Federal Fiscal Follies, Part Va: Unemployment Compensation (Part I)

| October 4, 2012

We’ve all got our opinions about Federal entitlements.  But I think it’s safe to say that, without question, some of them desperately need overhauling.

Take unemployment compensation, for example.  After all, what could be better justified than providing temporary help to folks who just lost their job?

Well, you might want to take another, more in-depth look.  The devil is sometimes in the details.

Like this detail:  Federally-funded unemployment compensation is not means tested.  And that means that 2,362 Americans living in households with taxable household incomes in excess of $1,000,000 received unemployment compensation.  Dig a little more, and you find out that over 956,000 people living in households with taxable income in excess of $100,000 in 2009 did the same.

Where does that money come from?  It comes from payroll taxes levied on employers – who cover the cost by raising their prices, and pass the cost along to us.  These payroll taxes go into specified unemployment funds; compensation is paid from these funds.  And when these various funds set up to pay unemployment compensation runs short, Uncle Sam generally ponies up more to make up the shortfall – from Federal revenues.

In short:  the money for unemployment compensation comes out of our pockets, one way or another.  We pay for it.

Hey, I’m OK with helping out folks when they need a little temporary help for events outside their control.  But let’s not check common sense at the door when we do that, either.

Someone getting unemployment compensation – or any other form of public “assistance” – while living in a household having a taxable income of $100,000 or more just doesn’t pass the common sense test.  At least in my book, it doesn’t.  IMO this program absolutely screams for a bona fide, no joke means test.

More to follow on this subject in the future, as time allows.

Category: Dumbass Bullshit, Economy

Comments (50)

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  1. 2-17 AirCav says:

    “Eliminating the federal share of unemployment benefits for millionaires would save $20 million in the next decade.”

    Excuse me? Save 20 million over the next week? No. Month? No. Year? No. Decade? Yes.

    Heck, we can save that merely by eliminating Obama’s greens fees.

  2. raul duke says:

    So if i am working a contract oversea, and making $135,000 a year, and my spouse with a Masters degree gets laid off from a job paying $50,000, the spouse should NOT get unemployment? Unemployment is only for people making under $100,000??? The spouse of a NYPD officer, who makes over $100,000 with overtime, does not get unemployment when let go from a defense contractor who is downsizing?

  3. Hondo says:

    True, 2-17 AirCav. But that’s only eliminating the Federally-funded part of 2,362 out of the 956,000+ persons receiving unemployment while living in a household with a taxable income of $100,000 or more. I’m relatively sure that an actual household means test set at a reasonable level would save one helluva lot more than that. The report indicates that such persons received approx $7.962 billion in unemployment compensation during 2009. The Federal share of that is roughly 10% – and may be substantially more, due to the fact that the Federal government pays a much larger proportion of extended and emergency unemployment compensation.

  4. Hondo says:

    raul duke: unemployment compensation is public assistance, not a Constitutional right. And IMO, yes – it should indeed be means tested at a reasonable level. Off the top of my head, a limit of $100k in taxable household income seems eminently reasonable, if not perhaps a bit high. Remember: that’s AGI, not gross income.

    In case you haven’t noticed: Uncle Sam is essentially broke. We’re spending about $4 for every $3 the US takes in in taxes. We can simply no longer afford to keep handing out Federal money to everybody like we do chewing gum or candy on Halloween.

  5. DefendUSA says:

    Hondo- I constantly reiterate, that if a millionaire, billioniare becomes “unemployed” and they have paid into the system, then legally, they qualify like anyone else. The laws clearly need to be changed. Just like the title 8 in Chicago does. As long as it’s legal and nobody changes the laws to reflect common sense, then the system will be raped, sadly and yes it affects those who really do have legitimate need.

  6. OWB says:

    Is unemployment compensation an earned benefit or not? If it is not, then go ahead with your means testing. But my understanding is that it is a benefit that employees earn by virtue of their working. Their employer is required to pay into the system for each and every employee without a means test, so should not the benefits be paid out the same way?

    If we want to discuss the possibility that the unemployment compensation system should be self-sustaining, I will go there happily. If, for instance, the fund can only support 2 weeks compensation in unemployment benefits, then that is all it should pay.

    But taking away an earned benefits from anyone based on something other than having met the requirement to receive it? Nope. I cannot accept that.

  7. Hondo says:

    Uh, folks – no employee pays Federal Unemployment Tax Act (FUTA) taxes. Those taxes are levied on employers only, and fund the Federal portion of unemployment compensation.

