Why the Housing Rebound Could Take 20 Years; Is Unemployment the Worst Since the Great Depression?; Manufacturing Jobs Drop to Lowest Level Since 1941

Is Unemployment the Worst Since the Great Depression?

August 27, 2009

U.S. News & World Report - The "Great Recession" is the name that has stuck for the economic decline that began in late 2007. But there's some reason to think that using the word recession is being kind.

The U.S. gross domestic product has shrunk 3.9 percent in the past year, the worst drop since the Great Depression. Plenty of observers are willing to say that this recession is much deeper than anything we've seen since the 1930s--including the big dip in the early 1980s, generally accepted as the other candidate for the worst recession since the Great Depression.

"I think it's way worse today," says Ridgely Evers of Tapit Partners, a longtime entrepreneur and venture capitalist who founded the software company Netbooks (now known as WorkingPoint). In the recession of 1981 and 1982, "people recognized it as a dip. [Today,] nobody thinks we are going to come back out in relatively short order."

This recession seems to have dragged on longer. According to the National Bureau of Economic Research (NBER), the U.S. economy was in recession from July 1981 to November 1982--16 months. But the current recession started in December 2007, says the NBER, so it's already longer than the last big one.

The NBER defines a "recession" based on the all-encompassing gross domestic product figure. That economy-wide statistic may not mean much to the average American. In other words, the question "What is the economy's output?" usually doesn't matter as much as "How hard is it to find a job?" When we look at that question, how does the "Great Recession" compare?

The unemployment rate is a murky number. It seems simple enough to look at the national unemployment figures released every month by the Bureau of Labor Statistics. In July, that number was 9.4 percent. At the peak of the early '80s recession--December 1982--unemployment hit 10.8 percent.

So where's the murkiness? The problem is that many of the people one would think of as "unemployed" are not included in this unemployment rate. For one, the Bureau of Labor Statistics does not count unemployed people who have been discouraged by the labor market and have given up looking for work. You are counted as a "discouraged worker" if you are available to work, want to work, and tried to look for work in the past year but gave up within four weeks for reasons including the belief that no work is available.

The fact that the national unemployment rate excludes these discouraged workers has led many observers to believe it does not reflect the "real" level of unemployment.

"Ask the average person if he or she is unemployed, and there is little hesitation in giving you an answer, but that may not agree with government definitions," says John Williams, an economist who examines government statistics at shadowstats.com.

Other people who aren't counted in the official number are those who have been forced by the economy to work part time. The number of workers who wanted full-time jobs but could find only part-time work was 1.8 million last month, which amounts to 1.3 percent of the labor force. Still, that's not as bad as December 1982, when forced part-time workers accounted for 3 percent of the labor force.

What happens when you start counting all these people who have been heavily battered by the labor market? The Bureau of Labor Statistics has another rate that includes "marginally affected workers" and part-time workers. That number, referred to as U-6 because of its identification in bureaureports, was 16.3 percent last month--nearly 7 percentage points higher than the official unemployment rate.

What's more, the number of people who have given up on finding work has been steadily rising over the past few months, from 685,000 in May to 796,000 in July.

"If you have that number of people leaving the workforce, that seems to me a serious problem," says economist John Lott...

Williams says that when he takes into consideration people who haven't looked for work in more than a year because they can't find jobs, the real unemployment rate today goes all the way up to 20.6 percent by his calculations. "It won't take much to get it to the worst since the Great Depression," he says.

Why the Housing Rebound Could Take 20 Years

August 12, 2009

U.S. News & World Report - There are tentative signs the depressed housing market may finally be close to bottoming out. That might sound like good news, but hitting bottom doesn't mean an upward rebound will follow anytime soon.

Economist Celia Chen of Moody's Economy.com has published a forecast suggesting that residential real estate could take 10 years to recover in most states—and 20 years in Florida and California.

