As Congress gets ready to take up the American Jobs and Closing Tax Loopholes Act, which includes the urgently needed continuation of eligibility for extended federal jobless benefits through the end of 2010, research shows that the number of unemployed Americans is not declining and that long-term unemployment continues to rise.
The total number of Americans officially unemployed, according to the Bureau of Labor Statistics, remains near its peak during the Great Recession, and while virtually unchanged in the last six months, has been increasing again recently.
The above graph shows the total number of unemployed aged 16 and up from the start of 2007 through April of this year. BLS database queries based on age group demographics produced the following series of graphs. They show that unemployment among younger and older workers continues to rise.
Unemployed in thousands for those aged 16 to 24:
And for workers aged 55 and up:
The 35 to 44 age group is the only one that has shown a declining number of unemployed in the last six months:
The number of unemployed in the 25 to 34 age group remains high and has been rising again recently:
Virtually unchanged in the last six months is the number of unemployed ages 44 to 55:
As Laura reported earlier, AFL-CIO President Richard Trumka is telling Congress to “walk the walk” for jobs by passing the American Jobs and Closing Tax Loopholes bill this week.
Meanwhile, the persistent rise in long-term unemployment continues unabated. The percent of the unemployed who have been jobless for more than six months is approaching 50 percent:
And the number of Americans unemployed for 27 weeks or more is now approaching 7 million.
With 5.6 job seekers for every current job opening, the need to continue eligibility for extended federal unemployment insurance is undeniable. But for those exhausting their 26-week state benefits, and those needing to apply for their next EUC Tier I through IV, that eligibility will end June 2nd if Congress fails to act.
The National Employment Law Project estimates that 1.2 million long-term jobless Americans would lose their unemployment insurance in June alone if the bill is not passed. And an economy struggling to get traction for recovery could slide back down in the recessionary ditch.
Tell your Representative to vote for H.R. 4213 — the American Jobs and Closing Tax Loopholes Act!
Tags: HR 4213, Jobs, jobs bill, long-term unemployment, unemployment
The Senate passed a revised version (to match the House’s bill) of the jobs bill they already passed once.
Two things stand out. One, as every report tells you right up front, this was a bipartisan vote. It passed with 68 votes to 29, 11 Republicans for it and one Democrat against. That is, as BarbinMD notes, fewer Republicans than voted for “corporate sponsorship of rape.”
(Remember this one?)
Two, this is a really small bill. It’s a start, don’t get me wrong. And it’s good to see any kind of action on jobs. But…it’s a small fraction of what’s needed.
The centerpiece of the bill is a new program giving companies a break from paying Social Security taxes for the remainder of 2010 on any new workers they hire who had been unemployed for at least 60 days. Employers would also get a $1,000 tax credit for each of those workers who stays on the payroll for at least one year.
Aside from that program, the measure includes a one-year extension of the law governing federal transportation funding, and would transfer $20 billion into the highway trust fund. The bill also extends a tax break allowing companies to write off equipment purchases, and expands the Build America Bonds program, which helps state and local governments secure financing for infrastructure projects.
We should feel good about it, but not even think about letting up on the pressure we’re putting on Congress to do more.
Tags: Jobs, jobs bill
Instead of tackling the massive jobs crisis head-on, with large-scale legislation that combines needed solutions on multiple fronts, the Senate appears to be adopting a piecemeal approach.
The most urgent immediate priorities should be extending jobless benefits and other safety net programs, and providing major fiscal relief to state and local governments. Those two pieces could be legislated separately if need be. But the Senate’s current plan starts with the wrong piece. And a not-so-good piece at that. The proposed tax break for employers that is the core of the Senate bill would likely have little impact on job-creation.
Dean Baker calls it ‘Money for Nothing’:
It’s great that the Senate is prepared to do something to help create jobs. Unfortunately, its most likely course of action, the Schumer-Hatch tax credit will probably create almost no jobs.