    The best I can tell, the same is also true of the state portion of the program in all states – e.g., the taxes are on employers only, and the employee pays nada. I will admit that I did not review (and do not have time to review) all state unemployment taxes individually. It’s possible one or more states may levy unemployment taxes on individual workers as well, but I don’t think so. I can’t recall ever seeing reference to that practice.

    In short: unemployment compensation is IMO in no way an “earned entitlement”. The only essential qualification is that you had a job and lost it. But as far as I can tell, in America virtually no one receiving unemployment compensation has “paid into the system” out of their income whatsoever. (The only exceptions might be small business owners who also receive a salary from his/her business as an employee – and I’m not even sure about that, since I believe that the business gets to deduct the cost of payroll taxes as a cost of doing business when calculating Federal taxes.) All taxes supporting unemployment compensation were paid by their employer, in the form of mandatory payroll taxes levied by Federal and state law. Not a penny came out of employee paychecks.

  8. OWB says:

    Depends upon how you look at it, Hondo. It is the cost of employing an employee. Whether it is paid directly by the employer, the employee or Uncle Jack in Montana, it is what it costs to employ someone. If it were not being paid to Big G, it could be paid to the employee instead in salary/wages. Would that not fall into the category of an unpaid benefit?

    That benefit, whoever is paying for it, is one which can only be earned through employment.

    So, if you withhold the benefit from an unemployed former worker whose employer has paid into the system throughout the period that the worker was earning the benefit, who gets it? And is it fair/reasonable/ethical to extract those payments from an employer if there is a possibility that the employee for whom it was collected, sort of like an insurance policy against future unemployment, never has the possibility of collecting it? The employer could probably find something more useful to the company to do with those funds than throwing it down the rat hole of Big G.

  9. Nik says:

    “If it were not being paid to Big G, it could be paid to the employee instead in salary/wages. Would that not fall into the category of an unpaid benefit?”

    It could be paid to the employee, yes. That doesn’t necessarily mean it will, especially now when times are harder than has been in recent years.

    OTOH, it could also mean that money would go to paying for another person to work, especially now that times are harder than in recent years.

    I think the biggest question is, whether Unemployment is meant to be a safety net or an investment in the name of the employee. Once that’s settled, the decision whether or not it should be means-tested or not can be answered.

  10. Hondo says:

    OWB: in plain language, unemployment compensation is nothing but another tax-funded government unearned entitlement program. One becomes eligible by meeting legal qualifications (e.g., having a job), not by “earning” anything. If you’re working and lose your job, in general you qualify. Period. Coverage is mandated by law, and in the case of unemployment compensation costs the employee nada.

    It is not a “benefit” received from one’s employer. If it were an employer benefit, it would be either (a) optional or (b) subject to negotiation between employee(s) and their employer. It is not. It is defined by law and paid for from taxes collected by the governments involved (Federal and state). Neither the employer nor the employee has a choice in the matter.

    As I’ve stated previously: Uncle Sam is broke. We can no longer afford to hand out Federal money like candy at Halloween. That means we must get serious about who does – and who doesn’t – qualify for various unearned entitlement programs based on actual financial need. And yes, I’m including all Federal unearned entitlement programs here. I suspect we will likely see Social Security made subject to a means test at some point. For our long-term future, I frankly hope that happens soon – as painful as that will be. Given its calculation formula, earnings test, and maximum benefit, we’re already about 1/2 way there anyway.

    We can either cut back on what Uncle Sam spends; increase taxes dramatically; or see a financial crash a la the ones facing Greece/Spain/Portugal. Personally, I favor the former. I suppose I could live with the second option if I had no choice. But I’ll be damned if I want to see the third – and I’m beginning to fear we will. Many agrees that spending is out of control and should be cut – except for the programs they personally favor, of course. Everyone wants those programs exempted from cuts.

  11. Hondo says:

    Nik: unemployment compensation is and always has been a “safety net” program. Like Social Security, there’s no “unemployment insurance account” for you as an individual. It’s a common fund (actually, many funds – each state has one), supported by payroll taxes, forming a single “pot of money” from which benefits are paid. In extreme cases, the Federal government adds additional $$$ to the funds. Individuals have no individual “stake” and own nothing in the fund.

    It’s often referred to as “insurance”, but – like Social Security – in fact it is not. It is not voluntary; there is no legally enforceable contractual relationship; and you don’t pay premiums. Rather, it is a tax-supported government program mandated by law that transfers income from those working to those who are not – and which can be changed at the whim of the legislature. In this case, those receiving the money are those who recently lost their jobs vice those who have retired.

  12. HM2 FMF-SW Ret says:

    How many of those millionares are employers who paid payroll taxes on themselves as employees of the company?