Chen predicts that house prices will stop falling by the second quarter of 2010, which is consistent with what the Federal Reserve and many other forecasters have said. But her longer-term outlook helps explain why many economists are gloomy about the nation's economic prospects for the next several years. Some of Chen's predictions:

By the time house prices stop falling, they'll be down 43 percent from peak prices reached in 2006, as measured by the Case-Shiller home-price index.

That will mark the deepest housing correction since 1890, and probably ever in the United States (meaningful data go back only to the late 19th century). The prior worst housing bust was from 1916 to 1932, when house values fell 37 percent. Beating that dismal record suggests we're no smarter now than in the Great Depression.

Nationwide, price levels won't regain the peaks of 2006 until 2020. In the worst-hit states, Florida and California, the rebound will take until 2030. Five other states won't hit their 2006 peaks until after 2023. Anybody who doubts that it could take that long should consider the real estate bust in Japan, where prices are still down by half from the peaks they reached 15 years ago.

Other states, mainly those where the housing boom was muted, will bounce back faster. Homes in Texas, Oklahoma, and a handful of southern and Farm Belt states could regain peak prices within seven years, after falling by less than 10 percent. If it felt as if the housing boom was passing you by earlier this decade, count your blessings.

Forecasts like this should temper some of the recent hype over the stock market rally and a dip, probably temporary, in the national unemployment rate. If housing remains as depressed as this forecast suggests, it will be extremely hard to mount the kind of recovery it will take to bring back jobs and boost consumer spending.

Housing represents a huge chunk of the economy—about 16 percent—and at such depressed levels it would take runaway growth in other areas to compensate for a moribund housing market. But that's unlikely too, since housing is also a source of much of the personal wealth that fuels consumer spending.

The plunge in home values has been the major factor in the evaporation of $14 trillion of Americans' net worth, and that in turn is likely to depress spending for the foreseeable future. In past recessions, a housing rebound has been the spark that helped turn the economy around. This time, we'll need a lot of other sparks.

Manufacturing Jobs Drop to Lowest Level Since 1941

August 21, 2009

Carpe Diem - As a percent of the total labor force, manufacturing employment fell below 9% in July, the lowest level in BLS history (back to 1939).

Manufacturing employment in the U.S. peaked in June 1979 with 19,553,000 jobs, and by July of this year manufacturing employment had fallen to 11,817,000, the lowest level of manufacturing jobs since April 1941.

What Rebound? Foreclosures Rise as Jobs and Income Drop

August 21, 2009

McClatchy Newspapers - Rising job losses are worsening the nation’s housing troubles and threaten the Obama administration’s efforts to keep owners from losing their homes.

Delinquency and foreclosure rates for U.S. mortgages continued to rise in the second quarter, with loans to the most qualified borrowers going bust at an unnerving clip, especially in hard-hit states such as Florida and California.

The numbers reported Thursday by the Mortgage Bankers Association show clearly that rising job losses are worsening the nation’s housing troubles and threaten the Obama administration’s efforts to keep owners from losing their homes.

The quarterly National Delinquency Survey showed that almost one in 10 homeowners with a mortgage was at least one payment late, and thus delinquent, while another 4 percent had entered the foreclosure process on their loan...

U.S. Workplace Suicides Up By 28 Percent

August 22, 2009

World Socialist Web Site - The number of workplace suicides reported in 2008 rose by 28 percent over the previous year, according to figures released Thursday by the US Labor Department.

There were 251 reported workplace suicides in 2008, up from 196 in 2007. Protective service workers, including police and firefighters, registered the highest increase in workplace suicides, with the figure rising from 14 to 25...

Millions Face Shrinking Social Security Checks

August 23, 2009

MSNBC – Millions of older people face shrinking Social Security checks next year, the first time in a generation that payments would not rise.

The trustees who oversee Social Security are projecting there won’t be a cost of living adjustment (COLA) for the next two years. That hasn’t happened since automatic increases were adopted in 1975.

