Record Unemployment

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Here is a major reason that a depression hasn’t appeared and the public is not in open revolt.

AP: 20 million-plus collect unemployment checks in ’09 A record 20 million-plus people collected unemployment benefits at some point in 2009, a year that ended with the jobless rate at 10 percent…

The slow pace of hiring will force Congress and the Obama administration in 2010 to spend as much as $70 billion to extend jobless aid for the long-term unemployed, or else let benefits – which were extended several times in 2009 – expire for millions of people.

“Fewer people are getting fired, but nobody is finding a job,” said Dan Greenhaus, chief economic strategist at Miller Tabak.

Thursday’s report illustrates the two different trends: first-time jobless claims are falling as layoffs ease, but the total number of people collecting unemployment checks is still rising.

More than 10.1 million people collected jobless benefits in the week of Dec. 12, the latest data available. That’s up by about 200,000 compared with the previous week. That figure includes 5.3 million people receiving the 26 weeks of aid customarily provided by the states, and 4.8 million people that have shifted to the extended benefit programs enacted by Congress over the past two years and paid for by the federal government. Unemployment insurance averages about $300 per week.

But the extensions are set to expire in February. That could mean as many as 1 million people would run out of unemployment aid in March, according to the National Employment Law Project, a nonprofit group…

Most pundits and the usual Street shills and their confederates in the media ignored the dire news about so many people on unemployment benefits so they could trumpet the modest decline in jobless claims.

Financial and economic history shows that the lower rungs on the chain experience hardship first, like with subprime mortgages. Then there is an inexorable march up the food chain.

However, in this crisis, the welfare checks, food stamps and unemployment benefits are still rolling so there has not been as much impact, including political angst from this segment.

The people experiencing the biggest impact are the middle and upper middle (merchant) classes. This will devastate the Treasury. As entitlement and safety net spending soars, the minority of citizens that pay taxes and foot the bills for the majority of the populace are being squeezed. So taxes decline.

In 2008, and estimated 46.7% of US citizens did NOT pay federal taxes. Given the sharp increase in unemployment and the destruction of small and media businesses, over 50% of the US probably will pay no federal income taxes in 2009.

From the above AP story: The drain on federal and state finances could force Congress to consider raising the federal unemployment insurance tax, which is currently 0.8 percent on the first $7,000 of wages, or making other changes.

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Source:
20 million-plus collect unemployment checks in ’09
CHRISTOPHER S. RUGABER
AP, Dec 31, 3:10 PM
http://apnews.myway.com/article/20091231/D9CUGAHG2.html