The basic deal with Schumer-Hatch is provide a tax credit equal to the 6.2 percent employer side of the Social Security tax. This credit would last for the rest of 2010. If the employee is kept on the payroll for a year, then the employer gets an additional $1,000. Only workers who have been unemployed for at least 60 days are eligible for the credit.
There are two basic problems with the credit. First, there are more than 4 million workers hired every month already. A firm could get the credit for any hires among these 4 million who has been unemployed for 60 days, even if they would have hired the person anyhow. This is a lot of money for nothing.
The second problem is that the credit is far too small to provide any significant incentive to hiring.
The New York Times, which called the bill “puny” and “pathetic”, wrote:
Most of the $15 billion would cover the cost of a payroll tax holiday in 2010 for employers that hire unemployed workers. Since there are more than six unemployed workers for every job opening, a tax break for hiring is worth a try. But the proposed credit is too small to have a noticeable impact. At best, it would create about 250,000 additional jobs from April through the end of the year, according to an analysis by Moody’s Economy.com.
An even bigger problem is that the hiring credit is unlikely to work as intended unless it’s paired with other federal support to generate and maintain consumer demand — mainly extended unemployment benefits and more fiscal aid to states. No matter what Congress does to lower the cost of labor, employers won’t hire unless they believe demand will be sufficient to sell whatever the business produces.
A detailed analysis by Timothy J. Bartik, senior economist with the W.E. Upjohn Institute, published last week by the Economic Policy Institute (EPI) warned “Not all job creation tax credits are created equal”:
Well-designed employer tax credits can encourage significant job creation, and at an affordable cost per job. But the devil is in the details. The employer tax credit in the Senate’s “jobs bill” is likely to create few jobs, and at an excessively high cost.
The Senate’s employer tax credit is based on a design proposed by Senators Chuck Schumer and Orrin Hatch. The Schumer-Hatch proposal has several questionable design details: (1) credits are awarded for hires, not net job creation by employers; (2) the credits are limited to hires of persons unemployed at least 60 days; (3) the credit rate is only 6.2% for the rest of 2010; and (4) there is a modest retention bonus of $1,000 per new hire retained for a year, but little up-front cash to encourage job creation.
Are there alternative employer tax credits to the Schumer-Hatch approach that would be more effective in creating jobs? Yes, there are a number of good alternatives, including the proposal made by President Obama, proposals made by Senators Robert Casey and Russ Feingold, and Congressman Bob Etheridge, and finally the proposal that we developed for EPI. These better proposals have the following features:
They provide incentives that are tied to whether the employer expands employment and payroll, not simply on whether the employer is hiring. Net employment and payroll expansion is what we want to reward, not simply hiring and keeping the number of employees the same.
They focus simply on employment and payroll expansion, not who is hired, which is more complicated to administer and monitor and reduces employer interest in a tax credit.
They are large enough that it is more plausible that the credit will significantly change employer behavior, rather than simply being claimed for a hire that would have been undertaken anyway.
They provide sufficient immediate assistance that the credit can boost job creation with those employers concerned about cash-flow.
If we want to effectively encourage job growth through a tax credit, we need a program that tightly targets that goal with a large enough credit to significantly affect employer’s hiring decisions. And if we want to effectively target who gets hired, we need to run such efforts through the workforce system, which can perform the required matching, monitoring, and support.
The jobs-creation tax credit plan proposed by EPI would meet all those requirements, and would really help create jobs — lots of them.
According to our estimates, a tax credit for firms equal to 15% of expanded payroll costs would lead them to hire an additional 2.8 million employees next year. Such a credit would have to be:
1. Wide-ranging. The tax credit should be designed to stimulate a wide range of jobs across economic sectors and across all kinds of firms, regardless of size or current profitability.
2. Temporary. It should be of limited duration to encourage job creation when the labor market is weakest and to limit the cost to the treasury.