  13. Hondo says:

    Dunno, HM2 FMF-SW Ret. And I don’t think it matters. As I previously mentioned in comment 7 above: if the business paid them, as I understand it the business would also have been allowed to deduct those payroll taxes as a cost of doing business when filing both Federal and state taxes. Same is true if the individual was a sole proprietor with a salary – they’d come off their taxes in that case as a deduction too. Either way, no net cost to the individual concerned.

  14. Jack says:

    @ 2-17 AirCav

    Did you know that Olympic swimmers shave all the hair off their bodies? The tiny amount of surface friction from body hair is so negligible that it’s scarcely worth the time worrying about, but they do it anyway, because if you want to win you don’t skip anything!

    Yes, means testing unemployment is a small amount. But there’s no one magic bullet that will solve our debt problem. Some additional ideas like means testing social security and medicaid would also help. There’s a long list of things we should cut. Bottom line, start cutting.

  15. Jack says:

    Regarding unemployment compensation: the employer pays every state in which it does business a percentage of the money that each employee earns to a state unemployment tax account—SUTA. The employer continues to pay this percentage until the wage limit has been met. The wage limit varies by state, and the percentage of wages paid varies, not only by state, but also by the amount of benefits paid out to former employees of that employer. This is called the employer’s “experience rating.”

    To give you an idea, in Texas, our company’s rate is .096% and the wage limit is $9000.00, while in Illinois our rate is
    4.35% and the wage limit is $13,560. When unemployment is paid out, the money comes from this account, as well as from both the state and the Federal Government to pay for the full cost of the benefits. Notice that never is the employee charged for this “coverage.” However the employer certainly passes along the cost of this coverage to it’s customers and clients when it prices its goods and services.

  16. 2-17 AirCav says:

    Yes, Jack, but in this instance, the swimmer who is shaving off his body hair is wearing ankle weights.

  17. Common Sense says:

    It depends on how you define household. My eldest son had to move back in with us when he lost his job. Instead of going on unemployment right away like his co-workers did, he immediately started working temp jobs while job hunting. He didn’t apply for unemployment until the temp job dried up. He ended up being on unemployment for only a couple of months and now has a good temp-to-hire job (but still no benefits).

    My husband and I make over 6 figures, but should we have to support him again just because he lives in our house temporarily?

  18. Dave says:

    Jack – excellent post. Reminds me of the Social Security debates on this forum a few weeks back. Nothing from the government is truly free, and most are funded either primarily by the worker(in the case of SS) or the worker indirectly (as a cost to his company, or in the amounts we all wind up supporting when millions pay tiny amounts which get spread to a relative few, like unemployment. Now I understand the argument that people earning a lot may appear on paper not to need unemployment: but note, they aren;t still making that kind of money any more! I’m making $80K, my wife makes $40K, together we make $120K (pulling numbers out of the air) – if I get laid off, we are not making $120K any more, we’re making $40K. And sucking.

  19. Ex-PH2 says:

    Are we upset because people with extremely high incomes are eligible for unemployment compensation and get it? The maximum amount paid varies from state to state.

    The weekly unemployment numbers from this morning:
    New claims: 364,000 up by 4,000 from 9/28
    Continuing: 3.28 million wk ending 9/22 v. 3.271 million for the wk ending 9/15 (does not count those no longer getting benefits)
    Unemployment rate is now 8.2% v. 8/1% last month
    New jobs added in September: 126,000 — hardly enough to offset the number of new jobless claims

    Common Sense, from August 1974 to July 1975, I stayed in New Jersey after leaving the Navy and could not find a paying job. If I went for an interview, there were rooms full of people, up to 650 on one occasion, applying for two positions. I left New Jersey in July 1975 and moved back to Illinois with my parents because I was out of money, period, and looked for a job in Chicago while I was back in classes learning new skills. Finally went back to work by June 1976 in Chicago.
    If your grown son is working and kicking in something for food, then assist him by making him save some of his temp pay. Temp to hire is better than nothing.
    I’ve done temping and freelancing both, but didn’t have to move back in with the parental units because I was aggressive about getting work, and the 11 months I spent living with the parental units from ’75 to ’76 were enough to make me prefer living in a storm sewer.

  20. Hondo says:

    Common Sense: if you claimed him as a dependent, than yes – he was a member of your household. If you didn’t, then he wasn’t.

    I’d guess you didn’t claim him as a dependent, though – since if you did, you’d also have had to have claimed his income from his temp work on your tax return. And that would resulted in his income being taxed at your much higher rate vice his own lower income tax rate.

