It's interesting to read the news on today's unemployment numbers with a first line of WORST OVER?. It then goes on to explain how the numbers were "better than expected" even though the economy continues to bleed jobs.
Sure, not everything in the report was bad news...just most of it. The media was quick to report that temporary jobs were increasing, but failed to mention that the U-6 was also increasing, that the number of people on permanent layoff was increasing, and that people not in the labor force but still want a job was increasing.
All of this overlooks the fact that hundreds of thousands of long-term unemployed are about to exhaust even their emergency and extended unemployment benefits every month. From Goldman Sachs:
More than 400,000 jobless workers could run down their federal benefits each month over the next several months, even assuming that Congress continues to renew the expanded benefit period now in place.
More workers are moving from regular benefits into emergency benefits. The chart above illustrates this process. Workers who qualify for jobless benefits begin by receiving 26 weeks of standard unemployment benefits. They then move into the first of four tiers of emergency benefits, described at the bottom of the exhibit above. The third tier is generally available to states with an unemployment rate of more than 6%, so that most states are currently eligible. The fourth tier is available to states with an unemployment rate above 8.5%, which applies to a more limited group of states. Once jobless workers move through the tiers for which they are eligible, they usually move to state extended benefit programs, which once again depend on the unemployment rate in a given state and last an additional 20 weeks. In all, this means a laid off employee can receive benefits for 99 weeks, or almost two years, after losing employment. The result is that total uninsurance compensation rolls have risen significantly, even while regular continued claims have fallen.
in absolute terms the numbers are beginning to mount. For instance, over 100,000 workers exhausted their Tier III benefits last month, and for some of them this will be the end of unemployment compensation (a few will move to Tier IV benefits, and others will move onto state emergency benefits for a few months before completely exhausting their eligibility) If the rate of exhaustion continues at the current pace, this implies over 400,000 workers will exhaust their benefits in some months, even if Congress continues to extend the current, more generous, unemployment program.
The article focuses on the economic effects from so many people slipping through any sort of government safety net. That's not what I think is more important. I think the social costs are the most important - and they will be devastating. This includes rising crime and suicide rates, as well as people having their careers destroyed.
Inevitably we could see political costs as well, possibly even social unrest.