Chart: Unemployment Lasting Way Too Long

Above is a chart of the median duration of unemployment from the past 50 years, based on data supplied by the US Department of Labor. That’s quite a scary spike we have going right now. (Chart source, via The Atlantic and Greg Mankiw.)

Not coincidentally, the Senate just voted to extend employment benefits again after much debate. This means that the federal government will continue to provide up to 99 weeks of unemployment assistance, including the first 26 weeks provided by individual states.

People will argue whether this is the best way to combat the problem. I don’t know the answer, especially with the huge deficit, but I do feel that with two years of unemployment available that there is less excuse not to learn some new marketable skills if you need it. Also, this just makes my cash hoard of a year’s worth of expenses that much more important to me. I really didn’t think an emergency fund would provoke such a strong psychological response, but it has significantly lowered my daily stress levels.

If you don’t have your warm fuzzy cash hoard yet, open a separate online savings account and start socking something away! Just look at the chart again if you need motivation.

Comments

  1. Agreed on the emergency cash hoard. My spouse and I have very stable jobs, but the money provides nice peace of mind and once in place allows you to achieve a good deal more clarity on long-term financial planning. I’ve chosen to go with six months and it is fun to have it in rewards checking earning 4% just for paying a cable bill in tenth increments once a month.

  2. Can someone PLEASE tell me… WHO can live on unemployment?

  3. This unemployment extension was a tough one. On the one hand I definitely think that folks who have lost their jobs need a safety net. On the other hand I wonder just how effective it is. I tend to think there are three sets of unemployed people.

    Those who formerly had high paying jobs probably have (or should have) a savings cushion like the one you describe. They are eligible to collect unemployment even though perhaps they don’t really need it and it may not even be a significant sum to them at $300 a week on average. They have an incentive to collect benefits for as long as possible while they hold out for a higher paying job, which actually reduces wage flexibility in the overall economy and arguably slows down the economy’s recovery.

    At the other end of the spectrum are people who were low wage earners and lost their jobs. They probably need unemployment benefits to get by, which is fine, that’s what the insurance program is for. But on the other hand, in my state the unemployment benefit is greater than minimum wage (even before taxes) so I think these people honestly have an incentive to remain on the sidelines as long as possible. If you could earn $300 a week staying at home or $280 a week working 40 hours as a cashier I think the rational decision is obvious. And at $400 a week working it may even make sense to stay home depending on your cost of living and how much you value your “leisure time.”

    The third category are people in the middle who may or may not have an adequate savings cushion but need unemployment benefits to stay on their feet until they get another job that allows them to return to their former standard of living. Of the three groups this one has the most motivation to get back because they’ve really taken a hit to their standard of living and I have zero problem extending their benefits because they only take the max if they really need it.

  4. Mickey Blue Eyes says:

    How’s that Hopey Changey thing working out for you? :-)

  5. I couldn’t agree more with having an emergency fun or cash hoard of a year or more of expenses.

    I also can’t disagree more “that with two years of unemployment available that there is less excuse not to learn some new marketable skills if you need it.” Unemployment pays a fraction of what anyone made while working. If you were a low paid worker the unemployment is minuscule. If you were a high paid worker the unemployment in most states caps under $300/week. Its a sliding scale that doesn’t even supply enough money to support oneself. And that is by design.

    The motivation to go back to work is built in by not being able to support oneself on unemployment without tapping heavily into savings or cutting drastically back in ones lifestyle & living situation. Very few people could live off unemployment alone.

    As much as I think a lot of social services have turned into handouts for the lazy given to people working the system, I don’t feel much of unemployment is that way. Most of the people on unemployment, especially the ones laid off the past few years, want to work & are looking for work. Most of these aren’t habitually fired employees that try to get let go from jobs so they can milk the system. Most are people that have worked for years at a job and are suddenly out of work with no way to pay bills.

  6. JoetheBankgeek says:

    According to the so-called government there are over 8 million illegal aliens working in the U. S. At least some of them have good paying jobs. In southern California there are over 2.5 million. At the same time the L. A. Unified School District has a high school drop out rate of 56%. Many of those drop outs have only a few basic job skills and need unskilled jobs but can’t find them. Given these facts why isn’t the so-called government enforcing the immigration laws? Could that be because some politicians in Washington want the illegal alien vote? BTW it happens to be illegal for illegal aliens to vote in any election in California. Just thought I would mention it.