By law, Social Security benefits cannot go down. Nevertheless, monthly payments would drop for millions of people in the Medicare prescription drug program because the premiums, which often are deducted from Social Security payments, are scheduled to go up slightly.

“I will promise you, they count on that COLA,” said Barbara Kennelly, a former Democratic congresswoman from Connecticut who now heads the National Committee to Preserve Social Security and Medicare. “To some people, it might not be a big deal. But to seniors, especially with their health care costs, it is a big deal.”

Cost of living adjustments are pegged to inflation, which has been negative this year, largely because energy prices are below 2008 levels...

Bank Overdraft Fees to Hit $38.5 Billion This Year

July 10, 2009

USA Today - In 2009, banks are expected to reap a record $38.5 billion from overdraft fees, nearly twice the $20.5 billion they stand to collect from credit card penalties such as late and over-limit fees.

Banks say consumers can avoid overdrafts by keeping track of their money. Consumers contend, though, that banks' policies make it challenging to avoid fees.

Faith Gordon, 48, recently sued BB&T bank for allegedly "delaying and rearranging" transactions to maximize overdraft fees. Gordon, of Atlanta, says banks should change their practices and "be fair to us customers." BB&T spokesman Bob Denham says the lawsuit "lacks merit." The bank "categorically (denies) delaying the posting of items to create overdrafts," he adds.

Eric Halperin of the Center for Responsible Lending says regulators should examine bank overdraft rules because they "parallel" much-criticized card policies. Banks are raising fees and imposing similar policies on checking accounts and credit cards, such as charging more for multiple transgressions.

The Federal Deposit Insurance Corp. says if banks cover a $20 purchase and charge a $27 fee, the loan has a 3,520% annual percentage rate (APR) if paid back in two weeks.

Senate Banking Committee Chairman Chris Dodd, D-Conn., said if the Fed doesn't curb overdraft abuses, he'll "pursue legislative action." Rep. Carolyn Maloney, D-N.Y., has sponsored legislation requiring banks to get consumers' permission to cover overdrafts, disclose APRs and pay transactions in a way that doesn't increase fees.

Banks are lobbying heavily against restrictions. Why? "Overdraft fees are the mother lode of (deposit) fees," says Michael Moebs of Moebs Services, an economic research firm. "If it weren't for overdraft fees, 45% of banks and credit unions wouldn't have made money in 2008."

At Free Clinic, Scenes from Third World

August 18, 2009

Los Angeles Times - The huge turnout each day at the Forum made it clear that although Southern California has quite a few free medical and dental clinics, there aren't enough to handle the demand.

Among those waiting patiently for help was Walter Samwel, a 70-year-old Vietnam vet from Gardena who has been putting off a root canal for two years.

I asked Samwel why he didn't go to the VA, and he said they're swamped with recently returning vets, and more severe dental problems take priority. He had arranged time off from his part-time job as a maintenance man at a Long Beach senior center to come to the Forum, but this was his third attempt to get help. The first two days, his number was too high, and the dental clinic shut down before he was called.

Would his Medicare cover the dental work?

No, he said. There's lots it doesn't cover...

Will Obamacare fix this problem? No. It will only force people who already cannot afford insurance to buy it; and if they still won't buy it, they will pay $1000 dollars a year in a tax and still won't have coverage. As sure as night follows day, the Insurance companies, knowing that people have no choice, will raise rates even higher. This is not a plan with the people in mind. It is a plan with profits in mind. Obama ought to be ashamed of himself. I think of all the people who scrimped and saved and sacrificed to put him in office only to get this. What really troubles me though are the simple, everyday folks who are lining up behind Obamacare not knowing what it will really mean to them and their families. - Mark S. Watson

One in Nine Americans on Food Stamps

August 17, 2009

Black Voice News.com, - For the first time, 34 million Americans received food stamps in May according to the U.S. Department of Agriculture (USDA), which administers the Food Stamp Program (SNAP) in cooperation with State and local governments. The report is another symptom of the longest and one of deepest recessions since the Great Depression.

