Editor’s Note: We know what is unemployment insurance. It covers for unemployment. That said, it is also the price we pay to keep the unemployed active. And when the price of something falls, you get less of it on the market. This is what might happen with the end of the ‘extensions’: less active jobless persons looking for work.
These people are no more ‘on the labor market’. But they are still on the planet. What will happen next ?
1.3 million Americans have lost their ‘extended’ unemployment benefits last week end. This article looks at what has happened in North Carolina.
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At first glance, the effect appears to be positive. North Carolina’s unemployment rate dropped dramatically, from 8.8 percent to 7.4 percent between July and November. By comparison, the national unemployment rate fell by 0.6 percent over the same period. A closer look, however, suggests that North Carolina’s unemployment numbers have fallen not because the long-term jobless have found work but because they’ve quit looking altogether. As a result, the state no longer counts them as unemployed.
“The decline in the unemployment rate gives you a very limited view of what’s going on in our labor market,” says John Quinterno, founder of South by North Strategies, an economic research firm in Chapel Hill, N.C. “Year over year, the number of employed people in North Carolina ticked up by 6,082, while the unemployed fell by 101,901. That means the labor force contracted by 95,009. So the improvement has not necessarily been driven by more people going to work and is actually being driven to a large degree by people leaving the labor force.” In October the state’s labor force participation rate hit a 37-year low. One benefit of unemployment insurance is that “it has an anchoring effect,” says Quinterno, “because you have to be looking for work” to qualify for benefits.
Chosen excerpts by Job Market Monitor. Read the whole story at
via Emergency Unemployment Benefits Ended Dec. 28 – Businessweek.
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