MAINE LABOR UPDATE
April 2008
 
Please Forward to Working Families



FROM THE PRESIDENT'S DESK
Ed Gorham
President
Maine AFL-CIO

MASSIVE JOB LOSSES SHOW NEED FOR

BETTER UNEMPLOYMENT INSURANCE

 

The loss of tens of thousands of American jobs in the first three months of this year clearly showed the need for new measures to help American workers.

 

It also showed, as the Democratic candidates for President but not the Republican candidate recognized, the need for substantial permanent improvements in our system of unemployment insurance.

This is again one more strong indication of why workers in Maine and the nation need to strongly support the election of a Democratic candidate for President as well as electing candidates to Congress and the state legislature that will see reality and act to help workers.

Employers Slash Jobs
Employers slashed jobs for the third straight month in March and unemployment rose to a nearly three-year high, offering the latest signs that the economy has fallen into a recession.

This is no news to working families who have been feeling the economic pain for months. Polls show concern about the economy is now the top election issue.

By a wide margin -- 56% to 30% -- more Americans say the economy and health-care issues trump terrorism and social issues when it comes to casting their vote for president, according to the latest Wall Street Journal/NBC News poll.


The same poll finds that more Americans -- 50% to 37% -- would prefer that a Democrat occupy the White House.




Lose 80,000 Jobs

The Labor Department's much anticipated report, released Friday, showed a net loss of 80,000 jobs last month. That marks the third straight month that jobs have fallen - the longest period of decline since early 2003.

 

And if this was not bad enough the Labor Department new report also pegged job losses in January and February at 76,000 each month. Those revisions added an additional 67,000 job losses to previous readings.

"The revisions are the real surprise in the report," said John Silvia, chief economist for Wachovia. "If we had known it was anything like that, there would not have been any debate going on about whether we were in a recession. It's pretty stark."

Lose 232,000 Jobs
The Labor Department now estimates that the economy has shed 232,000 jobs in the first three months of this year. And even this is not the complete picture since a growing population means that the nation needs to add more than 100,000 new jobs monthly “just to stay in the same place.”

 

The net result is that, in just three months the nation is down more than a half million jobs.

 

The job losses were widespread, with the battered construction sector losing 51,000 jobs and manufacturing employment falling by 48,000. But there were also losses in key service sector industries. Retail employment dropped by 12,000 jobs, and business and professional service employers cut staff by 35,000.


Unemployment Jumps
The unemployment rate jumped to 5.1% from 4.8% in February. The new reading is the highest level since September 2005 in the wake of Hurricane Katrina. Economists note that this “rate” statistic is deceptive since it does not reflect unemployed persons who have given up actively looking for work. Nor does it reflect the number of persons who have lost a well-paid job with benefits to take a low paying retail or part time job.

The number of people outside of agriculture who are working part time who want to work full-time is now up 591,000 compared to a year ago.

 

The Labor Department household survey gave an even grimmer view of job losses. It found that the number of Americans saying they were unemployed soared by 434,000, the biggest jump in that reading in more than six years.


Expect More Losses
The outlook for the months ahead is not good. Economists estimate that monthly job losses will continue at least through August.

The split between Republicans and Democrats on this issue was immediately clear.

The presidential candidates, already divided over how to alleviate the mortgage and housing crisis, divided again over how to generate jobs and help the unemployed.

 

In separate statements Friday morning, Senators Hillary Rodham Clinton and Barack Obama supported another stimulus package and an extension of unemployment benefits, among other measures. In contrast, John McCain, acknowledging that “many Americans are hurting,” said that lower taxes and less regulation would generate jobs.


Ask Congress to Act
On Capitol Hill, Democrats argued that Congress should work quickly to extend unemployment benefits as part of a second economic stimulus package. A proposed extension was stripped from the stimulus legislation passed in January.


In contrast to the McCain do nothing position, Maine Senator Olympia Snowe said, "The number of Americans filing first-time claims for unemployment benefits is at its highest level since after Hurricane Katrina. As our economy continues to struggle, now is the time for Congress to take immediate and definitive action to bolster job growth and protect America’s workforce."

"The number of long-term unemployed in this country is twice as high as it was prior to the last recession in 2001, said Snowe, a senior member of the Senate Finance Committee. "Any effort to jumpstart the economy must address the key component of unemployment insurance."