SNAP enrollment surged by 2 percent to reach a record 34.4 million people, or one in nine Americans.

“People are desperate,” says Gary Madden director, 211 San Bernardino County, a local United Way Initiative that provides people in need access, information and referrals to non emergency health and social services. Madden says the number of calls for help is unprecedented.

“People calling now are saying things like ‘I’ve never asked for help in my life. I don’t know what I’m going to do I’ve lost my job and I’m about to lose my home’.” “More men are calling. Families are doubling up in homes. African-Americans are particularly vulnerable,” Madden said. He adds frustration levels are very high.

“Callers are saying, bank bailouts, auto company bailouts, where’s my bailout’.”

Adding insult to injury says Madden is an already over burdened emergency assistance network driven to the brink by deep budget cuts, and eligibility barriers that often confuse or outright prevent access to emergency help.

“There’s a lot of confusion among working people and families with laid off bread winners.”

He says combine California’s historically tough eligibility requirements for food stamps with charities that are already overwhelmed and counties with less money and fewer people to administer help. “It’s pretty bleak.”

Officials around the region say while the number of applicants soars, so does the confusion over eligibility. Sayori Baldwin, deputy director of the Riverside County Department of Public Social Services, said it is denying about half of those who apply for CalWorks and food stamps, despite the fact that “individuals are in crisis more than what we’ve seen in the past.”

Those numbers are a marked increase from last year. In February, Inland counties denied about 18% more CalWorks applications than the same month last year. Food stamp denials were up 14%, general relief denials were up 10% and Medi-Cal denials were up 7%.

For low income working individuals, like James Ealy food stamps make a key difference in keeping families fed throughout the month. Ealy was among those applying for food stamps in Fontana last week. The long line of applicants included an unemployed veteran with a degree in engineering who is caring for his elderly mother, who recently lost her home to foreclosure. With their combined unemployment and Social Security income, they were only eligible for $33 in food stamps..

Cost of Illegal Immigrants to Hospital Grabs Attention

August 18, 2009

Las Vegas Review-Journal - After learning that the cash-strapped University Medical Center is providing more than $20 million in dialysis services for uninsured, illegal immigrants, Clark County Commissioner Steve Sisolak said Monday that more efforts must be made to send foreign nationals back to their home countries for treatment.

On Sunday, the Review-Journal reported that UMC is treating 80 illegal immigrants who require costly and repeated emergency dialysis. Hospital officials said the majority of those patients are Mexican.

"The best thing we can do is work with the Mexican consulate," Sisolak said. "We need to come up with a plan that will work. ... These are people who obviously need health care, but we are stretched beyond belief."

Sisolak said UMC officials told him that the dialysis is just a small part of the problem. Obstetric and gynecological services for the uninsured are also costly issues.

U.S. citizens with end stage renal disease automatically qualify for Medicare to cover dialysis costs. Illegal immigrants are not eligible for Medicare. As a result, patients who have neither insurance nor Medicare to pay for dialysis are almost exclusively illegal immigrants, a distinction that allows hospital officials to estimate costs for their care.

Sisolak, part of the commission that oversees UMC's funding, is not the only public official looking at how to deal with the steep cost of medical care for illegal immigrants. Others are calling for congressional debate on health care for illegal immigrants and promising to find more money to fund hospitals that care for the indigent. Hundreds of readers' comments posted on the Review-Journal's Web site often reflected a frustration with the nation's leadership. Many questioned why the country does not have better control of its borders.

Last week, Mariano Leuma Gas, the consul for Mexico in Las Vegas, said Mexico does not want its citizens to come to the United States illegally or be a burden on the American health care system.

U.S. Home Foreclosures Set Another Record in July

August 13, 2009

Reuters - U.S. home loans failed at a record pace in July despite ongoing federal and state programs to avoid foreclosures, which have severely strained housing and the economy.

