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Economic News, Data and Analysis

Unemployment Insurance Study

A new CBO study finds that unemployment insurance is important in maintianing family income after a job-loss, and “the program has succeeded in preventing temporary poverty for a significant fraction of long-term UI recipients.”

03-03-UnemploymentInsurance.pdf (application/pdf Object)
CBO’s comparison of income suggests the following conclusions:
B UI benefits played a substantial role in maintaining the family income of recipients who experienced a long-term spell of unemployment in 2001 or early 2002—particularly those who did not have other wage earners in their family (see Table 1). Before becoming unemployed, recipients’ average family income was about $4,800 per month.2 When recipients lost their job, that income—excluding UI benefits— dropped by almost 60 percent. With UI benefits included,
the income loss was about 40 percent.
B For sole earners in a family, the income loss was greater: almost 90 percent excluding UI benefits, or 65 percent including them. For such one-earner families, UI benefits represented two-thirds of their total income, compared with an average of about 20 percent for families with more than one worker.
B Former UI recipients who did not find work soon after their benefits ended—people for whom federal extensions of UI benefits are intended—continued to incur substantial income losses. For the 40 percent of long-term UI recipients who were not working three
months after their benefits ended, average family income was about half of what it had been before they began receiving unemployment insurance (see Figure 1). By comparison, for long-term UI recipients who were working three months after their benefits ended, income loss was less than 10 percent.
In addition, more than one-third of the former longterm UI recipients who had not returned to work had an income below the poverty line (measured on a monthly basis), and about 40 percent lacked health insurance— more than double the numbers before they became unemployed.

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Filed under: Economics

The Quickest Way to Discard Credibility

I used to say that the quickest way to throw one’s credibility out the door on economic matters was to call oneself a “supply-side economist.”
I think I have to modify my theory.
I now think a faster way to show that you have lost all credibility and that you never intend to be taken seriously ever again is to claim that either 1) the household survey is a better measure of employment than the payroll survey, or 2) that “economists disagree” about which survey should be used.
The payroll survey is better, and it is what everyone uses – there is as much disagreement on this as there is on the question of whether or not the earth is round.
Would these people really be running around talking about the weaknesses of the payroll survey if for some reason it showed job growth? I don’t think so.

Filed under: Economics

Employment Still Struggling

The BLS announced that employment grew by only 21,000 last month, and the unemployment rate remained unchanged.
What is also concerning is that the household survey is showing that the civilian labor force decreased for the third month in a row, by 392,000 and the labor force participation rate fell to 65.9 percent. This might indicate a greater number of people giving up on finding a job.

BLS Release
Nonfarm employment was little changed (+21,000) in February, and the unemployment rate remained at 5.6 percent, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. Employment levels in most of the major industries were little changed over the month.

Filed under: Economics

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