3. Large. It should be large enough so that it will lead firms to hire new employees and cause a significant number of jobs to be created economy-wide.
4. Efficient. The tax credit should target new job creation as much as possible and not simply be a handout to businesses.
In line with these principles, we suggest a broad-based refundable tax credit for employers that expand their workforce in 2010 and 2011. In the first year the credit would be equal to 15% of the net increase in that portion of a firm’s payroll subject to Social Security taxes. In the second year the credit would drop to 10%. The reduction in the second year would encourage firms to hire sooner rather than later and would provide a significant incentive for expanded employment.
By basing the credit on total Social Security payroll taxes, it would also reward expansion of work hours as well as employment. And basing it on that portion of wages subject to Social Security payroll taxes ensures that the credit does not apply to wages increases for very high wage earners.
EPI’s job-creation tax credit is the fifth component of their American Jobs Plan, the basis of the five-point plan supported by the AFL-CIO and its Jobs for America Now coalition partners. In the interest of saving the Senate a lot of extra work, perhaps it should simply adopt this entirely workable jobs plan — piecemeal if the Senate insists.
At least we’d get all the right pieces.
Tags: Jobs, jobs bill, labor
“The jobs bill emerging in the Senate is pathetic”
So starts the lead editorial in The New York Times last Friday titled How Not to Write a Jobs Bill.
The jobs bill emerging in the Senate is pathetic, both as a response to joblessness and as an example of legislation deemed capable of winning bipartisan support.
An $85 billion proposal put forward Thursday morning by Max Baucus, the chairman of the Finance Committee, and by Charles Grassley, the committee’s top Republican, scarcely began to grapple with the $266 billion in provisions for jobs and stimulus that President Obama proposed in his budget. It was not even in the same league as the modest House-passed $154 billion jobs bill.
The Times rightly notes that most of the Baucus-Grassley plan wasn’t really jobs-related, but loaded with a patchwork of business and other tax breaks for the wealthy, as well as special interest payoffs to attract hoped-for Republican votes. In response, many Senate Democrats said they could not support the Baucus-Grassley proposal.
So the majority leader, Harry Reid, decided to hold a vote on a stripped-down, $15 billion version in late February. The rest of the package, plus many other job-creation ideas, would be left for another day.
With 14.8 million Americans unemployed — more than 40 percent of them for more than six months — the smaller package is so puny as to be meaningless.
The Times goes on to endorse a plan that would immediately include key components of the five-point plan proposed by the AFL-CIO and endorsed by the Jobs for America Now coalition.
At a minimum, a credible jobs package must extend unemployment benefits through 2010. Piecemeal extensions only ensure that lawmakers will have to return to the issue repeatedly, creating avoidable uncertainty for unemployed workers and for businesses that rely on the consumer demand generated by jobless benefits.
A credible package also must provide fiscal aid to states, which continue to be slammed by falling tax revenues just as more people need help. Without more aid, states will have to cut spending and raise taxes to close an estimated $142 billion budget gap for fiscal year 2011, which starts on July 1 for most states.
Republican Senate Minority Leader Mitch McConnell has objected to a proposed emergency one-week extension of jobless benefits beyond their scheduled February 28 expiration.
Senate Majority Leader Harry Reid’s tiny payroll tax-break plan leaves out the essential jobless benefit extensions, fiscal relief for states, large-scale infrastructure and public works programs for hardest-hit communities across the country.
Stop the cockamamie nonsense already!
Last week Senator Reid was quoted as saying “we don’t have a jobs bill, we have a jobs agenda.”
At the moment it’s clear that he’s right on the first point. We need to make sure that he’s right on the second. As the Times editorial concluded Friday:
The $15 billion Senate proposal may win Republican votes, but better-than-nothing is not nearly good enough. Neither is a pledge to do more later. A full response to joblessness is already overdue.
Tags: Jobs, jobs bill, unemployment, unemployment benefits extension