Foreclosure activity jumped 7 percent in July from June and 32 percent from a year earlier as one in every 355 households with a loan got a foreclosure filing, RealtyTrac said on Thursday.

Filings -- including notices of default, auction and bank repossession -- have escalated with unemployment.

"July marks the third time in the last five months where we've seen a new record set for foreclosure activity," James J. Saccacio, RealtyTrac's chief executive, said in a statement.

"Despite continued efforts by the federal government and state governments to patch together a safety net for distressed homeowners, we're seeing significant growth in both the initial notices of default and in the bank repossessions."

More than 360,000 households with loans drew a foreclosure filing in July, a record dating back to January 2005, when RealtyTrac started tracking monthly activity.

Notices of default, auction or repossession have reached nearly 2.3 million in the first seven months of the year -- with more than half a million bank repossessions, the Irvine, California-based company said.

Making timely payments keeps getting more harder for borrowers who have lost their jobs or seen their wages cut. The unemployment rate is 9.4 percent and President Barack Obama has said he expects it will hit 10 percent...

States where sales and prices surged most in the five-year housing boom early this decade remain hardest hit. California, Florida, Arizona, Nevada accounted for almost 57 percent of total U.S. foreclosure activity in July. Illinois had the fifth-highest total filings, spiking nearly 35 percent from June, in an example of how moratoriums often delay rather than cure an inevitable loan failure...

Other states with the highest foreclosure filing totals last month included Texas, Georgia, Ohio and New Jersey. Nevada had the highest state foreclosure rate for the 31st straight month, with one in every 56 properties getting a filing, or more than six times the national average.

Five Secrets Banks Won't Share to 'Harvest Fees' from Customers

August 5, 2009

Yahoo Finance - Banks are squeezing customers with historically high fees and penalties, from overdraft charges to account service fees to new surcharges on foreign debit transactions.

But the pressures that have prompted the fee war with consumers started well before the financial meltdown, according to Jo Preuninger, a former management consultant who spent more than a decade in the consumer banking arena.

I asked Preuninger for a little history, as well as some of the tricks of the trade that banks would prefer to keep secret.

Secret #1: For many banks, the most profitable customers aren't the mass affluent -- they're "Joe Lunchbox."

In 1999, the Gramm-Leach-Bliley Act allowed banks, insurers and securities firms to merge, breaking down barriers that had been in place since the 1930s. Following the new law, "if you took all the (deposit) checks written for $10,000 and above, most were written to institutions such as Charles Schwab, Fidelity or Merrill Lynch," says Preuninger. "They took the best customers. The banks were becoming more like Laundromats, where you put money in for a short period because you still needed to pay with a check or (get cash)."

At the same time, loans provided little profit as interest rates remained relatively low, prompting banks to seek consistent, non-interest income. "The focus was on how banks could not only identify fees they could charge, it was how to do a better job of collecting their fees," says Preuninger.

Middle-income customers presented the greatest potential to harvest fees. "There's certainly a customer segment that could be called 'Joe Lunchbox,' who expect to be nickeled and dimed," says Preuninger. "They are managing money from paycheck to paycheck. It's someone who would prefer to pay an overdraft fee to get their mortgage covered rather than get hit by a mortgage provider with a late fee and a ding on their credit score."

Last year, overdraft and insufficient-funds charges totaled nearly $35 billion and comprised about 90 percent of banks' consumer-fee income, according to a study by the consulting firm Bretton Woods Inc. Three-quarters of banks automatically enroll consumers in their "overdraft protection" programs without formal permission, and more than half of banks manipulate the order in which checks are cleared to trigger multiple overdraft fees, according to a Federal Deposit Insurance Corporation study.

"They are going to try to turn the best profit they can, which is why they post in the most attractive way they can while avoiding and minimizing legal exposure," says Preuninger.

Someone who overdraws a checking account a few times a year should choose a bank with a program that makes it easy (and free) to shift funds from savings to checking to protect against overdrafts.