 With the ranks of the unemployed swelling by 16% in the past year and jobs becoming scarcer, the outlook has rapidly darkened for the nation’s 7.8 million unemployed with little relief in sight,” said Andrew Stettner, Deputy Director of the National Employment Law Project.

Big Economic Trouble
Job loss was just one of the many financial figures indicating that the nation is already in recession and is teetering on the cliff of an economic disaster. While John McCain says he doesn’t believe we are in a recession the economic clouds continued to gather.

 

* U.S. home sales have fallen to a 13-year low.

* Consumers have fallen behind on paying car, home and credit card loans at the highest level in 15 years.

* Some 28 million Americans are on food stamps with numbers rising in 40 states – some with a one-year growth rate of more than 10 percent. This is the highest level on food stamps since the program began in the 1960s. People sign up for food stamps when they lose their jobs or their wages go down when their hours are cut.

* One in eight Americans – about 37 million people – live below the economic poverty line – nearly 5 million more than in the year 2000. Sixty million more live just above the poverty line - $19,900 for a family of four – a level 42 years old that fails to account for even the basic necessities of life.

* Americans do get the big picture. Eighty-one percent of Americans believe the nation is “seriously off on the wrong track.” This is a majority of every major demographic group. And 78 percent say they are worse off than they were five years ago. Two thirds of Americans say the nation is in recession. Working families realize the fact that median household income has not returned to the inflation-adjusted peak that it hit in 1999.

* Fueled in part by the massive Bush tax cuts for the rich a new report of the Congressional Budget Office shows that the incomes of the top one percent of Americans was more than the income of the poorest 20 percent. Three million at the top took in more income than 166 million at the bottom. The richest had the biggest share of national income since 1928. To help feed this fire of inequality Congress in 2003 cut taxes on long-term capital gains and most dividends. The income of the typical working family was lower in real Inflation adjusted) income in 2007 than it was at the end of the 2000 business cycle.

 



McCain/Bush “Pain No Gain”

“All pain and no gain” is the slogan that characterizes the Bush Administration toward working families and John McCain promises “four more years.”

If the nation follows the do-nothing Bush-McCain economic policies the rise in unemployment will cause working family income to drop $750 or more in the months ahead.

 

There are a number of improvements in unemployment insurance that could be made at the national level including longer periods of benefit payments, tying the extent of UI to national economic downturns, making UI more available to low-wage workers, part time workers, temporary workers and long-term unemployed and equalizing levels of UI benefits among the states.





States Could Change
Since the UI program was established, there have been a number of important changes in the labor market, including the rise in part-time and temporary work, the increased role of women in the workforce, and the rise of dual-income families and the difficulties they face balancing work and family obligations. Unfortunately, the unemployment insurance program has not kept pace with these changes, and presents particular difficulties for these groups of workers, as well as low-wage workers.   Providing the assistance necessary to help these families requires the following state-based reforms:

  • States should consider a worker's most recent earnings when determining eligibility for benefits.

  • States should extend eligibility to workers seeking part-time jobs.

  • States should base their eligibility requirements on hours worked, not wages, to alleviate the inherent discrimination against low-wage workers.

  • States should pay more generous benefits to keep workers and their families out of poverty.

 

Research confirms that the unemployment insurance system has been an extremely effective mechanism for stabilizing the economy during a downturn. Click Here for Information. Unemployment insurance is a particularly effective stimulus. Not surprisingly, job loss is often associated with a decline in consumption, which then reduces demand for other goods and services as part of a negative cycle of increasing unemployment and declining economic activity.

Benefit Changes
The effectiveness of the unemployment insurance program at the present time is less than it should be. This is the case for three reasons: (1) The criteria for providing additional weeks of benefits to workers who have exhausted their 26 weeks of regular benefits are excessively restrictive, and no extra weeks of benefits are currently being provided anywhere in the country; (2) certain eligibility rules for unemployment insurance are outdated and often prevent steady part-time workers from receiving benefits when they are laid off; and (3) benefit levels are low.

The present economic situation is undoubtedly bad and is recognized as such by virtually everyone (except Bush/McCain). But in every problem there is also an opportunity. The opportunity here is to extensively improve the national/state unemployment laws. Workers and working families should support candidates at all levels who have a clear record of fighting for this goal and who are pledged to make this a major goal of their time in office.