there have a net 1.2 million new jobs---I would think that there would have a been a net million job job losses---If you disregard, the net "births"---I believe the unemployment rate would be almost 1 percentage point higher (around 10.2%)---And if you believe that there have a net-reduction of jobs from small businesses, the unemployment could actually be closer to 11% (vs. 9.4% 'as reported' in May 2009).

Monday, June 8, 2009

Detroit's Unemployment Rate ~23%

Click on Chart for a Larger Image

Data from the state of Michigan shows that the state's largest city--Detroit--is suffering from an incredibly high jobless rate. Almost 23% of Detroiters were unemployed in April 2009---This compares to almost 13% of all Michiganders being unemployed.

Detroit suffers from lackluster politicians, a poor school system and a high crime rate--with these persistant negative conditions, it's likely that the city's unemployment rate will continue to outpace both the state's and nation's average unemployment rate for years and years to come.

Update July 2009--Check out the latest Detroit Unemployment Rate Data Here

Sunday, June 7, 2009

California's Unemployment Trust Fund $2.35 Billion underfunded

Click Image for a Larger Chart

According to California's Employment Development Department (EDD), the state's unemployment insurance trust fund is currently at a $2.3 billion deficit and is increasing the deficit by ~ $700million a month.

Things are likely to get worse for the state because its unemployment rate continued to climb in the month of May (not shown on the chart)--and is likely to continue to climb for a few months---So that means fewer employers paying taxes into the system, and more unemployed workers collecting benefits.

Unemploy-MAN-rate is worse than the Unemploy-WOMAN-rate

Mark Perry reports on why the unemployment rate for men in this great recession is notably higher than the unemployment rate for women.

Friday, June 5, 2009

30 years of Unemployment Data

This morning I wanted to look at the last 30 years of unemployment rate data. As you can see below from the chart from the bureau of labor statistics, there have been essentially 6 different peaks of unemployment during the last three decades.

What I wanted to compare was the trough-to-trough paths of unemployment rates during different recessionary periods (See Chart below).
Click on Chart for a Clearer Image

There are a few items of interest to me:

1) Typically, the unemployment rate rises faster and quicker than what it falls.

2) The worst unemployment seen in the last 3 years was 10.8% in late 1982 (Red Line)---And it took over 6 years for the unemployment rate to drop to cyclical lows in 1989.

3) The current recession (Green Line) has seen the quickest, steepest increase in unemployment of any of the six past cycles during the last 30 years. In 26 months, the unemployment rate has increased 5 percentage points. The previous cycle ranged from 1.6 percentage points to 3.6 percentage point increase in 26 months, with an average of 2.3 percentage point increase. That means that this recession has seen the unemployment rate increase 2x's the average rate during the first 26 months.

The chart below shows The Change In Unemployment Rate for the same cycles---since the chart above shows the actual unemployment rate, it's difficult to gauge the change in unemployment rate. The chart below more clearly shows that this recession has seen unemployment rates jump quicker than an other recession in the past 30 years and is just a few basis points away from being a bigger increase than what was seen in the early 1980's.

And you can rest assured that with the additional layoffs coming from GM, Chrysler and their dealers, the unemployment rate will cross 10% and be worse than the recession of 25 years ago.

Click on image for a bigger chart

1 in 6 American Workers Unemployed or Underemployed

The Bureau of Labor Statistics today reports that the unemployment rate was at 9.4%. This is the first time in 27 years that the unemployment rate has been since August 1983.
Click image for a larger chart

The U6 unemployment rate, which includes people working part-time jobs even though they'd rather be working full time, has risen by 0.6 percentage points in the month to 16.4%---That means that 1 out of every 6 American workers are either out-of-work or working part time jobs even though they want to work full time.

Since the start of the recession in December 2007, the number of Americans unemployed have increased by 7 million! You can read the entire jobs report here.

Wednesday, June 3, 2009

California's Unemployment Insurance Fund could be $18 Billion underfunded

The SF Gate reports that the state of California could see it's unemployment insurance system run an $18 billion deficit by 2010.

The state currently taxes employers ~$434/employee per year to fund the unemployment insurance trust fund---this calculation hasn't changed since the mid 1980's even though the average weekly payout to the jobless has increased to a maximum $450 per week of unemployment benefit.

The state which has already run into issues with balancing its books will defiinitely see legislators debate this issue---Either raise taxes on employers, cut benefits to the jobless, or both.

Tuesday, June 2, 2009

Tennessee Increases the Unemployment Insurance Tax by $100+/employee

According to Forbes, the state of Tennessee is going to be raising the taxes that imposes on employers in order to fund the state's unemployment insurance program.

The average tax per employee will rise by ~$108/year, as the tax rate is increased 0.6 percentage points and taxable wages are increased from $7,000/year to $9,000/year---However there is a provision to lower the tax once the unemployment trust fund crosses $900 million.