Secret #2: Banks hope frequent overdraft customers don't understand the alternatives.

The banks deemed overdraft protection to be a customer service convenience that provides an alternative to payday lenders, says Preuninger. And yet some of those customers might almost fare better with loan sharks. The Bretton Woods study found 80 percent of overdraft fees are incurred by 20 million households, who paid an average of $1,374 in overdraft fees.

These customers should consider ditching traditional checking account in favor of a prepaid debit card, which typically cost $70 to $80 a year ($10 upfront with a $5 monthly fee). Users direct-deposit their paychecks onto the cards (the money is FDIC-insured) and can do point-of-sale transactions and pay bills online. There are no overdraft fees; the purchase is declined if the card is empty.

Secret #3: Those helpful new customer set-up kits, designed to make it easy to switch banks, also try to make the account "sticky."

"I did a lot of work in customer attraction and retention," says Preuninger. "The biggest barrier to new accounts was switching. There's a higher tolerance; a bank may have a lot of long-term customers -- that doesn't mean they love (the service)."

Most banks have a kit to assist customers in switching services. But do it yourself instead. Enter your regular bills in the bank's online billpay site, rather than signing up with each biller's website. If your new banking relationship goes sour, the account is more transportable. You won't have to log into a dozen different biller sites and change the account and routing numbers.

Secret #4: Long-term relationships matter.

"Know what you want in the way of a bank and stay as long as you can because tenure does matter," Preuninger says. "If you've been with a bank three to five years, they treat you differently than if you are there six months. If you direct-deposit your paycheck and have a (savings) relationship, they think of you differently than if you have free checking with $100 in it. Tenure and relationship does matter."

So if you incur the rare fee now and then, always call customer service and ask (politely) for it to be removed. Emphasize your long-term relationship with the bank and ask for a supervisor if the initial effort fails.

Most customers aren't profitable until they've been with a bank a few years because of the high cost of customer acquisition -- sales compensation to branch managers, IT infrastructure, documentation and account setup. "It's a long time before they break even, especially if they goose it with $100 to you to open the account," Preuninger says.

Secret #5: Banks want you to enjoy the "advantages" of paying with credit, debit, check and cash -- because it will make you more likely to lose track of your money.

"One of most dangerous things going on with consumers is they are not paying attention to the variety of ways they are paying. They are balancing money back and forth because it's too hard to account for," Preuninger says. "If you pay seven different ways, you've just added complexity to your life. Consumers shouldn't say to the bank ‘you're responsible to tell me what I'm doing with my money.'"

But more banks are moving in that direction. PNC Bank, for instance, launched an account called Virtual Wallet that presents account information in calendar form, focused between today and the account holder's next payday. A "danger day" appears on the calendar in red if the account is at risk of an overdraft. The user can either move bills later in the month, or shift money immediately from the savings portion of the account at no charge (the account does it automatically if the consumer doesn't). Statements are only available online and the bank charges 50 cents per check for writing more than three a month.

Best bet? Simplify. Get a free checking account with no fees and a low minimum balance requirement, pay major household bills online, and then stick to cash. You'll think twice about purchases, and avoid getting caught in the widening web of bank fees.

Hunger Hits Detroit’s Middle Class

By Steve Hargreaves, CNNMoney.com
August 7, 2009

On a side street in an old industrial neighborhood, a delivery man stacks a dolly of goods outside a store. Ten feet away stands another man clad in military fatigues, combat boots and what appears to be a flak jacket. He looks straight out of Baghdad. But this isn’t Iraq. It’s southeast Detroit, and he’s there to guard the groceries.

“No pictures, put the camera down,” he yells. My companion and I, on a tour of how people in this city are using urban farms to grow their own food, speed off.

In this recession-racked town, the lack of food is a serious problem. It’s a theme that comes up again and again in conversations in Detroit. There isn’t a single major chain supermarket in the city, forcing residents to buy food from corner stores - often less healthy and more expensive food.

