Unemployment Drops as Lawmakers Debate Benefits Extension
By Unemployment-Extension.org | May 27, 2014 at 5:30 AM |
The U.S. unemployment rate for April hit its lowest level since George W. Bush was president as federal lawmakers continue debating a potential extension of benefits for the long-term unemployed.
The 6.3 percent jobless rate reported by the U.S. Department of Labor Statistics for April is encouraging on the surface, but a close examination suggests the nation’s jobs market mostly is stagnant, and more people are shifting to government dependency rather than continuing to look for jobs. A shrinking U.S. labor force also is reducing the unemployment rate, with some 806,000 fewer available workers in April than in March.
Baby Boomer Retirements Partly Spur Unemployment Drop
Some economists attribute retiring baby boomers as part of the reason for the drop in unemployment, but federal labor figures indicate the percentage of baby boomers dropping out of the workforce due to retirement or other reasons is about the same as for other age groups. A lot of baby boomers have extended their working years to make up for retirement funds lost during the Great Recession.
Many younger adults also are choosing to stay in school longer while awaiting improvements in the nation’s economy and jobs market. Instead of looking for jobs after finishing undergraduate degrees, a lot of college graduates are pursuing graduate degrees and second or third bachelor’s degrees to boost their marketability while buying time.
Decreased Labor Force Participation
While there are fewer unemployed reported in April, the month also recorded the lowest percentage of available workers employed since the 1970s. Less than 63 percent of the potential U.S. labor force actually has jobs, according to the U.S. Bureau of Labor Statistics. Among reasons cited for the low participation are an aging pool of workers as baby boomers reach retirement age and a weak national jobs market.
Reflecting that weak jobs market, federal jobs data indicate fewer men between the ages of 25 and 54 were employed in April than in March. Males in that age range are considered to be the primary component of the nation’s labor force, but jobs data show a slight drop from 83.7 percent employed in March down to 83.3 percent in April. While more than 83 percent of the available prime workforce holding jobs might seem promising, the percentage is much lower than prior years, when as much as 90 percent of the prime workforce held jobs.
Underemployment and Low Wage Increases
Another contributing factor to the apparent drop in April’s unemployment figures is the amount of people in the U.S. who either stopped looking for work or accepted part-time jobs that pay substandard wages. The percentage of U.S. workers who either stopped looking for work due to economic reasons or accepted low-paying and mostly part-time jobs dropped to 12.3 percent in April from 12.7 percent a month earlier.
Reflecting the lower pay many workers have accepted a relatively stagnant increase in yearly earnings. Workers since late 2009 have averaged about a 2 percent increase in pay each year, which is less than the rising cost of inflation. If inflation outpaces wage increases, earning power decreases along with spending power. And when spending power lessens, people buy less, resulting in economic stagnation and reduced revenues at all levels of government.
Long-Term Unemployed Rate Remains High
That economic stagnation is evident in the high percentage of long-term unemployed, who are the primary targets of federal lawmakers’ efforts to enact another federal unemployment benefits extension. More than a third of people drawing unemployment benefits are long-term unemployed who have been out of work for more than six months. The percentage of long-term unemployed drawing benefits inevitably will rise if federal lawmakers approve an extension.
While awaiting news of an unemployment extension in 2014, unemployed and underemployed workers can contact their respective state unemployment offices and ask about free jobs-training programs. Many offer free certification courses for obtaining commercial drivers licenses, forklift training, office staff training, and other free courses and jobs-training programs designed to enhance the skill sets unemployed workers have to make them more marketable in an ever-changing jobs market. Some also can qualify for grants to attend a community college or university to obtain more training.
Disability Benefits Dependency Sets Record
With more than 800,000 fewer people working, federal, state, and local governments take in less tax revenue. At the same time, the number of people drawing federal disability benefits has hit an all-time high of nearly 11 million. Some 10,996,447 people in the United States collected federal disability benefits in April, according to the U.S. Social Security Administration.
The record amount is about 20 percent higher than when President Barack Obama took office in 2009, when the number of people collecting disability benefits was about 9 million. The number drawing disability also means the federal program has reached a point of insolvency after posting surpluses the 15 years prior to Obama taking office, according to the Cato Institute.
The U.S. Social Security Administration runs the disability program, and the program has recorded budget deficits since 2009. Five of the 19 years that the federal disability benefits program has run deficits occurred under the current president, with 2014 likely to become the sixth-straight year under the Obama administration and the 20th year the program has run a deficit during its 58 years in existence.
Contact State Unemployment Departments for Updates
With a continued weak jobs market, many who remain unemployed are hopeful for a federal unemployment benefits extension to help bridge the gap to hoped-for better economic times. To stay abreast of any changes in unemployment benefits extensions, those searching for jobs should continue monitoring news sources while also accessing their respective state unemployment departments. Each should offer up-to-date information on any changes to the federal unemployment benefits extension program.
Many economists suggest that with the retiring baby boomer generation, by 2020 there will be a much smaller workforce available, regardless of what the economy does in the meantime. That should be good long-term news for many who are unemployed now.
*IMPORTANT: Be sure to check with your State for details on your full eligibility requirements, or to begin the voluntary benefits process.