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Unemployment plummeted to 6.6% in January ... Why?

  1. My Esoteric profile image89
    My Esotericposted 2 years ago

    Unemployment hasn't been this low since 2008 while 113,000 more jobs were added during one of the worst winters America has seen.  E\What do you think?

    1. wilderness profile image96
      wildernessposted 2 years ago in reply to this

      I think the extended benefits ran out in Jan, taking a great many people off the unemployment rolls.

      And the people that claim unemployment plummeted as a result of not drawing unemployment insurance are lying through their teeth.

      1. My Esoteric profile image89
        My Esotericposted 2 years ago in reply to this

        They ran out starting Dec 28 and have continued to run out to the tune of about 70,000 per week.  So, far over $2 billion has been lost to small business as a result.

        But, you are right, the initial analysis does show the .1 drop wasn't due to people leaving the labor force, but that is coming; it can't be helped.  One big incentive of unemployment benefits is that you had to keep looking.  But why bother now, employers won't hire you anyway, statistics are showing, because you have been out of work too long anyway.

        1. wilderness profile image96
          wildernessposted 2 years ago in reply to this

          Two billion has been lost?  Lost how?  Who lost it? 

          But for the rest - I agree.  I retired early myself - too old to find work in my field and not about to flip burgers when I can collect some of what I've paid for for 40 years.  And my wife, just as rhamson said, got laid off from a major manufacturer near us.  With skills specific to that company and no other, she went to school and got a new skill - to find that no one wanted a woman approaching 60.  Not when the field is crammed with young (healthy) kids that will work for peanuts because they don't have the living expenses that mature people do.

          1. My Esoteric profile image89
            My Esotericposted 2 years ago in reply to this

            Unemployment money goes directly back into the economy.  Each dollar not given by the gov't (which comes from employers to begin with) goes right back to business as it passes through the unemployed person.  Now it doesn't; to the tune of $55 million per week.  The businesses keep on feeding the unemployment machine at the same time and it doesn't decline simply because the extended benefits were cut off.  If fact, my rates have gone up to cover the cost of the recession and will continue to do so for awhile (granted, maybe for not as long now)  But, because of the actions by the Republicans, I can't get some of it back now from the purchases the unemployed would have made with their benefits from my store (assuming I owned a facility they would use; which I don't, other businesses use my services, but I am sure you get my point.)

            That is where the $2 billion comes from, the unemployed who lost their benefits haven't spent the $2 billion they would have received if the Republicans had seen fit not to make them and small business suffer.

            1. wilderness profile image96
              wildernessposted 2 years ago in reply to this

              But the unemployed didn't have anything to spend.  The money came from someone else (which they would have spent themselves were their taxes not so high) and loans from China (which will NOT do the country any good in the long run.

              So you haven't lost anything but "digital" money that you would have to repay anyway.  Pretending that the 2$ billion they would have received was anything real doesn't help.

              1. Josak profile image60
                Josakposted 2 years ago in reply to this

                That is not how economics works.

                Taxes can certainly be taken from sectors unlikely to spend that money (poor people on the other hand almost always spend their money because food and rent etc. are constant necessities). So the first point is out.

                As for Chinese debt that does have some interest but it's in the 1% range.

                On the other hand economic stimulation creates economic growth and savings. If that money had been spent by the unemployed people then businesses would have more customers meaning they would need more staff (thus fewer unemployed and less entitlement spending) and more produce (meaning more mining farming etc., which is where wealth is created, becomes necessary to meet demand).

                That is why the IMF and World Bank as well as every other major economic board has recommended stimulus practices and why countries like Australia that implemented them did not have recessions.

                1. wilderness profile image96
                  wildernessposted 2 years ago in reply to this

                  Where is all this money that isn't being spent?  Put in a bank and then being loaned out to build factories to provide jobs?  Stuck in a mattress somewhere?

                  Economic stimulation.  What you actually mean is taking from one to give to someone else or borrowing to give away.  While both will stimulate an economy, long term use of either will ruin it.  Known to all but liberals whose primary goal is to equalize wealth, not grow an economy.

              2. My Esoteric profile image89
                My Esotericposted 2 years ago in reply to this

                Unemployment taxes come from only one place, employers ... me and my company, in other words.  For each employee I have, I contribute up to $42 per year into the Federal program, and varying amounts in each State I have employees; in some states, that can be very expensive (up to a few hundred dollars per employee) if they have generous programs or, like in Florida, very cheap, if they would rather have the unemployed starve, as they did my step-son-in-law.

