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Mint Explains Why The Real Unemployment Rate Is 17.2 Percent

by Erick Schonfeld on December 4, 2009

The U.S. unemployment numbers are out today, and most headlines will show that the U.S. unemployment rate in November was 10.0 percent, down from 10.2 percent in October. That number is depressingly large, but even that under-counts the true number of unemployed. For instance, it doesn’t count those people who don’t have a job and have given up looking for one, or those who have found marginal part-time work but still can’t make ends meet and are still looking for a full-time job.

The government keeps stats on all of these “marginally attached workers” and people “employed part time for economic reasons” (rather than by choice). If you add all of those people in, the total unemployment rate in the U.S. is 17.2 percent, compared to 12.6 percent a year ago. The only good news is that number is down from 17.5 percent in October.

To explain all of this (and I guess to remind people why it’s important to budget in these trying times), the folks at Mint prepared the video below. Despite its attempt to be lighthearted, it’s probably the most depressing cartoon you’ll see all month.

 

 

Can you imagine an America without a strong middle class? If you can, would it still be America as we know it?

Today, one in five Americans is unemployed, underemployed or just plain out of work. One in nine families can't make the minimum payment on their credit cards. One in eight mortgages is in default or foreclosure. One in eight Americans is on food stamps. More than 120,000 families are filing for bankruptcy every month. The economic crisis has wiped more than $5 trillion from pensions and savings, has left family balance sheets upside down, and threatens to put ten million homeowners out on the street.

Families have survived the ups and downs of economic booms and busts for a long time, but the fall-behind during the busts has gotten worse while the surge-ahead during the booms has stalled out. In the boom of the 1960s, for example, median family income jumped by 33% (adjusted for inflation). But the boom of the 2000s resulted in an almost-imperceptible 1.6% increase for the typical family. While Wall Street executives and others who owned lots of stock celebrated how good the recovery was for them, middle class families were left empty-handed.

The crisis facing the middle class started more than a generation ago. Even as productivity rose, the wages of the average fully-employed male have been flat since the 1970s.

But core expenses kept going up. By the early 2000s, families were spending twice as much (adjusted for inflation) on mortgages than they did a generation ago -- for a house that was, on average, only ten percent bigger and 25 years older. They also had to pay twice as much to hang on to their health insurance.

To cope, millions of families put a second parent into the workforce. But higher housing and medical costs combined with new expenses for child care, the costs of a second car to get to work and higher taxes combined to squeeze families even harder. Even with two incomes, they tightened their belts. Families today spend less than they did a generation ago on food, clothing, furniture, appliances, and other flexible purchases -- but it hasn't been enough to save them. Today's families have spent all their income, have spent all their savings, and have gone into debt to pay for college, to cover serious medical problems, and just to stay afloat a little while longer.

Through it all, families never asked for a handout from anyone, especially Washington. They were left to go on their own, working harder, squeezing nickels, and taking care of themselves. But their economic boats have been taking on water for years, and now the crisis has swamped millions of middle class families.

The contrast with the big banks could not be sharper. While the middle class has been caught in an economic vise, the financial industry that was supposed to serve them has prospered at their expense. Consumer banking -- selling debt to middle class families -- has been a gold mine. Boring banking has given way to creative banking, and the industry has generated tens of billions of dollars annually in fees made possible by deceptive and dangerous terms buried in the fine print of opaque, incomprehensible, and largely unregulated contracts.

And when various forms of this creative banking triggered economic crisis, the banks went to Washington for a handout. All the while, top executives kept their jobs and retained their bonuses. Even though the tax dollars that supported the bailout came largely from middle class families -- from people already working hard to make ends meet -- the beneficiaries of those tax dollars are now lobbying Congress to preserve the rules that had let those huge banks feast off the middle class.

Pundits talk about "populist rage" as a way to trivialize the anger and fear coursing through the middle class. But they have it wrong. Families understand with crystalline clarity that the rules they have played by are not the same rules that govern Wall Street. They understand that no American family is "too big to fail." They recognize that business models have shifted and that big banks are pulling out all the stops to squeeze families and boost revenues. They understand that their economic security is under assault and that leaving consumer debt effectively unregulated does not work.

Families are ready for change. According to polls, large majorities of Americans have welcomed the Obama Administration's proposal for a new Consumer Financial Protection Agency (CFPA). The CFPA would be answerable to consumers -- not to banks and not to Wall Street. The agency would have the power to end tricks-and-traps pricing and to start leveling the playing field so that consumers have the tools they need to compare prices and manage their money. The response of the big banks has been to swing into action against the Agency, fighting with all their lobbying might to keep business-as-usual. They are pulling out all the stops to kill the agency before it is born. And if those practices crush millions more families, who cares -- so long as the profits stay high and the bonuses keep coming.

America today has plenty of rich and super-rich. But it has far more families who did all the right things, but who still have no real security. Going to college and finding a good job no longer guarantee economic safety. Paying for a child's education and setting aside enough for a decent retirement have become distant dreams. Tens of millions of once-secure middle class families now live paycheck to paycheck, watching as their debts pile up and worrying about whether a pink slip or a bad diagnosis will send them hurtling over an economic cliff.

America without a strong middle class? Unthinkable, but the once-solid foundation is shaking.

Elizabeth Warren is the Leo Gottlieb Professor of Law at Harvard and is currently the Chair of the Congressional Oversight Panel.

Some Say It’s... Recovery.Con
Putnam County used in stimulus shell game

by Michael Brendan Dougherty

CARMEL, NY:  Recovery.gov, the Obama administration’s attempt at creating transparency in the $787-billion dollar stimulus program, is a transparent failure in Putnam County.