  21. 2-17 AirCav says:

    I suppose the thing that bothers me most about this story is that it smacks of the class warfare that Obama and Co. is fomenting. And I don’t like it. I have no doubt that Hondo sees a legitimate wrong here–as do others–but these kinds of target-the-rich stories, in view of all else in crsis America, just rubs me the wrong way.

  22. PigmyPuncher says:

    “Someone getting unemployment compensation – or any other form of public “assistance” – while living in a household having a taxable income of $100,000 or more just doesn’t pass the common sense test. At least in my book, it doesn’t. IMO this program absolutely screams for a bona fide, no joke means test.”

    Seriously Hondo? How about the family where Dad earns 150k year and Mom stays home to care for kids. He looses his job in September thanks to this administrations craptastic policies (after making 100k), and your saying he and his family should be denied the unemployment benefits which have ALREADY been paid by his employer specifically for this scenario (and by him indirectly via wages he’ll never receive but are factored into his ‘cost’ to the company).

    How long should they tough it out before they receive any help – rest of the year? twelve months? never?

    While we’re at it, the ‘benefit’ is not even close to making up what you actually earned while employed (at least in TX) and is therefor hardly a income replacement. I’ll also add that the one time I looked into claiming benefits (after my layoff upon my return from my Reserve units 3 week AT in Korea), the weekly payments were so low and time limited that I would NEVER see the same amount of money my employer paid into the system back out in benefits/payments. It was, IMO, a hell of a scam… I ended up “volunteering” for a year of TDY (without my spouse) so that we wouldn’t loose our home..

  23. 2-17 AirCav says:

    Pygmy: I just want you to know that I am still reeling from your “Oh. I threw-up a little” comment the other day. It’s one of those things that I think of, laugh out loud, and then look like a jerk because I can’t possibly explain it.

  24. Ex-PH2 says:

    Ewwwwww! I reread my post and saw I’d made a serious typo:

    The new claims number is 367,000 NOT 364,000. I apologize for that mistake.

  25. PigmyPuncher says:

    #23 – 🙂 glad I could make you smile.

    if you ain’t CAV……

  26. Hondo says:

    PigmyPuncher: you generally have to have significantly more than $100,000 in gross income to have a taxable income of $100,000. The standard deduction alone guarantees that. And most making that much have other deductions as well.

    To answer your question: yes, I’d say exactly that. IMO, we should set a threshold regarding AGI, and if the household taxable income for the year is over that – not eligible. That should IMO be done not only for unemployment compensation, but also for most if not all unearned entitlement programs the Federal government runs or helps fund. And the income limits should be real limits, with none of the rampant “exclusions” that makes qualifying for many entitlement programs a joke.

    The fact that your employer (not you) paid taxes to support the program is true; it is also irrelevant. Like Social Security payroll taxes, unemployment payroll taxes are not earmarked for any individual. They go into a common pot; benefits are paid from that common pot. The taxes paid by your employer are used to pay benefits for whoever qualifies – whether you ever receive unemployment benefits or not. They give you no more legitimate claim to entitlement to unemployment compensation than the next guy or gal.

    Eligibility for unemployment compensation – like eligibility for food stamps – is not anything the individual owns or has earned due to individual service. Rather, it is an entitlement the qualifications for which are defined by law – just like eligibility for food stamps. And expecting someone to use their own resources before qualifying to receive such an entitlement, or to meet income limits as a qualification, is IMO eminently reasonable.

    And such a proposal hardly counts as “class warfare”. The CRS study I cited notes multiple proposals presently before Congress which would either tax unemployment compensation at 100% for those in households with high taxable incomes or for those who the previous year had a high net worth. Of the six proposals cited in the CRS study, only one was introduced by a member of the Democratic party.

    Again: helping someone out who’s out of work is one thing. But paying public assistance of any type to someone who has a taxable income of $100k for the year and may have $50k in the bank or in liquid investments, seems at best questionable if not just plain wrong.

  27. OWB says:

    Hondo – I really don’t want you to misunderstand where I am coming from here. I would be just fine with eliminating the feds from any involvement in unemployment compensation. It is frankly not something into which they should be meddling – one of a multitude, some of which you have mentioned in this post and others. If states or communities want to do so then that is up to those areas to pay for it.

    I would also be just fine with my state eliminating all involvement in unemployment compensation as well, and may find myself working toward that end some time down the road. It is a nonsensical system which has indeed evolved into just one more way to scam society’s producers and reward the nonproducers with the bureaucrats who administer the program being the only real beneficiaries.

    But, none of that directly relates to the initial question the answer to which in my mind still remains that those whose employers have contributed to the system should receive the benefits that they have earned because they did what they were supposed to do, as did their employers, to receive them.