                If the fund runs out, the States and the Feds lend it money and the rates we are charged are raised in order to replenish it.

                The question is, what would most small businesses do with the extra money if they didn't have to pay into unemployment insurance?  Common sense as well as detailed analysis says that a smaller percentage makes it way directly back into the economy than direct payments to the unemployed and the social value of it zero while for the unemployed it is 100%.  For large corporations, even less makes its way back into the economy in the same beneficial way as it does through the unemployed; most of it would go into the pockets of the executives.

                1. wilderness profile image96
                  wildernessposted 2 years ago in reply to this

                  Really?  But the feds are paying for a a great many months of extended benefits.  Benefits NOT paid for by employers; benefits paid for by borrowing.  I understand how the system worked in the past, and how it works now.  The basic difference is that the feds are handing out money they don't have to people that can't or won't work.  States are handling the paperwork, but the bulk of the money is coming from the feds, not from local business.

                  So the question isn't what a small business would do with the extra money the feds are gathering from china and giving away as they never had it to start with.

                  1. JohnfrmCleveland profile image82
                    JohnfrmClevelandposted 2 years ago in reply to this

                    Then I don't think you really understand how the system works now (and has for the past 43 years). 

                    When we were on the gold standard, the government was not able to create more dollars (deficit spend) unless it acquired the requisite gold to back it up.  So in order to deficit spend, they borrowed, exchanging bonds for gold-backed dollars, then spending those dollars.  This kept the actual number of gold-backed dollars constant, so they had the gold to fully back those dollars.

                    When we went off the gold standard, we no longer needed to procure more gold in order to create dollars.  The government, if it chose to do so, could issue dollars directly.  But bonds were in place, as were some gold-standard-are laws that required us to keep a positive balance in the Treasury's account at the Fed.  Plus, nobody was really sure how the new system was going to work in practice.  So bonds stayed.  BUT - today, with fiat money, they do not represent real debt, as it costs the government no real resources to meet their obligations (illustrated by the fact that they can, and do, "borrow" from themselves).  The "national debt" is illusory, because those bonds could be exchanged for dollars tomorrow, and the government would not break a sweat doing it. 

                    So it is not at all correct to say that the federal government is "spending money that they don't have," because they have an unlimited supply of dollars.  And deficit spending is necessary to keep the economy going, because so many dollars get hoarded out of circulation that the economy would starve without the new influx.  Every dollar lost to net imports is lost to the economy, until those countries decide to start spending more dollars than they earn (which isn't likely anytime soon).

    2. rhamson profile image76
      rhamsonposted 2 years ago in reply to this

      There are more people leaving the job market. I know I came upon hard times and there is not much out there for an aging woodworker. The governments answer is go and get some education and qualified for a high tech job as there are many out there. Unfortunately as I am nearing sixty the employers are looking for young entry level people in these fields and not expensive insurance liabilities from an older employee.

      I find more and more customers coming to me offering cash for discounts on my services. Two things preclude me from accepting these offers. 1. I don't want the government to have a shot at me with an audit when I can barely keep my head above water. 2. It is impossible for me to hide it as my business has a large amount of materials that just don't go away in the books.

      In this race to the bottom I find even the 1%'ers who were my mainstay are price hungry and find items in IKEA to titillate their fancies more and more.

      1. My Esoteric profile image89
        My Esotericposted 2 years ago in reply to this

        Plus, the longer you are unemployed in a market where there are still three people vying for each job opening, the less likely an employer will bother to look for them and now, 1/2 our elected officials have, eyes-wide-open, put them on the permanent welfare rolls or worse by taking way their unemployment benefits making them a self-fulling prophecy.

      2. Credence2 profile image84
        Credence2posted 2 years ago in reply to this

        Yes, it is sort of frustrating that years of work and experience are not of any value once you cross the line as an elderly worker. So what is left for seniors? Walmart greeters, flipping burgers? What has happened that so many older people find themselves in this position. That gap appears after 50 with only Social Security coming into play for most at 65+. I guess in the past people did not live as long to be of concern after they were considered too old for the workforce. When an older person is laid off what is to be done? This trend is unsettling, to old to start over, too young to retire.

  2. 84
    Education Answerposted 2 years ago

    I wouldn't call it "plummeted."

    People stopped looking for jobs, and now they are not part of the unemployment numbers.  Additionally, the economy may be slightly improving.