As the area’s economy worsens –unemployment was over 16% in July — food stamp applications and pantry visits have surged.

Detroiters have responded to this crisis. Huge amounts of vacant land has led to a resurgence in urban farming. Volunteers at local food pantries have also increased.

But the food crunch is intensifying, and spreading to people not used to dealing with hunger. As middle class workers lose their jobs, the same folks that used to donate to soup kitchens and pantries have become their fastest growing set of recipients.

“We’ve seen about a third more people than before,” said Jean Hagopian, a volunteer at the New Life food pantry, part of the New Life Assembly of God church in Roseville, a suburb some 20 miles northeast of Detroit. Hagopian said many of the new people seeking assistance are men, former breadwinners now in desperate need of a food basket.

Hagopian is an 83-year old retired school teacher. She works at the pantry four days a week, spending two of those days driving her own minivan around town collecting food from local distributors.

The pantry, housed in the church basement, gives away boxes of food that might feed a family of four for a week. It includes dry and packaged goods like cereals and pasta, peanut butter, canned fruits and vegetables, 7 or 8 pounds of frozen meat (usually chicken or hot dogs), and eight pan pizzas donated from a local Pizza Hut. Most of the other food is purchased from a distributor or donated by the county food program. Last month they gave out 519 boxes.

Hagopian hopes the demand for food doesn’t get much worse.

“I hope we’re at the top of it because we’ll run out of food, and then we’ll have to go out and find some more,” she said.

She should brace for the worst. Across metro Detroit, social service agencies are reporting a huge spike in demand for food assistance.

Gleaners, an agency that distributes excess food donated from food processors, says their distribution is up 18% from last year. Michigan Department of Human Services, which handles federal food assistance like food stamps, WIC checks and such, has seen a 14% spike in applications since October. Calls to the United Way’s help line have tripled in the last year.

“Given the resources, we could double our numbers,” said Frank Kubik, food program manager for Focus:Hope, a Detroit aid organization that fed 41,000 mostly elderly people last year. Kubik said his program is restricted by charter and budget from serving more than its current number of clients. But if that were changed, he could certainly serve up more meals.

“There’s no doubt about it, there’s just so many out there that are really struggling right now,” he said.

The changing face of hunger

There have been plenty of people struggling in Detroit for a long time. What makes this recession different is the type of people coming in. It’s no longer just the homeless, or the really poor.

Now it’s middle class folks who lost their $60,000-a-year auto job, or home owners who got caught on the wrong side of the real estate bubble. Many of these people have never navigated the public assistance bureaucracy before, and that makes getting aid to them a challenge.

“They have no idea where the DHS office is,” said DeWayne Wells, president of Gleaners, the food distributor.

To assist these newly hungry, Wells pointed to the United Way’s 211 program, where people can call the hotline and speak to an operator that guides them through a wide range of available social services. The Michigan Department of Human Services is going digital, rolling out a program where people can apply for food stamps via the Web.

That may help ease another challenge in getting aid to the middle class: pride. Many people feel so bad about having to ask for help that they just don’t, or they have issues with it once they do.

“They’ll say things like ‘I’ve never had to do this before’ and they feel a little uncomfortable,” said Hagopian, the retired school teacher. But she says times have changed, the good union jobs are disappearing and it’s harder and harder to find work.

“I just tell them society is not what it used to be,” she said.

Detroit responds

Actually running out of food doesn’t seem to be a problem, so far. In fact, because more people are being affected the response seems to be greater.

“A few years ago it was someone you saw a profile of on TV,” said Wells. “Now it’s your brother in-law, or the people your kid plays soccer with.”

Wells said volunteers are up at Gleaners, as is general community awareness.

The Feds have helped too. Food stamp allowances were increased 14% nationwide under the stimulus plan.

