Friday, October 11, 2013

Government shutdown and unemployment

Hello all,

People in the technology industry are not immune to unemployment.  Being unemployed at the moment, I did a little digging into what the "Unemployment Rate" really means and how it is calculated.  After several hours of looking through exactly what it means, and going through all the mumbo jumbo, it is surprisingly simple, and horrifically inaccurate.
The unemployment rate is only a percentage of people who receive unemployment.  That's it.  If there are 100 people, and 10 of them are receiving unemployment, then the unemployment rate is 10%.  That does not mean that only 10 people are unemployed.  It only means that 10 people are eligible and are receiving unemployment benefits.  It could mean, and does mean, that there are more unemployed people who are simply not eligible for unemployment benefits.  The actual number is alarming.
In late 2009, the unemployment rate peaked at about 10%.  That means about 10% of people "qualified" for unemployment benefits.  "Qualified" is the key word.
Since that time, the unemployment rate has been going down.  Which, according to the news agencies, should be translated that more people are getting jobs, right?  WRONG!  What it actually does mean is that fewer and fewer people are able to qualify  for unemployment benefits!
There are a number of factors in the mumbo jumbo that figure into all of this, but it seems that there are two criteria that seem to be the biggest.
First, a person's time on unemployment expires.  It may mean that a person simply couldn't find a job in the time that they were qualified to receive unemployment, so they simply dropped off the receiving line, and therefore have been removed from the unemployment rate statistic.  They are unemployed and are no longer receiving unemployment, therefore, the unemployment rate goes down.
Second, the government sets the unemployment timeline.  That's right, if they want the unemployment rate to go down, simply short the amount of time a person can collect unemployment, and suddenly you have fewer people collecting unemployment, therefore the unemployment rate again goes down.  In September 2013, the government cut the unemployment timeline from Tier 3 to Tier 3, thus removing 9 weeks of unemployment benefits.  This essentially means that a person who was not able to find employment over a 28 week period will no longer be eligible for unemployment, and therefore will not be included in the "unemployment rate"
The third concept that is a bit gray, and most concerning to me is the self employed.  If you are self employed or work as a contractor, you may or may not ever be included in the unemployment rate.  If your business is down or even collapses, you may not even be eligible for unemployment and therefore not included in the unemployment rate.
A fourth concept is people making $363 a week or more are not considered unemployed.  It comes to about $310 per month after paying taxes, or $10 per day.  I am not sure what our government is thinking, but who can have a life and a family on $10 per day?
As I look through the numbers, I think our true unemployment, under employment rate is closer to 25%-30% across the nation.  This is NOT including people who do not want to work or are 'legitimately' unable to work.  I use the word 'legitimately' because I have found there are some ideas of disability and unable to work that are a bit far fetched, and tend to lean toward a sluggard mentality.
So, in a time where our government is shut down, maybe those who are employed to keep the government running should collect nothing but unemployment.

Comments?

Tom