The Federal government claims that when Putnam County purchased five Paratransit vans with $319,000 of federal stimulus funds, 60 jobs were saved. A casual visitor to Recovery. gov might think that those 60 jobs were in Putnam County. But John Lynch, Putnam County’s Commissioner of Planning/Development and Public Transportation, said, “That number of 60 jobs is incorrect.”

In fact, the number of jobs that should appear on the report is not 60, but just 1.54, and those one and a half jobs are actually in New Paris, Indiana. Whether by bureaucratic error, or deliberate maneuvering, the administration has inflated claims of job creation based on Putnam County stimulus spending. Other stimulus-funded projects in Putnam County are riddled with reporting errors and inaccuracies.

Recovery.gov reports that Putnam County has received $1,092,595 of stimulus money for projects, $319,000 of which was dedicated to purchasing five new Paratransit vans, manufactured by Turtletop Busses in Indiana. Lynch told the Courier that the inaccurate number of 60 jobs created by the purchase of vans “counted both the second and third fiscal quarters, when it was only supposed to count the third quarter.” Putnam County officials tried to correct the number before the third quarter report was issued, but were “frozen out of the system” according to Lynch.

The number 60 does not reflect the number of jobs saved only by Putnam county’s expenditure of $319,000; that expenditure would yield an average salary of $5,316 per year. Only when Putnam County’s order of five vehicles was combined with orders from municipalities around the country, which may or may not be using stimulus funds for their purchases, are the 60 jobs at the New Paris plant considered “saved.” It is unknown whether the 60 Turtle Top jobs have been counted several times in the overall report.

According to Lynch, Turtle Top Busses claims that Putnam’s expenditures on busses in the third quarter added up to “a few days, and that comes to 1.54 jobs.”

“These numbers are quite alarming,” State Senator Vincent Leibell said. “They do not seem to have any basis in fact... I’m afraid the only jobs being created are the beancounters added to the payroll in order to keep track of the numbers. It would appear that the beancounters aren’t doing a great job.” Leibell added: “This isn’t accounting, it’s smoke and mirrors.”

“The [reporting] process and the procedure is craziness,” Lynch said. “We went back to Recovery.gov to confirm the numbers, but received an e-mail from them at quarter to five on the last day of reporting, to confirm that it was 1.54, not 60 jobs.” Putnam’s response arrived too late and the already-inflated number of 60 was reported anyway. No correction was made, even after Putnam officials alerted Recovery.gov of the reporting problems.

“The latest report goes to the heart of the fact that the stimulus package did nothing for Main Street throughout the Hudson Valley, and especially Putnam County, where business owners can’t get lines to credit to expand and create jobs, and foreclosures continue to mount,” said Assemblyman Greg Ball. “It leaves a lot of working class people wondering, where did the money go?”

Many of the other projects listed on Recovery. gov relate to local schools. Education related stimulus spending was first dispersed from the federal government to states, and then the states in turn awarded grants based on applications. In Putnam, the Carmel Central School district received over $2.2 million dollars. According to the government’s own reporting, this money has saved and created no jobs whatsoever. Superintendent Dr. James Ryan did not immediately respond to inquiries for this story. But according to other school officials, such numbers on the government’s transparent Web site are inaccurate.

The Brewster Central school district received $1,828,466. “Basically a lot of it went to saving jobs that were slated to be eliminated last spring,” said Assistant Superintendent Timothy Conway. “Then a fair amount of it has gone to help children who are from low socio-economic backgrounds or those who need extra help in school. All of it is going in those areas of direct instruction.”

“I think it is somewhere between ten and twelve [jobs that were saved],” said Conway, “I think they were almost all teachers and one administrative position.” Documentation for these claims was not immediately available, though the Courier has requested it. Asked how long these jobs were off the chopping block, Conway said, “My understanding is the stimulus money is a two year commitment” Asked whether any of the teachers knew that their jobs would have been cut absent the federal money, Conway responded, “No.”

Putnam is not alone; many localities around the country are having difficulty tracking the avalanche of federal dollars, and the jobs “created or saved” by them. Local reporters around the country have found so many inaccuracies in the government’s own reporting that the Obama administration has slashed 60,000 jobs from its recent stimulus report, citing “unrealistic data” as the source of its misreporting.

That “unrealistic data” in the Obama administration’s stimulus report included a Congressional district in Arizona that doesn’t exist. The stimulus report claimed that 30 jobs were created or saved in Arizona’s “15th Congressional District,” with just $761,420 of federal monies. And the data still includes the inflated number of 60 jobs created by Putnam County spending.

But according to Congressman John Hall (NY-19), “Recovery.gov provides an unprecedented level of transparency to the public about where their tax dollars are going and how they are being spent.”

Rep. Hall added that “It not a perfect site and if errors are identified, they are corrected. The bottom line is that the economic recovery package is saving and creating jobs in Putnam County and around the country. Some of these jobs haven’t been reported yet on recovery.gov, but they are having an impact in our community, which is what matters. For instance, Garrison Central School District was able to save four positions with recovery funds, Haldane Central School District saved three positions and Putnam Valley Central School District saved two positions and created three new jobs.”

The federal government’s attempt at transparency has instead created a tangle of conflicting reports and information. This week, after a string of embarrassing stories about inflated job-numbers and a fictional Congressional district, the Obama administration has promised to spend $18 million to rebuild Recovery.gov to make it more accessible and accurate.

In the coming weeks THE PUtNAM COUNtY COURIER will continue to investigate the use of stimulus money in our county and Congressional district, tracking the amount of dollars spent, the jobs created, and the bidding process on shovel-ready projects.