  7. @Tim – But what else are you going to do while unemployed, besides either look for work or learn new skills? People say to treat job-searching like a job. But I don’t think you can look for work for 40 hours a week for 99 weeks in a row. Why not spend it learning new skills?

  8. I was on unemployment for 3 months back in 2008 before finding another job just before things really tanked. I didn’t have an official emergency fund at the time but I had a few thousand dollars to get by with the help that unemployment provided. The 227/week wouldn’t have been enough to even pay my mortgage. I remember cutting back on everything. We cut television to a tolerable minimum, no job so I didn’t have to drive except to go to interviews, no entertainment, no eating out. It wasn’t so bad. Had to keep internet and phone service to look for jobs and answer the phone when recruiters called. Had it not been for my savings though, I would have missed a couple mortgage payments and credit card payments and my credit would have taken a nose dive but I was able to find employment before things got bad.

    Long story short – BUILD UP YOUR EMERGENCY FUND!

    @JoetheBankgeek

    I agree with you. Enforce laws to keep people that shouldn’t be here from taking jobs from people that have a legal right to be here.

  9. @klein – I don’t think anyone said you can live on unemployment alone necessarily, and it definitely isn’t supposed to replace all your lost income. It’s a safety net/cushion, which I think is a good idea in general.

  10. Looking at a chart like that definitely makes one appreciate their full-time job all the more!

  11. Let’s not bring the illegal alians debate into the discussion of unemployment here. I have my problems with illegal alians, but taking the jobs away from Americans isn’t one of it. Most of them are filling jobs the current generation of Americans are not willing to do…

  12. @Eric
    You are 100% correct about illegal aliens. All the people who say IA are taking jobs would never consider picking fruit, working fast food or standing on a corner waiting for day work. Hey, maybe your teenager will apply for these jobs….

  13. Eric and Steve, you two are dead wrong. Why don’t you ask all of the remodelers, carpenters, sheetrockers, roofers, painters, and numerous other semi-skilled workers how they feel about the illegal aliens? If you think all they do is take the very worst jobs with the worst pay talk to some of these laid off, out of work, or underemployed people first.

    I for one can attest to this for they not only break our immigration laws, take our jobs, but also take badly needed social services that are desperately needed for our American citizens now.

  14. @Jack
    I agree, the workers you mentioned should and would complain, but who is too blame? Yes they are illegal but who is hiring them? A lot of people hire illegals to save money (which I don’t agree with). As long as there is a market, the labor will follow. So Jack, before you get hot under the collar, my point is, the illegals are not the problem with unemployment, it’s the economy. Since the housing market got hit so hard in the last 2 years, I would expect remodelers, carpenters, sheetrockers, roofers and painters to have high unemployment.

  15. Stop blaming foreigners or illegal aliens, it’s the employers who have stopped hiring. The evil employers rather hire temporary workers (aka contractors) or give existing workers more workload. Go check out the latest earnings, companies left and right are making huge profits!

  16. Question for everyone here? Where do we draw the line on unemployment? 3 years, 4 years, 6 years, 10 years? Is there a limit?

  17. Jonathan – my only question is, *when* in that two years do you start looking for new skills? I assume the first few months you are still hoping to look, thinking each application or interview might be The One. Then. 6 months? 9 months? later, even if you are starting to really think you might need to brush up, now, where is that money coming from? Which I guess only underscores the need for the savings cushion, but, I see it as challenging calculus to decide where/how to spend what money you may have remaining in order to *possibly* make yourself more hireable. Anyway. it’s challenging, and as an unemployed recent phd recipient (sciences) , I don’t even get any unemployment ;)

  18. you’ve just got to look down over here in Australia. We have NO time limit on unemployment benefits and I regularly work with people who are 3rd Generation unemployed!!! WTF!! You’ve just got to add a couple of kids and you get Family Tax benefit too, with 3 kids you could be on $1000 a fortnight and never have to work

  19. I have been out of work for four some months now and my brother has been out of work since early 2009.

    Mid-career, mid-level, middle age professionals like us are a glut on the market. We both want to work, but there simply aren’t the jobs for our field.

    My brother did retrain before he got laid off to be a teacher, but this year, finding a job in teaching is nearly impossible, so hope he will find something to tide him over until that market improves.

    As for me, I keep looking and I have finally gotten some interviews the last few weeks.

