Posted by marykeating on July 27, 2010 under Economic situation, Unemployment compensation | 
A new study released by the census followed a group of people over several years (2004 through 2007) to compare their “spells” of unemployment. A spell of unemployment is defined as a period of a month or more that the person was unemployed, for whatever reason.
The study found that younger workers had more frequent but shorter spells and that workers in the age range 45 to 54 had the longest. The length of the spells was longer for more highly educated and for non-white workers. Women were more likely to experience periods of unemployment, but their spells were no longer than that of men.
The study also looked at whether people receiving unemployment benefits were more likely to be unemployed longer; apparently some policymakers believe that the availability of unemployment insurance acts as a disincentive to finding work. The length of the spell of unemployment was several weeks longer among those receiving the benefits. The study did not draw any conclusions from this difference, stating that it may be related to other factors. More interesting was the fact that only 20% of the individuals followed did receive unemployment benefits.
Posted by marykeating on June 3, 2010 under Economic situation |
Robert Reich contributed an op-ed piece for The New York Times yesterday, commenting on the rising numbers of entrepreneurs starting new businesses. American, yes? A symbol of optimism for the economy, right? Well, maybe not.
The age range of the entrepreneurs, and other anecdotal information, make analysts believe that many of these new ventures are makeshift substitutes for what their founders really want, a job. That is, people having trouble finding a new job have hung out their shingle as a consultant. Some are rehired by their old companies as temporary or free-lance personnel, usually earning less and nearly always ineligible for benefits. Others are hampered by the credit environment and the teeming numbers of unemployed people from making at true go of it. In the meantime, by characterizing themselves as “self-employed” these laid off workers are often not in the unemployment count.
Under Maryland law, though, a “self-employed” individual can collect unemployment benefits for the weeks that he or she is not actually making any money from the new business. In the meantime, the effort to make self-employment work may pay off even for people who want a steady job, not to create a startup company. To get contract work, one has to fan out into the network and meet new people; those contacts may lead to employment. Before that happens, the resume does not look as empty of enterprise as does a gap in dates.
Posted by marykeating on April 24, 2010 under Economic situation, Employment benefit issues |
Last week, Congress again extended the reach of the COBRA subsidy. As reported here before, the subsidy was part of the legislation designed to jump start the economy and ease the pain of the unemployed. Instead of paying the full freight of health insurance (plus a two percent administrative fee), the newly unemployed person could pay only 35% of the health insurance premium. The employer paid the rest, and could take an offset from the withholding tax owed to the federal government. In other words, the government pays for the majority of the premium.
This program has been extended not only to last for fifteen months, from the earlier nine, but also applies to those laid off in April or May of 2010. The subsidy is available for people who lose their jobs, not those who quit.
Posted by marykeating on March 30, 2010 under Economic situation |
March came in with a lion’s share of new legislation. On the 18th, the President signed the Hiring Incentives to Restore Employment Act, with the happy acronym “HIRE” Act. Under this law all employers except public entities receive a credit from the United States against the FICA taxes owed by the employer for eligible newly hired employees. FICA taxes amount to 15.7% of an employee’s wages; the employer pays half, and the employee pays half, which is withheld from wages.
For the rest of this year, new hires who were unemployed for at least two months and are not replacements for other employees are eligible for the tax exemption. This provision is intended to prevent employers from firing an employee for no reason other than to hire someone eligible for the tax incentive. Employees who quit or are fired for cause.
Employers who keep the new hires for at least a year are eligible for $1,000 in a retention credit next year.
Posted by marykeating on February 7, 2010 under Employment at will, Unemployment compensation |
The plight of unemployed workers is inextricably linked to the high rate of foreclosures. These are not the stories of people who bought a house on credit that they could, under no fantasy, afford. Those are the extremes, and were never destined to work out.
These are the stories of ordinary people squeezed by daily expenses, but making it until they were brought down by a prolonged period of unemployment. They lose their houses, their credit is smashed, and when they finally get a new job, they remain insecure. A recent New York Times article details only three such examples, but they are surely worth pondering as we see whether the American mindset will permanently change. Our grandparents (or parents or great-grandparents) who lived through the Great Depression were more likely to believe in saving to the point of miserliness, buying nothing on credit, and putting by for retirement. Yet, as the thirties turned into the forties and fifties, the post-war economy soared, social security was available, good private pensions abounded, and people took more risks. Easier, perhaps, when a lifetime at one company was commonplace.
Now many well-educated, well-trained, hard-working people have lived the reality of employment at will. They may not be able to afford a house again, or be able to handle the commitment required. They know that loyalty to an employer is a one-way relationship. Will their experiences change our priorities and choices, or will our native optimism prevent us from redefining the American dream?
