Unemployment rate’s untold stories

September 3, 2010
Peter Ruark photo

Peter Ruark

It’s Labor Day once again, and as Harry scurries about getting things ready for his annual family cookout, he tries to squeeze in a few moments of reflection on the state of labor in Michigan.

He brings this year’s Labor Day Report from the Michigan League for Human Services out onto the deck, and reads that Michigan has had the highest unemployment rate in the nation for 49 out of the past 52 months, and that the current unemployment rate is still more than 13 percent.

As he waits for the coals in the grill to heat up, he skims and realizes that 41 percent of Michigan’s unemployed workers—and nearly 50 percent of African American unemployed workers—have been unemployed for six months or longer.

Harry sips a Michigan brew and puts the meat on the grill, thinking about his friends and neighbors who were laid off, but were lucky enough to not be unemployed. The guy at church who got his hours cut to part time kept his job, to be sure, but has sure had a helluva time paying the mortgage.

He reads in the Labor Day Report that one-fourth of all part-time workers last year wanted to work full time but could not because of the economy. The unemployment rate doesn’t include these people like his church friend.

Harry thinks of his neighbors. One lost her job last year because the shop where she worked went out of business. She tried for the next several months to find another job, and finally gave up in frustration. She now stays home and volunteers at her children’s school, but hopes to look for work again in the future when the job market is friendlier.

Then there is the single mother across the street who had to stop working because she no longer has reliable evening child care, and the only jobs she can find are during the evening. She applied for public assistance, which is now her only means of support for her family. She uses this downtime to get some training at the local community college, so that when the economy gets better she will be able to find solid daytime work. Neither of these neighbors is counted in the unemployment rate.

The relatives finally arrive for the picnic, and Harry’s niece tells him how she lost her manager position at the box store and now works for a fast food chain earning only one-third of her former wages.  Harry shows her the Labor Day Report and tells her that her wages would not bring her family out of poverty.

She is glad that her husband has not lost his job, but is worried that if he does, she would not be able to support her husband and young daughter on her fast-food wages alone.  She is also not counted in the unemployment rate.

As folks eat their lunch and socialize, Harry’s brother mentions that he hopes next year’s Labor Day Report shows a decrease in long-term unemployment and in the share of workers who are part time for economic reasons. His aunt points out that the end of the report lists some things that Michigan could do better to support workers and their families, such as increasing funding for adult education and vocational training, modernizing the Unemployment Insurance system, and strengthening Michigan’s social safety net for those who don’t qualify for unemployment benefits.

Finally, sensing the conversation is going to turn to MSU’s  opening football game, Harry reminds everyone that we live in a representative democracy and that people might want to consider calling their state legislators to urge them to take action on some of these issues.

— Peter Ruark

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High cost of higher ed cuts

August 9, 2010

Jacqui Broughton

Going to college is expensive. It’s also one of the keys to getting out of or staying out of poverty, reducing your chances of unemployment, and attaining higher income.

Unfortunately, with tuition at both two-year and four-year institutions rising faster than the rate of inflation and median household income falling, many students are finding it harder and harder to go to college. (See our new report Pulling the Plug on Michigan’s Future: Why Draining Resources Hurts Tomorrow’s Workforce.)

What’s to blame for the increase in tuition? There are several factors, such as expenses relating to health care, fuel costs and some courses being more expensive to teach than others. However, a lot of it has to do with the state, over a period of years, cutting aid to higher ed. 

Over the last eight years (2002-2010) the state’s general fund has shrunk by 12.6 percent, but state funding to community colleges, public-four year schools, and state-funded financial aid programs has dropped by 15 percent. This lack of state support, coupled with the factors listed above has caused tuition at Michigan’s four-year public institutions to skyrocket. Over the same eight-year period, tuition and fees increased 88 percent at Michigan’s four-year public colleges and 40 percent at two-year institutions.

Overall, Michigan’s investment in higher ed ranked fifth from the bottom in the nation between 2005 and 2009 and our tuition increases rank seventh-highest over the same time period.

Because of these cuts in state support, causing tuition to soar, tuition is representing an ever-increasing share of household income for families at all levels. This especially hurts families at or below the poverty level (which is $17,285 for a family of three) who have the most to gain by going to college.

However, even as tuition rises and aid programs (including many need-based aid programs offered by the state) have been cut or drastically reduced, enrollment has not dropped as more families and individuals understand the need for education beyond high school.

This is causing more students to finance their college education through student loans. In 2008, over half of all four-year graduates had student loan debt, which averaged just over $22,000, and half of all full-time freshmen took out student loans, up from just 40 percent in 2001. 

Michigan cannot afford to have its young people graduating with tens of thousands of dollars in educational  debt due to our cutting aid to the institutions that will ensure Michigan stays competitive in a changing economy.  At a time where jobs are shifting from skills-based to knowledge-based, is it worth cutting off aid to the institutions that invest in our future?