    But if I don’t find something by fall in my profession, I start retraining.

    My experience with the overwhelming number of job seekers I have met is we want to work.

  20. NYC GUY says:

    @Benjamin Bankruptcy

    No time limit, and benefits for kids? That sounds like a recipe to encourage slackers and living off unemployement.

    I know people that are unemployed, receiving unemployement checks and are happy with it. Granted these people are young 20 somethings living at home, with little to no bills but the lengthing unemployement only encourages them to not work. The flip side is people who legitimitly can not find work, have bills and a family and need to subsidize there small emergency fund with unemployement checks. Than there are people I know who made out very well with getting laid off, severence package and collecting unemployement and than finding a job right when there severene stops and doign rather well with building up some savings. Not saying this is right, but it sure is a nice way to benefit from losing a job.

    It’s a tough decision on what is the right decision, to extend benefits or not. Seems they decided to extend benfits and put us in further debt, and I have little faith in Obama getting us out of this thing. Didn’t he promise to create jobs? I guess census worker was the only job he was able to increase.

  21. If any of you are in the DFW, USA area and in decent physical condition respond on this thread and I have a job for you.

    It will be about 4-8 days of solid work outside in the sun putting in fence. It will pay $9/hr cash and I, the property owner, will be working alongside you. We will be driving t-posts with a manual t-post driver and sweating and most likely bleeding some.

    Looking forward to hearing from some of you.

    Good day.

  22. Can somebody please help me understand what the unemployment extension of benefits means to workers currently employed?

    For example, I THINK unemployment benefits typically last 6 months (correct me if I’m wrong) under normal circumstances…however due to the extension, they now last up to about 2 years (99 weeks), right?

    Let’s say a person currently employed today becomes unemployed tomorrow and also assume that there are no more unemployment extensions of benefits. Will that newly unemployed person only get 26 weeks of unemployment, or will he get 99 weeks of unemployment?

  23. bb,

    “Evil” employers? Lol. Here we go again with that mess. If you think companies and rich people are evil then go work for a poor person.

    Joe,

    I’m not sure you’d get very good help at 9/hour using a manual driver. For 80/hour you can get it all done in 1-2 days and spend the same amount of money while watching someone else do it for you with a bobcat post driver.

  24. Eric and Steve:

    Restaurants, lawn services, housing (including all categories mentioned before), cleaning crews. The list goes on. All of these are jobs that any other US citizen would be willing to take but illegal labor is cheaper. The government just looks the other way. Blame should be placed on companies that higher illegals and the government for not enforcing the laws that exist.

    Using the argument that “these are jobs that no US citizen will take” is nonsense. You have to qualify that statement with “for the wage that an illegal alien will do it for”. There will always be a legal citizen willing to do a job for the right wage.

  25. @Robert, indeed I could but that misses the point. We have the online discussions in the tidy, air conditioned room of cyberspace about how our ‘manufacturing base’ has left and there is high unemployment however the real work is just that ‘real’ as well as hard. Most people who talk about the manufacturing base has left our country have not spent a full day of real work outside in months if not longer. Sorry but our unemployment situation will not improve much until people get back to the joys of hard work. Unemployed? Cancel the gym membership and go do some day labor. Although my job doesn’t pay or offer the benefits of a job with the city you’ll get in better shape, feel healthier after a few days of adjustment and put food on the table.

    Personally I enjoy the work and have saved thousands in gym fees and associated ‘health enhancing’ supplements by working hard and eating well. I appear to be slightly overweight but can outwork many consistent gym attendees as well as having a much better tan :)

  26. @Robert
    I can’t speak for Eric, but you are missing my point. Illegals are cheaper because employer doesn’t pay taxes or social security, which they should (or at least a 1099). If employers did this, the problem would take care of itself and put everybody on equal footing. You’ve seen the headlines, even very rich people dodge the system. So who is the problem, the illegals doing the work or the people employing them? Your statement, ” There will always be a legal citizen willing to do a job for the right wage”, needs to be qualified. What is the “right wage”? I’m not sure I know the answer. I have a very good job so my price is high but if I’m unemployed, my price goes down considerably. Personally, I don’t think losing your job and then working at McDonalds or being a janitor is the first thing that pops to mind for the unemployed. Someone that has a good job and gets laid off is now told, take a minimum wage job. Easy to say but I don’t think it would be easy to do. Back to my original point, the illegals are not the cause of unemployment.