Posted by marykeating on December 2, 2009 under Employment benefit issues, Pending legislation |
The discussion about health care reform has increased awareness of the high cost of health insurance for people who are not in a group plan. While employed and in an employer-sponsored plan, an employee usually gets a reasonable plan for a pretty reasonable price, or even free, depending on the employer’s policies. But then the job ends, whether voluntarily or not. If the employer has at least 20 employees, the departing employee is entitled to COBRA coverage for 18 months, in most cases.
With unemployment still high, Congress is now thinking about extending the COBRA coverage for six more months, for those people who lost their jobs between April 1 and December 31 of 2009. In addition, even better for some, the COBRA subsidy discussed here would be extended as well. The subsidy has the federal government picking up 65% of the cost of the premium, which is repaid to the employer by a credit on the payroll taxes. If passed, the new law will be called the “Extended COBRA Continuation Protection Act of 2009.”
It’s hard to think of an interest group that would oppose this law, other than those who think that the government is subsidizing the unemployed too much.
Posted by marykeating on September 28, 2009 under Unemployment compensation |
The New York Times hit another graphic home run with the simple and dramatic illustration of the competition for jobs during this recession. On average, according to its analysis of Bureau of Labor Statistics, there are six unemployed people for each job opening. Even government openings are down, despite certain areas in which the government is hiring.
Since not all jobs are alike, there are regional differences in these statistics. In addition, a major source of pain shows up in the drop in open manufacturing services positions. Many of these jobs do not require specialized certificates or education, and so career-switchers can think about manufacturing openings (as opposed to an open registered nurse position, for example). But competition remains fierce.
This state of affairs makes the unemployment insurance extension all the more necessary.
Posted by marykeating on September 7, 2009 under Unemployment compensation |
The headlines continue to report, cautiously, that we are out of the recession. But the effects of the recession are still with us. And the recovery has not extended to job creation, at least not yet.
Today’s New York Times explains that unemployment data can be misleading since the percentage of the unemployed counts only those who are actively searching for work. The article focuses on four people, typical of many, who lost their jobs and after numerous fruitless searches for new work, have essentially given up. They may stay home with the kids, go back to school, retire, or simply hang on until times get better. Others are working part-time, but would work full time if they could. If the jobless rate included the “discouraged” and the “marginally attached to the labor market” categories, unemployment would stand at 11%, rather than 9.7%.
The last local report from the Bureau of Labor Standards for Baltimore/Towson is from May; so it does not show any bright spots. For those employed though, state-wide average compensation rose by 2.5% from June 2008 to June 2009.
Posted by marykeating on August 4, 2009 under Employment at will |
According to an article in today’s New York Times, the difficulty of bouncing back from a layoff turns out to be permanent for many workers. The article quotes an economist whose longitudinal study of workers laid off in an earlier recession, in and around 1982, proves statistically what many feel: in many cases, the middle-aged, middle income worker loses a job, and never regains his original wage level. The study concludes that people who stayed in one job the longest were hardest hit, perhaps because they had become such specialists. Not only that, those who had been laid off once were more likely to face the same fate in the next economic downturn, since their tenure was shorter.
I do not have the economic chops nor remember enough about statistics to evaluate the methodology, though it certainly seems to have been thoroughly considered. The authors primarily focus on men’s experiences, but decide that women’s experiences track the same way.
The authors of this study do not take on the challenge of suggestions for an individual to escape the 20% long-term earnings reduction that befell the average laid off worker. From a societal perspective, however, they note the following:
In particular, while the ability to fire ‘at will’ may benefit adjustment in
the labor market as a whole, the costs in terms of lost productivity and earnings of individual
workers may be much higher than typical replacement rates of unemployment insurance or
other programs designed to smooth temporary earnings fluctuations.
(See page 20 of the study).
I haven’t been hearing a groundswell of support for enacting a termination with cause standard, and don’t expect it to begin in Maryland. So, in the meantime, employees need to keep in mind that loyalty to an employer is largely a one-way street. Recommendations on avoiding a permanent reduction in a standard of living after a layoff include things that your mother told you, and things your geeky nephew can tell you. Mom would say live below your means, you never know how long the good times will last. And Stan the high- tech man can teach you to leverage social networking like LinkedIn (here is my profile) and other sites, and to keep track electronically of your friends and acquaintances, so you can get a great job search going when you need to.
Posted by marykeating on July 30, 2009 under Unemployment compensation |
The federal government announced today that it was sending more relief to the states, in the form of supplements to their unemployment services.
Maryland will receive $1,019,462 to begin a Re-employment and Eligibility Assessment (REA) Initiative. The funding will pay for counseling, assessment, and crafting individual work-search plans for unemployed people whose industries may have dwindled or disappeared.
