Inquiring minds are asking “How many people have exhausted all of their unemployment and extended unemployment benefits?”
For starters, to exhaust benefits, one first must have had them. That excludes those who are self-employed. It also excludes those fresh out of high school or college, and looking for a job for their first time.
I have a series of charts from reader Tim Wallace that will help explore the issues. The charts are based on weekly unemployment claims data put out by the states.
Continuing State and Extended Federal Unemployment Benefit
Note that in spite of the recovery, we still have not made a dent in the number of people collecting benefits.
Percentage of Eligible Now Collecting Benefits
The above chart shows the number of people collecting unemployment benefits or extended unemployment benefits, divided by the number of eligible participants.
The current data point consists of 3,891,808 continuing claims + 5,253,587 extended and EUC claims (a total of 9,145,395) divided by the eligible benefits pool of 126,763,245.
The result is an unprecedented 7.2% of those eligible, now collect unemployment benefits.
Eligible Unemployment Insurance Pool
The above charts all courtesy of Tim Wallace.
For more charts from Tim Wallace please see What does Petroleum Distillates usage say about the Recovery?
The last chart helps address the opening question. Note that the eligibility pool is nearly back to 2004 levels!
In 2008 there were 133,690,617 covered participants. Now there are 126,763,245 covered participants. The drop from the peak is 6,927,372.
Implications and Analysis
The implication is at least 6,927,372 have exhausted all of their unemployment benefits.
Indeed, the number may be considerably higher because every first-time job seeker who found a covered job since the pool peak in 2008, displaced someone in the eligibility pool who exhausted all benefits.
All things considered, at least 7 million people exhausted all unemployment benefits with some unknown portion of them coping via an option to start collecting social security. Moreover, those prematurely opting for social security, did so with reduced benefits.
People are Broke, Congress Responds
With the exception of those opting for social security, some 7 million people who want jobs and once collected unemployment benefits, now have no job-related income.
Think those 7 million people are about to go on a spending spree? Think those forced into social security are about to go on a spending spree? Think the self-employed with no income are about to go on a spending spree? Think the 26 million unemployed or under-employed are about to go on a spending spree? Think the countless millions of working Americans barely scraping by are about to go on a spending spree?
Well, I don’t either.
Yet, look at the response from Congress – arse Backwards: Senate to Shelve Bush Tax Cuts for Individuals; House to Pass Small Business Tax Cuts.
Senate Democrats Ready To Shelve Tax Cut Vote
TPM reports Senate Dems Ready To Shelve Tax Cut Vote
A senior Senate Democratic aide told TPM today there won’t be a vote on extending the Bush tax cuts in the upper chamber before the November election, a blow to party leaders and President Obama who believed this would have been a winning issue.
“Absent a stunning turn of events, we’re not going to do tax cuts before the election,” the aide told TPM.
“We have a winning message now, why muddy it up with a failed vote, because, of course, Republicans are going to block everything,” the aide said.
Tax Credits for Capital Spending Not The Right Approach
Given the #1 problem facing small corporation is lack of customers, it makes little sense to entice businesses to increase capacity. Payroll tax credits suffer the same flaw.
Please see my response to both those ideas in Response to Nouriel Roubini on “America Needs a Payroll Tax Cut”
Indeed, I received this email from the president of a small corporation just yesterday.
I agree with your analysis of the statements by Roubini re: payroll taxes. As a business owner with four employees, I’d welcome them; however, such breaks would not entice me to hire another employee.
Have a good day.
I am quite certain that sentiment represents the vast majority of small business owners.
The one thing small business owners need is customers. It’s hard to get more customers when government is going to start taking a bigger bite out of everyone’s pay check.
But hey, who cares if the economy goes to hell. After all, scoring political points is far more important!
People are broke, yet Congress opts to punish those still working by letting tax cuts expire. Is this amazing or simply par for the course?
Mike “Mish” Shedlock
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