    But I would certainly agree that the system is not justifiable AND we cannot afford it. Our “leaders” have used it as another tool to suck folks into the dependency class.

  28. trolling says:

    helping out someone is one thing. its another thing to have as people claim : 1. 1 person pulling in 100K 2. ‘stay at home’ ish pulling around 30-40k .. you can live of 30-40k, it can be done, especially if your making beyond TRIPLING that amount making 100k. and your still saying your entitled to get benefits??.. id understand if the 100k person lost their job and reduced to 30-40k, which can be done(circumstances vary) and then pull it, but otherwise NO.

  29. Robert says:

    Anybody ever think about Medicare? I have kids out trying to get started in the world paying Medicare taxes when they are making 20K a year. There are retirees with incomes well over 100K a year who could easily pay a full premium for their Medicare policy instead of the government subsidized 1500 (approx) a year. But we continue to provide welfare for people who don’t need it on the backs of people barely making it. I think it’s a crime. Let’s means test ALL welfare.

  30. Hondo says:

    OWB: employers receive zero benefits from unemployment compensation. Nada. Rien. Nichts. Nothing. They merely fund the system through additional taxes imposed on a per-employee basis, as a percentage of the first $N dollars of each employee’s salary (varies by state). They get absolutely nothing for their money.

    Similarly, current employees likewise receive zero benefit. Although to be fair, they also don’t pay a damn thing into the system either.

    The folks who receive the benefit are the recently unemployed. It’s designed to be minimal, partial replacement of lost income given to them by the government for social welfare purposes. And for those who (a) lost their job through no fault of their own, and (b) who actually have a need, I can live with the program.

    However: in 2009, nearly $8 billion was paid in unemployment compensation nationwide to persons in households who had a taxable income of $100k or more – out of a total of around $83 billion. By design unemployment compensation is a social welfare/income transfer program designed to provide some minimal level of temporary income for the recently unemployed. Giving nearly 10% of that to folks with household taxable incomes of over $100k IMO simply doesn’t pass the common sense test.

  31. HM2 FMF/SW USN Ret. says:

    Hondo: I just came back to the site after work and school. UI is tied to the payroll tax rate, so if the employer files a claim on their wages it raises their payroll taxes. Therefore, I don’t think they can write it off.

    Secondly, UI(at least in my state) is figured based on your earnings in at least two of the first four of the last five completed calendar quarters. The individual must have baseline earnings of roughly 4,700 dollars within that base period. Many of the people trying to do the right thing and hold off until they really needed the assistance screwed themselves out benefits because the base period changed leaving their qualifing wages behind.

    Also, employers can file attached claims for employees to prevent the employees from having to seek other work. This prevents the employer from having to train new employees when work becomes available.

  32. Hondo says:

    HM2 FMF/SW USN Ret: all true, and all irrelevant to the point that I’m making. Unemployment compensation is an unearned entitlement, not something “earned” in any way by the individual concerned. Eligibility is conferred by law vice service/action/contribution on the part of the individual.

    According to the IRS, unemployment taxes paid by employers are indeed deductible from business income.


    I don’t have time to research 50 different states tax laws, but in general they’re often similar to Federal law regarding questions of what is and isn’t deductible. I’d therefore guess most if not all states allow all taxes paid to be deducted from taxable business income.

  33. HM2 FMF-SW Ret says:


    I stand corrected. However, that is because the state UI fund taxes will increase depending on the number of UI claims and duration of claims filed (at least in my state and the sourrounding three states. I too don’t have time to research the other 47.)

    I understand your point. However, simply because it is an unearned entitlement, doesn’t mean that it is not a worthwhile cause.

  34. HM2 FMF-SW Ret says:


    Two points I neglected to make:

    1. The vast majority of UI money goes into the local economy regardless of who is receiving. Moreover, I have seen employers take UI for themselves so that they do not have to lay off their staff. These actions result in stronger communities.

    2. I may agree with means testing if not for the limited reach back period. I have seen a lot of vets who try to not take UI end up in dire circumstances and not able to draw because they no longer have qualifying wages within the base period.

    (I know you are likely to come back to entitlements and rich people, but I get concerned when we start monkeying around with qualificatiosns. In my experience the people the changes are meant to help usually end up getting hurt.)

  35. Ex-PH2 says:

    I found the following article on CNBC’s site, regarding the food stamps program. There are specific items that I think are very pertinent to both unemployment and the food stamp program you all were discussing on an earlier post in Fiscal Follies:

    Record 46 Million Americans Are on Food Stamps Published: Tuesday, 4 Sep 2012 | 3:37 PM ET
    By: Jeff Cox
    CNBC.com Senior Writer
    The number of Americans on food stamps hit a record high in June, and economists don’t expect much improvement as long as unemployment remains high.
    Those receiving benefits through the Supplemental Nutrition Assistance Program numbered 46.37 million, the government said in a report that hit just days ahead of the monthly nonfarm payrolls report, which the Labor Department releases Friday.

