Why States Are Bankrupt: 12 Million Really on Unemployment Insurance

A leap from November to December 2009 in Federal and state unemployment insurance outlays, betrayed the rising mass unemployment behind the official figures claiming that "the labor market has stabilized."

The Federal government spent an all-time record $14.7 billion on unemployment insurance benefits in December, a 24% jump from $11.8 billion in November. The states spent $12.7 billion on unemployment benefits in December, up by more than 15% from the month before. So the Labor Department's claim of a mere 1.7% increase, to 9.6 million, in Americans receiving "continuing" insurance benefits in December is clearly a fraud.

First approximation is that Emergency Unemployment Compensation (EUC—i.e., Federal extended) benefits jumped by 43%, from 3,594,253 in early November to 5,143,410 in mid-December. Analysts explain this, saying that state "continuing" benefits are being exhausted at a significant rate, and new claims are slowly declining, so there is a strong net shift from state to Federal benefit rolls, but with little total growth. This is because the "seasonally adjusted" reports put out every week by the BLS are claiming (for the most recent reported week, ended Jan. 9), that 4,596,000 Americans were getting state continuing benefits, and 440,000 new claims were added in that most recent week. So 9,598,000 people were supposedly getting either state "continuing" or Federal benefits in that week, and 440,000 more were trying to join them.

But the actual "unadjusted" figures for week ending Jan. 9 are dramatically different—a differential getting wider and wider since late November. The actual, unadjusted initial claims were 801,086 (not 440,000!), an increase of 156,165 (not 11,000!) from the previous week. And the unadjusted "continuing" state claims were 5,988,940 (not 4,596,000!), a leap of 503,924 from the preceding week. In this "continuing" state claims figure, an actual increase of 900,000 over the most recent two-week period has been officially "adjusted" into a decrease, -400,000.

By comparison, January 2009 was a period of intense shock-wave layoffs and firings, amid financial collapse; a net job loss of 598,000 was reported by BLS that month, and over 500,000 jobs were lost in each of the previous two months, November and December of 2008). But so far in January 2010, the actual unadjusted figures for new unemployment claims are running 85% as high as in January 2009. That implies a real job loss of about 500,000 (not 85,000!) last month.

So the actual total of state "continuing" and Federal benefits, combined, in the week ending Jan. 9 was 11,142,000 (not 9,598,000!), with 801,000 more Americans applying to join them in that week.

We may, by now, have 12 million Americans actually on unemployment. That is DOUBLE the highest number ever recorded prior to 2009, in statistics that go back to the creation of unemployment insurance. And even as a percentage of the population, we have reached 3.5%-4% of the population on unemployment relief, whereas that percentage has never been above 2% since the late 1940s.

This mass unemployment is a major, and rapidly rising factor in bankrupting of state governments nationwide.