Out of Benefits and Out of Luck
-- February 5, 2004
Friday, you'll hear plenty about the nation's unemployment rate, which is expected to end up in the neighborhood of 5.7%-to-5.8%. But what you likely won't hear much about is the number of people who have totally exhausted their unemployment benefits.
In January, approximately 375,000 workers completely ran out of unemployment benefits. This is the highest one-month number on record. If you think times were bad when you take in $275 a week from the Department of Labor, try making absolutely nothing. What is especially alarming is that this number is projected to grow to a whopping 1.9 million people by June, according to the Center on Budget and Policies Priorities.
In response, the House of Representatives voted to reinstate a six-month extension of the unemployment benefits program yesterday. However, passage in the Senate is not as clear - nor is passage of the final appropriations bill that would be needed to fund the program.
But even if this bill is passed, tomorrow's unemployment rate will not reflect the true picture of the labor market. According to the Labor Department's calculation of the unemployment rate, only workers who currently receive unemployment benefits are counted.
Rather, they show up in an obscure statistic called the "exhaustion rate" which measures the percentage of workers who have exhausted benefits offered to them six months ago. The exhaustion rate hit 43.4% in December and has been above the 40% level since August 2002 - that's sixteen straight months. Compare this to the recession of the early 1990s when this figure topped out at 40% for a grand total of two months - once in 1992 and once in 1994.
So, while the market lauds the fact that the unemployment rate is "stabilizing" or even falling, remember that there's more to this than meets the eye. As the people who show up in the exhaustion rate will tell you, the unemployment situation is far worse than the Department of Labor's unemployment rate figures would lead you to believe.
Wall St Edges Up Ahead Of Jobs Data