    The two numbers are inextricably linked as the economy battles its way back from the crippling recession that the National Bureau of Economic Research says ended in 2009.
    “The unemployment data is not really telling us the true story of how many people are underemployed,” says Peter Cardillo, chief market economist at Rockwell Global Capital in New York. Food stamps are “a good indication of how the income of the workforce has stagnated and more and more people are applying for food stamps.”

    With 22.4 million households using food stamps, fully 15 percent of the American population is on the program. The costs, at $6.025 billion for the month, are just off the all-time record though the average monthly benefit per person has declined modestly to $132.96.

    While the unemployment rate actually has come down from the 10 percent readings it showed in 2009, the amount of participants for the SNAP program has soared.
    There were fewer than 31 million people on food stamps as recently as November 2008, but an aggressive effort from President Obama’s administration has helped build participation, with the total increasing by 44 percent since the president took office in January 2009.

    Liberal commentator Alan Colmes, in a Wall Street Journal op-ed piece Tuesday, cites the expansion as a key achievement of the Obama administration, as participants “only stay on it an average of nine months” and circulate $1.73 back into the economy for each food stamp dollar spent.
    But if Cardillo is correct and the proliferation of food stamp recipients represents underemployment and wage stagnation, that could signal difficult times ahead for reducing entitlement spending. Cardillo projects just 90,000 new jobs were formed in August, below consensus for 125,000 and the unemployment rate level at 8.3 percent.

    Citigroup economist Steven C. Wieting, in a recent analysis, said there are more than 3 million Americans still without work who lost their jobs following the financial crisis but did not work in the housing-related industries that suffered most.

    Consequently, he said in an interview, recovery will be slow in coming as those noncyclical job losses will be more difficult to remedy.

    The economy’s growing and it’s likely to continue to grow,” Wieting said. “But it’s three steps back and one step forward and lots of cyclical improvement in the economy from very depressed lows. But we are very, very far from having normal labor markets.”

    Indeed, data last week from the National Employment Law Project underscored how far there is to go.

    The group found that 58 percent of all jobs created over the past two years paid $13.83 an hour or less while just 22 percent were in the “mid-wage” class of $13.84 to $21.13 an hour, even though that group lost 60 percent of the jobs during the recession.

    “The economy has fewer good jobs now than it did at the start of the 21st century,” Annette Bernhardt, policy co-director at the NELP, said in a statement. “Indeed, it’s important to recognize that the U.S. labor market was already in trouble before the Great Recession, the result of 30 years of growing wage inequality and shrinking numbers of good jobs.”

    Wieting said the economy is “on a path to seven years just to get back to the employment level where you were at the start of the downturn,” and suggested the economy is closer to depression than it is the inflation that would signal sustained growth.

    I find it disturbing to be told that an “aggressive effort by the administration” has been underway. Very disturbing. I’ve said this before: bread and circuses only go so far before the Huns and the Goths break down the gates.

  36. PigmyPuncher says:

    “and may have $50k in the bank or in liquid investments, seems at best questionable if not just plain wrong.”

    Ok, you’ve changed the scenario a bit with that add on. Look at the EVIL guy with a savings account that lost his job that paid over 100k a year. If savings is evil for that guy, it must also be evil for everyone else who qualifies. Lets cut benefits for anyone who has a savings account!

    Next we can go after those A holes that have 401ks. Ya, they shouldn’t get any benefits either since they have a retirement they’re hiding. /sarc…

  37. Hondo says:

    PigmyPuncher: pray tell – what’s wrong with expecting someone to demonstrate that they’ve already used their own resources first before asking for government assistance? Are you suggesting that people don’t have the responsibility to plan ahead to account for possible hard times and/or the loss of a job? Are you actually advocating that people should receive public assistance so that they can avoid spending their own money first to support their family?

    I have no problem with real means testing as a precondition for receipt of pretty much all public assistance and/or unearned entitlements. It is not the government’s job to support those who have the means and ability to take care of themselves. The government should step in if and when that’s no longer the case – not before.

    And, for the third time: one almost always has to make way more than $100k in order to have $100k in taxable income, AKA “AGI”, on the 1040.

  38. HM2 FMF-SW Ret says:

    @37: Because if they wait to be in need they won’t qualify. (3rd time saying that as well, but it doen’t fit your meme here so you ignore that fact.)

