Many recent economic data releases aren't making sense to a wide swath of the American population. Specifically, a number of data series' - such as new/existing home sales, home prices, GDP, mortgage originations, and now even The Employment Situation - would seem to indicate that the economy has spent the past several months dusting itself off and proceeding towards recovery. The sheer length and depth of the current recession however, necessitates the following and inspection of a handful of alternative economic indicators. Particularly I would argue, we should be examining a trend that is buried deep in the Bureau of Labor Statistic's monthly employment report: the Long Term Unemployed.
One of the few, but most widely appreciated, safety nets afforded to Americans are unemployment benefits; usually a meager pittance compared to what you were earning at your job prior to dismissal, but nonetheless satisfactory at putting food on the table. The magic number for unemployment benefits used to be 27; that was the number of weeks one could typically expect to receive weekly payments from the State after being laid off. The American Recovery and Reinvestment Act a.k.a "the stimulus", increased that number to 52 weeks, or an entire year for some of the harder hit states such as North Carolina. Despite the increase though, 27 weeks is still a standard that can be applied to a majority of the US population. With that in mind, the figures contained in Table A-9 of the Employment Situation are very relevant. Specifically, the last row of the table lists the number of persons who have been unemployed for 27 or more weeks. For July, that number reached 4,965,000 - an increase of 584,000 persons from the month of June. The increase in the number of long term unemployed is even more shocking when you trace the data series back to March of 2009 - a time at which there were 1,783,000 fewer people unemployed for 27 or more weeks.
The social safety nets that exist in this country are beneficial both for the individual receiving assistance, and the economy as a whole. The economic benefit of unemployment benefits should be self evident. The question that remains largely unanswered is to what extent will a massive exhaustion of unemployment benefits affect the economy and, realistically, society. Going forward, the portion of the Employment Situation that may deserve the most attention is not the headline unemployment rate or the decline in non-farm payrolls, but the number of long term unemployed. This is the segment of the unemployed population which presents the most profound strain on the economy; and their numbers are rising.
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