  27. Steve,

    Re SS/taxes: Funny that it requires and illegal immigrant to do this. You could pay anyone cash under the table legal or not. If a business is going to dodge taxes, why would they care if the worker is illegal or not?

    The right wage is whatever is agreed to between employer and employee (as long as it meets min. wage requirements).

    I feel the problem with illegal labor is with 3 groups:

    1. The employer that is knowingly breaking the law
    2. The illegal immigrant that is knowingly breaking our laws by living and working here illegally.
    3. The government that won’t enforce the law

    Because I agree with you that illegals themselves aren’t the cause of unemployment. I will conclude that we are now way off topic.

  28. After working as an electrician for 35 years, my dad has been collecting unemployment (including extentions) off and on for 2 years. he is sometimes able to get out for a few weeks or months, but nothing steady. And he’s even willing to travel all over the country to find work, but if you are trying to get in line as a “traveler” you have to go behind the locals.

    He has done some training classes, but still in his field

    But if he were to attend college to get retrained in a new profession, unemployment will not support him. in general, I don’t think people should be able to collect unemployment while in college, but it an economy such as this, maybe it is time to rethink this.

    He has been considering an all out career change/shift, but all that is really available at this time is work in the oil fields. Which he could and will do if needed. But he has worked in the electrical field his entire life, and it isn’t like electrical work ever will be obsolete. Let me say this: he would far far prefer to be working than collecting.

    Perhaps they also should look over lifetime earnings and collections. Someone who has worked 35+ years, never collecting a dime, suddenly needs to collect for nearly 2 years should be looked at differently than someone who is collecting every couple years, even for shorter times.

    (PS- i’ve heard mixed things on whether or not you can attend school and collect. Perhaps it varies by state? )

  29. Joe: “Most people who talk about the manufacturing base has left our country have not spent a full day of real work outside in months if not longer. Sorry but our unemployment situation will not improve much until people get back to the joys of hard work.”

    I don’t really understand your argument. America has lost million of of good manufacturing jobs over the years. Thats a fact which has nothing to do with the amount of hard labor I may or may not do. Do you think there are tons of hard labor jobs out there just looking for workers? The unemployment rate in the construction industry is 25%. DO you seriously think that is due to laziness or something?

  30. @SP
    That is a good point about lifetime earnings and collections, that is an idea that I would like to see addressed in the political circles but alas it probably won’t happen.

    @jim
    My point was many people would prefer to collect unemployment than do hard labor. Please do not misread, not all but many.

    The problem is our current unemployment is a complex subject with many facets but most people take the easy way out instead of engaging in complex discussions. To explain just one facet is that we, the American consumer, are also to blame for our desire for cheap and non-American goods. It gets frustrating that people complain about problems and explain how there are ‘no’ alternatives but they really have not done their research, they refuse to see how they contribute to it. Unless it is put in their lap with a label that says ‘American Made’ they’ll just sit on the fence and bellyache. A couple of examples related to this point: tools and food. I buy quality tools for the most part and try to buy Snap-On because they’re mostly American made but how many people on this forum buy crap at the big-box stores made overseas? Another example is farmer’s markets, individuals complain how things cost more which is partially true. They fail to recognize how the reason things are cheaper at the store is due to the massive government subsidies to big-ag. So do they spend the time to drive to farmers markets….not a chance. If more Americans would really reflect and _really_ look at themselves they would see how they’re partially responsible for our current situation. We really can’t have an immediate impact on our political or U.S. unemployment situation but we can change our buying habits n-o-w! Imagine if everyone reading this blog went to the farmers markets this weekend and only bought their produce from them. They would clean them out and next growing season they’d have more than enough product to support the demand _and_ prices would drop some.

    The construction industry may have 25% unemployment but based on my experience with construction people 25% is a good start of getting rid of the boneheads. This is one reason I started learning to do most of my own work. Two family members have had their bathroom/kitchens done in the last 12 months and the people who did them were sub-par, in one case the nice walk-in shower has to be completely ripped out and redone due to the contractors being idiots. Problem is that some of the boneheads stay employed and some good, hard working people need to get creative and get their foot in the door.

  31. @Robert
    I agree

  32. well, lets start with a simple question. what does america make that can entitle citizens to employment?
    ….