    @36 If they are recieving benefits based on the employer they draw UI from, the amount of the pension is deducted from the claim amount. Same with disability other than VA compensation.

  39. Hondo says:

    HM2 FMF-SW Ret: a reasonable point. The “lookback” period would seem to require suspension or modification if an effective means test were to be made mandatory.

    For what it’s worth: 401k plans aren’t pensions. They remain the property of the owner and fully under his/her control; they can be tapped by the owner if needed. The IRS also allows for hardship distributions from 401k plans, though that must be written into the plan’s terms. However, doing so early has decidedly unpleasant tax consequences even if for reasons of hardship. The same is essentially true for IRAs as well, though IRAs appear to offer a couple of ways to avoid early distribution taxes (higher education expenses, 1st time home ownership) that 401ks don’t.


  40. Ex-PH2 says:

    While you guys are discussing the fair/unfair vicissitudes of unemployment compensation, there is some discussion on several news sources regarding the ‘perceived’/reported drop in the unemployment rate from 8.2% last week (9/29/12) to 7.8% this week.

    Jack Welch, who appears frequently on CNBC’s morning programs, stated that he believes that the Obama admini (read: White House people) is cooking the books on unemployment. There is something to be said in that, but I haven’t been able to dig around enough to find anything other than the reference by Jack Welch. The issue is that while the jobs added, new unemployment claims and continuing claims are regulary adjusted, a sudden drop of 0.4% in one week is, in my book, SUSPECT.

    But it’s an election year, right?

    Ya gotta look good, ‘specially when Al Gore says you were ‘off your game’ because you rose to an altitude of 5,000 feet to get to the debate.

    If you haven’t seen that ‘special’ remark, it’s on video. Make sure you swallow any liquids before watching same.

  41. HM2 FMF-SW Ret says:

    @39: Agreed. Also, I should not have lumped 401K and pension teogehter, but the rule is the same. Retirement pay is retirement pay per the system. As long as there was an employer contirbution you can’t draw both at the same time.

    I have propsed changing the look back period for vets if they are going to school. It would be better to allow them to draw when they finisha nd are looking for a job and not drawing GI bill than not drawing at all.

  42. UpNorth says:

    Ex-PH2, Rick Santelli at CNBC is saying the same thing, http://newsbusters.org/blogs/mark-finkelstein/2012/10/05/santelli-smells-rat-i-told-you-theyd-get-it-under-8-they-did
    And, you were very circumspect in calling this Obama October Surprise SUSPECT. The U-6 numbers haven’t changed, while the “drop” took place?

  43. Hondo says:

    HM2 FMF-SW Ret: not sure if 401k and/or IRA distributions technically are the same as pension income for unemployment compensation eligibility. They are technically not retirement pay. If I can find a definitive answer, I’ll let you know.

    However, be advised that from what I’ve seen so far the answer may well vary from state to state. In particular, some states apparently consider retirees receiving Social Security eligible for unemployment compensation, while it’s my understanding others don’t.

  44. Ex-PH2 says:

    UpNorth, when something stinks, it is wise to investigate the source of the stench, yes?

    I make a note of the unemployment claims, new and continuing, and percentage changes every week, as well as the jobs reports when they come out. The current adjustments, which were done after the Wednesday night debates, are very suspect.

    Thanks for that link. My one and only TV died and now my only news source is the net and the radio, so I don’t always get the breaking news.

  45. Nik says:


    You are correct. Unfortunately, it seems anytime you call BO out on anything, you’re automagically a racist. A .4% drop is stinking amazing. Unbelievable, even.

    But since I’m not a racist, I’m not going to do like Jack Welch has and say…well…”Unbelievable jobs numbers..these Chicago guys will do anything..can’t debate so change numbers”


  46. Ex-PH2 says:

    What makes it so very suspect is that the non-farm payrolls were revised with the current report AFTER the debate, per se:

    August non-farm payrolls were 96,000, revised to 142,000
    July non-farm payrolls were 141,000, revised to 181,000

    August especially is a huge change in numbers, but if it’s really so important to make Bo look good, then why not do that in early September, or mid-month, and why revise July numbers so late in the year, and WHY AFTER the first debate, where the Big Cheese screwed the pooch?


    Because he screwed not only the pooch, but also his cult followers like Chris Matthews, three ways to Sunday.

    Rick Santelli had predicted a drop in unemployment to 7.9%. I’m sure that Labor Secretary Solis either watches CNBC’s reports and forecasts, or has someone do it for her.

