2010 Unemployment Extension - Cost of Not Helping 99'ers is Killing Economic Recovery

In my recent article "Tier V Unemployment Extension - Statistics Working Against the 99'ers" [1] I estimated that the number of people impacted as 99'ers, or unemployed for such a long period that all unemployment benefits have expired, has reached a number of approximately 2.155 million people. What I didn't discuss in that article was the overall economic impact that the loss of these people had to our consumer markets. What we are really talking about is a $100 Billion dollar a year industry being stripped from our economy (based on a median income of $46,509/yr based on Bureau of Labor Statistics data for July '09 [2]). I hate referring to these unfortunate people as numbers because they are our fellow citizens, but sometimes to reach those that only respond to numbers, you have to talk numbers. If one is not willing to address the issue of supporting the 99'ers based on principle, compassion, or obligation, then perhaps viewing the situation from a simple self-interest framework will make the difference.

Those that only care about money, and making more of it, should stop and take pause at the thought that by not providing, at a minimum, a sustenance level of relief to the 99'ers, they are actually cutting off their own nose to spite their face. They are stifling the emergence of this country out of the recession by not supporting putting cash into the hands of those that fuel an exceptional level of economic stimulus for every dollar that they receive. Many articles reference the notion that for every dollar put into the hands of an unemployed person approximately $1.65 in economic activity is generated. Putting money into the hands of the 99'ers in my estimation would add a much needed bump to our ailing economy and might just wind up being the stimulus that is needed to get the corporations to stop sitting on their record levels of cash reserves and start investing in additional inventories, boosting production, and hiring new workers. At the end of the day the solution to fixing the economy is creating jobs. The unemployed want jobs, but will take additional unemployment insurance until the jobs are created.

Jobs are the solution, not just for the 99'ers, but for the economy in general and the other 15+ million unemployed currently looking for work specifically. When one looks at the hugely negative impact of losing half or all of the purchasing power of 17+ million consumers, it is no wonder the economy is still at best awful. On top of the $100 billion lost due to 99'ers alone, the additional15+ million people unemployed represents an additional $578 billion a year industry [3]. This "industry" has effectively been reduced by 59% due to unemployment compensation averaging around $315 a week versus the median weekly income of Americans at $773 a week. This represents a loss of consumer activity for the current unemployed, but not 99'ers, at an additional $341 billion dollars. Combined we are looking at a reduction in consumer activity of a total of $441 billion or almost a half a trillion dollars! Any businessperson that cannot see the opportunity for tremendous growth by tapping into this market is both blind and dumb. So why aren't they doing it? Perhaps it is because the unemployed have no money and no promise of getting any anytime soon! The paradox is that the jobs that the businesses could provide would create the consumers that they need for growth, but right now they would rather hang on to the profits than produce new jobs.

Have we honestly forgotten how to develop and maintain a healthy and growing economy? Did we suddenly go both blind and dumb? Is it because we do not have a detailed and consistent approach for climbing out of this hole? Based on the levels of consumer confidence and confidence in our government, the answer is a resounding yes we have gone blind and dumb! There is no doubt that government should be taking the lead and presenting a resolute plan for growing ourselves out of this malaise, but they just can't stop bickering in an attempt to win in the mid-term elections, so millions suffer. The unemployed suffer by the in-action from leaders voted in to produce action. They suffer from the depression of knowing that no bi-partisan resolve is anywhere close to the horizon. So they wait. And wait. And suffer some more. The next American Hero will be the person that can successfully produce jobs and not more rhetoric.

[1] Tier V Unemployment Extension - Statistics Working Against 99'ers

[2] www.bls.gov

[3] 2010 Unemployment Extension - a Proper Perspective