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Unemployment in America

Unemployment in America



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Published by: Preston Williams III on Jun 19, 2009
Copyright:Attribution Non-commercial


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Unemployment in America
Monday, December 15, 2008
The US Department of Labor submits monthly, quarterly, semi-annual and annualreports about the number of Americans who lose their jobs and register for unemployment. The Department claims that its surveys include representation from thefollowing sources:
"The household survey and establishment survey both produce sample-base
d estimates of employment and both have strengths and limitations. The establishment survey employment series has a smaller margin of error on the measurement of month-to-month change than the household survey because of its much larger sample size. Anover-the-month employment change of 104,000 is statistically significant in theestablishment survey, while the threshold for a statistically significant change in thehousehold survey is about 400,000.
However, the household survey has a more expansive scope than the establishment survey because it includes the self-employed, unpaid family workers, agricultural workers, and private household workers, who are excluded by the establishment survey.The household survey also provides estimates of employment for demographic groups." 
 This information at best is quite misleading. Some people will find the following analysesboth eye-opening and devastating.
Historical Backdrop
 In 2002, as a small business man dealing with any number of issues, I reached out tothe Unemployment Office of North Carolina. As a result of written and verbal exchangeswith staff at the Charlotte location, I made the following observations:Here is the case:
How does the US Department of Labor calculate unemployment?
Every individual who applies for unemployment at any State Unemployment Officeis captured in the department's system. All of the former employee's details areinputted into the department's database.
How is unemployment eligibility determined?
An individual is usually eligible for unemployment due to a layoff. Any individuallosing their job due to resignation or dismissal for cause is NOT eligible for unemployment.
How is unemployment insurance payment calculated?
It varies from one state to another. Estimated bi-weekly maximum in 2002 wasapproximately $320.00 resulting in a monthly Total payment of approximately$640.00.
What is the period of payment?
Each individual receives a maximum payout at the above rate for up to three (3)months. The cutoff date is a hard date and payment ceases whether the unemployedindividual has found another job or not.
What happens if the individual gets a new job in less than 3 months?
Unemployment benefits cease as of the date of the new employment.
What is the true picture of an unemployed individual?
It varies.
Case 1:
For an individual who worked at a job which paid $7.00 per hour, thatindividual earned $560.00 bi-weekly, $1213.33 monthly or an annual gross incomeof $14,560.00. Upon registering for unemployment, that individual will experience amonthly income difference of -$573.33. If the individual does not find another job for the full duration of the allowed period of three months they will receive a monthlypayment of $640.00 and a total payment of $1,920.00. If that person does not findanother job during that 12 month period, they would have received a total of $1,920.00 in unemployment benefits for the year. The difference between what theyearned at their previous job versus their current unemployment would be an annualdeficit of -$12,640.00.
Case 2:
In the second instance the scenario is even more startling. For an individualwho earned an annual gross salary of $100,000.00 the unemployment benefits arethe same. When that individual registers for unemployment at the same office as thefirst individual, this is what happens. The registrant receives a bi-weekly payment of $320.00 or a monthly payout of $640.00. This individual who earned $4,166.66 bi-weekly, $8,333.33 monthly or an annual gross of $100,000.00 will now experience abi-weekly earnings difference of -$3846.66or a monthly difference of -$7693.33.If  that person does not find another job during that 12 month period, they would havereceived a total of $1,920.00 in unemployment benefits for the year. The differencebetween what they earned at their previous job versus their current unemploymentwould be an annual deficit of -$98,080.00.
 A quick synopsis will reveal that the true unemployment rate in the United States mayindeed be significantly understated. The individuals who fall off the "
unemployment rolls
" are NOT tracked when their benefits run out. The department has no informationabout those individuals until they show up on another company's payroll.

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