  47. HM2 FMF/SW USN Ret. says:


    You are correct each state does things a bit differently. I can only speak to my state and the three sourrounding states (to a limited degree.) Here, employer matched 401K is considered the same as pension. Withdrawl from an IRA would be considered income. Social Security Retirement, VA compensation or VA disability do not count. SSI does count.

    The system is very complicated and the look back periods are set as to ensure that the fund is not diminished. Not being an economist or a finance guy, I cannot tell you if there is a way to preserve the solvency of the fund while making the means test you suggest,. I would also say, having assisted many people with higher earnings, forcing them to liquidate all of their assests for providing assistance would ensure that many would enter a cyclic process of whereby they would never return to being wholly self sufficient.

  48. Hondo says:

    HM2 FMF/SW USN Ret: you might want to double-check that. That is in general true if the pension is based all or in part on work done during the base period (technically it doesn’t disqualify you, but it offsets UC dollar-for-dollar) if the retirement was voluntary. In that case, it’s deemed to have been a voluntary departure from the workforce, which pretty much universally disqualifies one from receiving UC.

    Involuntary retirement doesn’t in general do that. But you do have to (1) be able to prove the retirement was involuntary, and (2) be available and willing to work full-time.

    However, in more than half the states pension income is only considered if it is due to work a job held during the base period. In most states, a pension received from a previous job held completely outside the base period is not counted. Therefore, if a person (1) retires from one job, (2) takes a job with a second entity, and then (3) works long enough/makes enough money to qualify for UC, and (4) and is then laid off – in over half the states he/she would be eligible to receive UC based solely on their employment at that later job. This is in spite of the fact that he/she is currently still receiving a substantial pension based on other work.

    Social Security payments are similarly a mixed bag. Many states exclude Social Security payments completely from consideration when determining UC eligibility (don’t know which ones or how many yet). Some states count only part of Social Security benefits received. In total, 45 states exclude Social Security income from consideration when determining eligibility for UC. Only a few (5) offset UC for Social Security payments received. However, this is true only for Social Security income based on your own work record. Some states exclude Social Security benefits paid based on your own work record from consideration but do indeed consider Social Security benefits obtained based on a spouse’s or former spouse’s work record.

  49. Ex-PH2 says:

    I received this in my e-mail this morning from NewsMax. The first paragraph explains the revisions, but qualifies them. Not exactly book-cooking, but accounting tricks. And it’s revealing.

    Morici to Moneynews: Unemployment Fell on Part-Time Workers, Not Real Improvement
    Friday, 05 Oct 2012 11:24 AM
    By Forrest Jones and Steve Cordasco

    The U.S. employment rate dropped to 7.8 percent in September from 8.1 percent in August, thanks largely to gains in part-time workers and not due to noted fundamental improvements in the labor market, said Peter Morici, a professor at the Robert H. Smith School of Business at the University of Maryland.

    The economy added a net 114,000 jobs, the Bureau of Labor Statistics reported, adding its household survey reported that total employment rose by 873,000 in September, much of which was due to an increase in part-time work. Some 582,000 Americans took part-time positions because of slack business conditions or those jobs were the only work they could find.

    The number of unemployed Americans stands at 12.1 million, the fewest since January 2009, though keep the champagne on ice for now.

    “We’re basically creating jobs at the pace that the population grows. We’re not really getting a real decline in unemployment,” he said.

    “If we go back to when the recovery began, the unemployment rate was 10 percent. Today’s numbers, if the adult participation was where it was then, we’d be at 9.7-9.8 percent unemployment.”

    The number caught many market observers off guard, surprising many who were expecting the unemployment rate to remain steady or even rise to 8.2 percent.

    Former General Electric boss Jack Welch said on his Twitter page that the numbers appeared manipulated.

    “Unbelievable jobs numbers..these Chicago guys will do anything..can’t debate so change numbers,” Welch said on his Twitter page, referring to President Barack Obama’s performance in the first presidential debate earlier this week.

    While the Obama administration did not likely cook the numbers, which is very hard to do, it shouldn’t rush out and claim victory over a soft jobs market and a sluggish economy.

    “The economy’s in neutral,” Morici said.

    “I would give the president the grade of C if he had just taken office and, frankly, a failing grade at this point in time given this very poor performance.”

    Meanwhile, expect the government to take the numbers and claim the economy is healthier than it really is.

    “People’s real incomes and wealth have been falling now for about five years and they certainly want some relief. The president is going to try to tell everybody, ‘Look, now that you’ve put an ‘I’m for Work’ sign in your front window, everything’s just fine. The unemployment rate is falling,'” Morici said.

    “I can hear [Vice President Joe] Biden now. No one paints false figures into facts better than he does. They will be out there manipulating the truth and the economy’s just not getting better and people know about it.”