— Jacqui Broughton


It’s only a start

July 21, 2010

Peter Ruark

We can celebrate. Yesterday, the U.S. Senate voted to override a filibuster blocking a bill that continues making Emergency Unemployment Compensation available for workers who have exhausted their Unemployment Insurance (UI) but have still not found a job. This vote will prevent more than 130,000 Michigan workers from prematurely losing their UI benefits. 

However, the vote does not restore the Federal Additional Compensation (FAC) that added $25 per week to the UI benefits for Michigan workers. This additional money has helped unemployed families fill their gas tanks, pay their utilities and buy household necessities, and by the end of May 2010 added $669 million to Michigan’s economy.

Michigan’s average UI benefit during this past April would normally have been $301 per week, but with the FAC it was $326 per week. The maximum weekly benefit in Michigan has been $387 as opposed to $362 without the additional compensation. 

The vote also does not include the Consolidated Omnibus Budget Reconciliation Act (COBRA) subsidy for health insurance for laid-off workers. This assistance helped roughly 83,000 Michigan households between the beginning of 2009 and the first few months of 2010.

Without the subsidy, many unemployed workers will see steep increases in their health insurance costs.

Two sources of federal aid to states to help with public assistance costs have also not been extended yet. One is the enhanced Federal Medical Assistance Percentages, which provided additional match dollars to help states pay for their Medicaid programs. The other is the Temporary Assistance for Needy Families (TANF) Emergency Fund, which provides federal dollars to temporarily subsidize jobs for people who are leaving (or are in danger of having to seek) public cash assistance. According to the Center for Law and Social Policy, this program could create nearly 200,000 jobs nationally by September, at which time it will expire at the end of September if Congress does not renew its funding.

So, we can uncork the champagne and celebrate the fact that Congress finally voted to allow long-term unemployed workers to continue receiving unemployment insurance benefits. But Congress still needs to continue the COBRA subsidy, the enhanced federal Medicaid match, and the job creation subsidies. And it would be nice if our unemployed workers could have that extra $25 per week of help as they look for other employment.

— Peter Ruark


Michigan Is Ours!

July 19, 2010

Jan Hudson

The League of Women Voters of Michigan recently completed a project called Michigan Is Ours! that documents the loss of state dollars to fund public services over the last 10 years, in part due to tax policies that reduce taxes. The group is advocating for a reversal of this trend.

In its background information, the League of Women Voters cites the negative consequences  to state services  because of the dramatic decline in state revenues, including:

  • the reduction in state workforce– 18 percent, over the last seven years.
  • the dramatic decline in public safety funding– $3 billion, since September 11, 2001.
  • the astonishing decline in state investments in higher education.

The group’s members believe that the “T” word is not a terrible word, but is a necessary word if we are going to have quality public services.  They further believe voters are concerned about such services as education, public safety, social services, health care, employment services, safe food and water, parks, libraries, and roads, and are willing to pay for them. 

As part of this project, the League of Women Voters has created a series of postcards on specific public services to be sent to legislators. These postcards have a simple message: they affirm the voter’s support for a specific public service and further affirm the voter’s willingness to pay more taxes to support it.  They encourage legislators to pursue tax changes to increase state revenues to support these essential public services.

The Michigan League for Human Services also advocates for tax policy changes to increase state revenues to support key public services.  Numerous options are available to policymakers.  Please see our Facts Matter report for more information. 

If you think a change in direction is in order, and support public services, including adequate taxes to pay for them, let your legislators know.  You can contact Jackie Benson at the Michigan League for Human Services, Jbenson@michleagueforhumansvs.org, for a supply of postcards.

Thanks to the League of Women Voters for creating such an easy way for us to communicate our priorities and willingness to pay more taxes for public services to our legislators.

— Jan Hudson


Penny Swan on being jobless

July 16, 2010

Judy Putnam

Penny Swan, 51, is an out-of-work respiratory technician in Hillsdale.

She’s one of the 104,000 jobless Michigan workers who, as of Saturday, will have lost their unemployment benefits this month after Congress failed to pass an extension. Swan found out she was eligible for 20 more weeks of unemployment, then a week later she got a letter saying it wouldn’t happen. Her benefits ended two weeks ago.

“It’s just wrong,’’ says Swan, who has been looking for work for 18 months. “It’s not only affecting me, it’s affecting everyone I pay bills to.’’

Swan says she hears the talk show chatter about people who say the jobless need to just get off their couches and get to work. It’s hard for her to hear because she spends long days sending out resumes and looking for work. She wants to work but is running into brick walls.

“I’m not getting any calls back. I’ve never experienced anything like this. Before this, I’ve never been out of work for more than two weeks,’’ she says.