    I truly have no idea. And now I’m sure its obviously not seafood, unless you like your tuna in toxic oil instead of regular oil. This is a nation that provides services now, not products.

  33. I work for a paint contractor. We have had plenty of work for the past few years. Unil recently, I have averaged 45 hrs per week. I pay child support, as well. For 3 wks, I have not worked. I recently applied for unemployment benefits. My job is secure as I am the foreman. I will go back to work in 2 weeks. Until then, I need help. I have never filed for unemployment in my life. Had no need. I was making over 5 hundred a week. Dept. of Labor notified me that I would be recieving $166.00 pr week. Seriously? My employer pays $15,000 per year (to be legitimate) just for this reason. Where are they justified in saying that I’m only eligible for this meager and insulting amount? I’m an AMERICAN citizen. The issue with illegal aliens should be rectified. The Puritans came here for a better life. I laud the people that come here for a better life as long as they go through the proper channels. The issue in Utah, where the newspaper published the names of suspected “illegals” should have happened. They were showing on national news, a women being interviewed. She said that she was on welfare and recieving food stamps. That was how she was raising her children. She was Mexican and admitted on Television that she was here illegally. Saying that it wasn’t fair that her name was published in the paper. NOT FAIR? Why wasn’t she arrested on the spot? NOT FAIR? They are the one’s that make it SO difficult for those that need the help that is in place for US, to get it!!!! Obama is a coward for not standing up for the ones that elected him. Im guilty for my vote. And I’m ashamed of it. GOVERNOR OF ARIZONA IS A TRUE U.S. PATRIOT. Its a sad day in a civilized U.S.A. that the U.S. Government would sue a state that is wanting to do a job that belongs to the U.S. Goverment. SHAME SHAME SHAME

  34. KeysConch says:

    The fact of the matter is there is no open and shut answer to this doscussion, Eitther of them realy. As far as illegals and the government’s lack of actoin towards them, even to the point of sueing a state for trying to fix the problem themselves, Like it was stated above there are three groups responsible for this. In regards to extensions I challenge any of us to say that in one area or another we havent looked for the easy way out? No I’m not encouraging iit I’m stating that no matter what you try to do there wil always be someone looking for a way to take advantage og it.

    In regards to that oil comment that slipped in, Ya that was a Fuck up and a half, Being from the keys I have a good idea on how even the scare of it can effect ones economy.

    Far as work goes It realy isnt a quick and easy or in some case even possible situation to fix. My own situation for instance is I’m not built for the heavy lifting type jobs, Not that it would nmatter when most of those companies are going out of buisness on a daily rate any how, My means of travel are lefty andd righty, find work when ya gotta walk almost an hour to get anywhere sweat is not a saught after trait when meeting a potential employer. I have recently agreed to push myself on the job site with a relative to fundcontinued searches however this is only a temperary fix and with a busted knee im sureas heck gonna have issues, But rather that get the violin treatment I’ll get to my point.

    What ever the cause Illegals, Companies moving out of country, or STUPIDITY on an almost catastrofic level The economic situation we are in is all the dangerous as it has been claimed to be and we cannot depend on UNCLE SAM, play the blame game, or pull the well times are softer thanwhen i had to walk 15 miles in blistering sun up hill with bare feet card.

    Options to fix this is to unite/cooperatte localy, this means let small busnesses focus on hireing local workers (scroll up for eample) or simply kwwp your ears open and when you hear potential job openings dont keep it to urself ,assuming ur working, but if u have work pas the intel on to someone else weather you know them or not.

    CAPITALISM [yes I know I badly misspelled that] works or can work but it has to be doin properly, after all capitalism reqquires the establisment of well capital. Now I’m an anime/ kungfu movie person myself so im not saying dont import, but if you have a branch here hire locals AND LEGALS. But I’m done putting in my two cent. cant wait to see ya alls responce

  35. BJ John says:

    DUH- IT IS THE GAS PRICES THAT DESTROYED THE ECONOMY! If you don’t believe this-than you are STUPID! I guess if this continues, in 2025, the gas will be $100 a gallon a gas. Just imagine–$100 for 1 loaf of bread. If your grocery bill runs $200/month now, then groceries will be $4,000 a month. A studio apartment rent by then would be in a more affordable town would cost $6,000 a month! A SMALL HOUSE (900 sq. feet) would cost in a cheap town $3,000,000–only multi-millionaires could afford ANY house by then!

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