It’s no secret that the Job market is struggling. In fact, it is down right UGLY. Numbers are tossed around every week, but what we hear in the media could be a bit misleading.
We all know that without Jobs it is going to take a miracle for the economy to recover. Why is that? The short answer is this – without Jobs, people don’t spend, without spending, merchants don’t sell, inventory levels swell, manufacturing slows, company profits dwindle, people get laid off…and the cycle continues.
Each week we get a read on jobs. First up to bat on Wednesdays is the ADP report. They give us a forecast of what the private sector might look like. I say “might” because their batting record isn’t so hot. Then, next up to the plate is Initial Claims and Continuing Claims on Thursday. And the big enchilada comes once a month – the first Friday – THE all important Jobs report.
Let’s break this down and keep it simple:
- Initial Claims – (aka New Claims) people filing for unemployment for their very first time
- Continuing Claims – people that are unemployed and still looking for work
Here is what unemployed folks can anticipate:
Unemployment benefits are 26 weeks
Then there are the numbers you don’t hear about – –
Extended Benefits – an additional 13 to 20 weeks, based on the state unemployment rate
Emergency Benefits –
Tier 1 – 20 weeks
Tier 2 – 14 weeks
Tier 3 – 13 weeks where total UE is 6% or higher
Tier 4 – 6 weeks where total UE is 8.5% or higher
And now an additional tier (Tier 5) has been proposed by Senator Debbie Stabenow (D) for what is termed the “99ers” (people who have exhausted all 99 weeks of unemployement) . If they live in a state with 7.5% unemployment or higher, they would get a proposed additional 20 weeks.
Last week we added another 484,000 people who signed up for the first time to receive their unemployment benefits. Today, it was another 500,000 people. These are just awful readings which shows us that the “recovery” is still sucking wind.
Continuing Jobless Claims remain at 4.5 million, which does not include “discouraged workers” and in addition, many folks saw their benefits expire. Look for these folks to eventually roll over to the Emergency Unemployment Compensation benefit category.
If we look to all the folks unemployed…we are hovering near 17% unemployment.
Doing the Math –
Naturally, we all want to see this improve. The administration has thrown around a number of 6% unemployment as a 5 year target. Our budgets are based on this 6% figure. But how do we get to a 6% target for unemployment from these lofty levels? Great question.
First – we need to account for population growth. Births per women average 2.1%. And don’t forget immigrants – those folks need to work also. For population growth alone, the U.S. needs to add about 125,000 jobs per month.
Second – we are close to 10% unemployment (and this does not include the discouraged workers and those no longer receiving benefits. So let’s do this math using the 10% figure.
There are 150 million people in the labor force.
That means 15 million unemployed (using 10% as our factor).
The administration says 6% is their target, or 9 million people. Which means we need jobs for the difference ( 15M – 9M = 6 million jobs).
To create 6 Million jobs for the currently unemployed over 5 years (60 months) = 100,000 jobs per month each month for 5 years.
Add this 100,000 to the 125,000 we need for population growth and we are at a whopping 225,000 new jobs per month for every month over the next five years.
We have only done that for a mere 12 month span once in the history of our country…which was 2006. To accomplish this month after month for 60 months seems like pie in the sky.
As I mentioned before, there is a link between Payroll Taxes and Jobs. That could help. Bottom line is this – to get the economy going…we must put people back to work.