U.S. Economic/Financial News

Long-Term Unemployment, the Shrinking Social Safety Net, and the Mass Strike

Feb. 21 (EIRNS)—As the U.S. and global economies continue to evaporate, the problems of Americans who have lost their jobs and have little to no prospect of landing new ones, grows by the day. Even the official unemployment statistics, which understate the problem, are horrible: Some 6.3 million Americans have been unemployed for six months or longer, the largest number since the Labor Department began tracking that figure in 1948. Roughly 2.7 million people will lose their unemployment compensation before the end of April, unless Congress once again extends the benefit program.

Already, one-third of the unemployed receive no unemployment benefits at all, because they have run out of benefits, they never applied, or they didn't "qualify." For example, starting in 2006, benefits were denied in 44 states to anyone with a household income of 75% or higher of the official—and artificially low—poverty rate.

In New York City, there are 450,000 unemployed people and only 21,500 jobs available, according to the state labor department. That's one job for every 20 people who need work. In the city, some 51,000 people are facing the loss of unemployment benefits March 28 and, statewide, 356,000 are expected to lose those benefits by June.

One in six of all Americans now lives in poverty, and nearly 50 million people—including one child in four—had trouble getting enough to eat in 2009. At least 15 million Americans who do have jobs, still fall below the poverty line.

The National Governors Association, which began its Winter meeting in Washington, D.C., Feb. 20, reported that plunging revenues led 43 states to cut $31 billion from their budgets in FY2009, and that for FY2010, even with $30 billion in additional revenue from tax and fee increases, 36 states have cut another $56 billion. A study of 45 states showed that, despite $87 billion in closed budget gaps in FY2010, they still face $19 billion in deficits, with a deficit total of $134 billion projected for 2010. The states also face large increases in new Medicaid costs under the health-care bills passed by the House and the Senate.

In short, in 2010 what little remains of the U.S. social safety net will rapidly run out, with the funding ending this year for most programs—and meanwhile, the economy keeps falling, meaning that the money really isn't there to extend these programs, and protect an increasingly vulnerable population.

Fannie Mae To Borrow Another $15.3 Billion from U.S. Taxpayers

Feb. 27 (EIRNS)—Fannie Mae, the government-owned mortgage company, reported yesterday, in a filing with the Securities and Exchange commission, that it will seek another $15.3 billion in bailout money from the U.S. Treasury, after reporting its 10th consecutive quarterly loss. This will bring the total poured into it to $76.2 billion—or, about six years worth of NASA budgets. Fannie Mae's losses for 2009 add up to $74.4 billion, compared to $59.8 billion in 2008. The collapse of Fannie Mae and its rival Freddie Mac, is being driven by the disintegration of the residential mortgage market, which is expected to continue, with forecasts that 3 million homes will be possessed by banks in 2010.

23,000 Florida Jobs Could Be Lost, if 'Constellation' Is Killed

Feb. 26 (EIRNS)—When the Apollo program ended in 1972, and there was a near-decade-long hiatus in manned space launches until the Space Shuttle flew from the Kennedy Space Center (KSC), the people who had worked to send men to the Moon, suffered not only unemployment, but despair. The Florida space coast had the highest rate in the nation of divorce, alcoholism, and suicide. Whole neighborhoods were abandoned, as now-unemployed people just walked away from their homes. If the proposed Obama space policy is not defeated, that is what will face Florida's space workers—the most highly skilled in any industry—for a second time.

The state was expecting up to 7,000 layoffs from the NASA and contractor workforce when the Shuttle is retired at the end of this year. If Constellation, the manned space program that would include a return to the Moon, had been funded adequately throughout the Bush years, there would have been a two-year gap between the Shuttle and the Orion craft, and large layoffs could have been avoided. Now, the gap will be at least five years. But NASA had started to redeploy Shuttle workers to Orion.

An analysis released Feb. 25, according to Florida Today, with projections revised to include the cancellation of Constellation, indicates that there will be 9,000 direct space jobs lost, and 14,000 indirect jobs, which depend upon activity at KSC. This potential disaster was discussed at a meeting yesterday of the Brevard County Commission. Mark Nappi, the vice president of United Space Alliance, the Boeing/Lockheed company that processes and launches the Shuttles, said that more than 4,500 of the company's 5,500 Florida workers will lose their jobs. He said that since "the market will drive where space vehicles are launched from," Florida is "going to be [like] the Pittsburgh of the steel industry and the Detroit of the car industry."

Vowing to fight the shutdown of Constellation, the county has rolled out an up-dated version of the website, SaveSpace.us, encouraging a letter-writing campaign to elected officials. A rally Feb. 27 has been organized by local labor unions, with support from national union headquarters, and local merchants and citizens.

One in Five Americans Is Either Unemployed or Underemployed

Feb. 23 (EIRNS)—A New Gallup poll finds that 19.9% of the workforce, an estimated 30 million workers, was "underemployed" (unemployed or involuntarily employed only part-time) in January. This figure is noticeably greater than the official 16.5% from the Labor Department, but it's still probably less than the real figure. The demographic breakout shows an even more devastating picture: Blacks 27% un- and underemployed; Hispanics, 29%; 18-29 age group, 31%; and those without a high school diploma, a devastating 38%.

The poll also questioned the buying patterns of the un- and underemployed, and, guess what? Underemployed people spent less money! 36% less, to be exact. 19% admitted having problems paying rent in January, and 36% had problems finding money for food or health care.