Swan’s life has been caught up in the national debate about debt vs. economic stimulus. Some in Washington have suddenly discovered the national debt. While it is a concern (See a recent Center on Budget and Policy Priorities paper on the recession and debt), failing to stimulate the economy, many economists fear, will lead to a double-dip recession. In other words, there’s a time to address the deficit, but the time is not now if we want our economy to return to health.

Beyond making it difficult to make ends meet for thousands of jobless workers in Michigan, the loss of unemployment benefits removes more than $200 million a month from Michigan’s economy, the National Employment Law Project estimates.

Michigan’s congressional delegation, for the most part, has been supportive of extending unemployment benefits. Only Reps. Candice Miller and Dave Camp voted ‘no.’ Rep. Peter Hoekstra was attending a fund-raiser for his gubernatorial campaign and didn’t vote.

Michigan has led the country in unemployment  for 49 out of  the last 50 months. It’s important that these benefits be reinstated quickly. A vote in the U.S. Senate could do that as early as next week. Please read the League’s statement issued today urging a fast vote.

Swan says many in Washington are out of touch with the reality she faces. The health care company she worked for, providing in-home assistance for respiratory patients, has cut its workforce from 25 to seven. Still, Swan says she’s lucky. She has an understanding landlord and she is considering moving in with a sister a few miles away. She is single, with just two cats to care for.

“I can’t imagine the pressure on someone who has a family to support,’’ she said.

Even with unemployment benefits, Swan says she’s watched her pennies. A crown on a tooth fell off more than a year ago, and she hasn’t had it replaced, instead using a temporary dental patch to fill the hole.

“I can’t go to a dentist,’’ she said. “I don’t have any choice.’’

— Judy Putnam


Will Michigan be ready for 2018?

July 8, 2010

Peter Ruark

We at the Michigan League for Human Services have written extensively about the need for Michigan to invest in postsecondary education and training. A new report from Georgetown University called Help Wanted provides projections for future job demand that underscore this need.

According to the report, the number of Michigan jobs requiring postsecondary education will grow by 116,000 between 2008 and 2018, while jobs for workers with no education past high school (including dropouts) will grow by only 22,000.

In Michigan, 62 percent of jobs in 2018 will require some postsecondary education and 28 percent will require a bachelor’s or graduate degree. These figures are close to projections for the nation as a whole.

Jobs that require some level of postsecondary training (such as an associate’s degree or a recognized vocational credential) but not a bachelor’s degree are called “middle skill jobs.” This is where a large part of the job growth will be in the next several years.

What is driving the increasing need for postsecondary education? According to the report, it is technology. Throughout our country’s history, technological development has favored workers with more education, and in turn, demand for these workers grows as the technology spreads throughout the economy.

So what are Michigan and the United States doing in light of all this? The good news is that No Worker Left Behind has been very successful in its first three years. It has enrolled more than 131,000 workers, and 75 percent of the 58,000 program completers have found new employment or retained a job that had been at risk.

However, in contrast to the $40 million in state funds that Gov. Jennifer Granholm recommended for its first year, the state only invested $4.5 million in No Worker Left Behind this fiscal year, with the vast majority of funding coming from the federal government.

This may have worked fine when there was federal money to be had. But, according to the Lansing State Journal, federal funding will be cut by $92.4 million as the need in other states becomes greater and as stimulus funds begin to dry up. Because workers already in training programs will receive highest priority for the remaining funding, No Worker Left Behind will not be able to enroll many new trainees in the near future.

There has to be serious monetary investment in adult learning by both the state and the nation if we are going to have a workforce that can meet the job demands of the upcoming decade. If Michigan plans to be competitive, it must make sure it has the money to upskill its workforce when federal funds are scarce.

Right now our state doesn’t have the money. And though it sounds like a broken record to say so again, we won’t have the money until we devise a way to increase state revenues.

— Peter Ruark


While you’re at the parade…

July 2, 2010

Judy Putnam

Thursday, we posted a blog urging people to tell their U.S. representatives how important extending unemployment insurance is for the thousands in Michigan about to lose benefits.

The U.S. House later that day voted to extend the benefits. Michigan’s Democrats all supported the extension as did four GOP representatives – Vern Ehlers, Fred Upton, Mike Rogers and Thad McCotter. (The rest voted no except for Peter Hoekstra, who did not vote.) The League this week sent letters thanking the four Republicans for joining the Democrats in understanding how important these benefits are to Michigan families struggling in this recession.

 The Senate is expected to act on the extensions when it returns from the Fourth of July holiday. Jobless workers will see their benefits disrupted, though they are likely to be restored when the Senate votes. (Sens. Debbie Stabenow and Carl Levin support the extension.)

Please thank the members of the delegation who support this! And when you see them at the Fourth of July parades or elsewhere, please tell them that Michigan needs fiscal relief in the form of enhanced Medicaid match. Without it, Gov. Jennifer Granholm has warned there will be huge cuts to the social safety net.

— Judy Putnam