Detroiters are also helping themselves in smaller ways. Thanks to the dearth of big supermarkets in Detroit proper – a phenomenon largely attributed to lack of people – and plenty of vacant land, community gardening has caught on big.

It’s not so much that these gardens are going to feed the city, although they certainly help. It’s more that they can be used to teach people, especially children, the value of eating right.

“I use vegetables every day,” said one child at an after school gardening program run by Earthworks Urban Farm, near the heart of the city. “Last night, an onion I picked from here, I had in my potatoes...”

U.S. Payrolls Fell Another Quarter-Million in July

August 8, 2009

WSWS - The US economy shed another 247,000 jobs in July, the Labor Department reported Friday, marking the 19th consecutive month that nonfarm payrolls declined.

Manufacturing employment fell by 52,000, service employment fell 119,000, construction employment fell 76,000, and retail trade fell 44,000. There were small payroll increases in government, tourism and healthcare.

Of the 271 industries tracked by the Labor Department, 70 percent are cutting jobs, while only 30 percent are adding jobs or maintaining existing employment. That figure is an improvement from the 80 percent cutting jobs during the first quarter of 2009, but still indicates an economy mired in a deep recession.

The official unemployment rate actually dropped slightly, from 9.5 percent in June to 9.4 percent, but this actually reflects an aspect of the worsening job market, not an improvement. Some 422,000 unemployed people gave up looking for work in July and were no longer counted officially as jobless. The proportion of the adult population with jobs actually fell from 59.5 percent in June to 59.4 percent in July.

The unemployment rate was much higher for the traditionally more vulnerable groups: 12.3 percent for Hispanics, 12.6 percent for single mothers, 14.5 percent for African-Americans, 23.8 percent for teenagers.

The manufacturing decline was somewhat steeper than shown by the Labor Department figure, due to another statistical aberration. The agency reported that jobs in auto production increased by 28,000, on a seasonally adjusted basis, despite the virtual collapse of the industry. Keith Hall, commissioner of the Bureau of Labor Statistics, explained, “Because layoffs in auto manufacturing already had been so large, fewer workers than usual were laid off for seasonal shutdowns in July.”

The White House, Wall Street and the corporate-controlled media lauded the jobs numbers as a signal that the economic slump in the United States has bottomed out. President Obama went before television cameras barely an hour after the numbers were released, pointing to the overall unemployment rate and the slower pace of job losses, from 700,000 in January to 467,000 in June and 247,000 in July.

It is only by comparison to the past eight months that July’s number could be portrayed as “hopeful.” In any year before the present, there would have been no White House photo-op to celebrate such a dismal employment report.

The stock market surged Friday to a new 2009 high. But the nearly 50 percent rise in the Dow Jones average since March is due not to a recovery in the labor market or the broader economy, but rather to the multitrillion-dollar bailout of the banks and financial institutions by the US Treasury.

Despite the statistical oddity of a drop in the unemployment rate, both the actual number of jobless workers and the duration of unemployment are increasing. The US economy has lost some 6.7 million jobs since the official start of the recession in December 2007.

According to Labor Department figures, 14.5 million Americans were out of work in July, another 8.8 million were working only part-time when they wanted full-time work, and 2.3 million had become “discouraged” and were no longer looking for work. This brings the combined total of unemployed and underemployed to 25.6 million, or 16.3 percent of the work force.

Long-term unemployment continues to rise month by month. According to the Economic Policy Institute web site, the number of workers unemployed for more than six months increased by 584,000 in July to nearly 5 million, so that now one third of those officially unemployed have been out of work more than half a year, a record since such data was first collected in 1948. The number of long-term unemployed has jumped from 2.6 million in February to 4.9 million in July, an increase of nearly 90 percent in only five months.

As of July 25, 6.31 million people were collecting long-term unemployment benefits, according to Labor Department data. All told, about 9.9 million people were collecting some form of unemployment benefits in the week of July 18. It was reported earlier this week that tens of thousands of workers are already running out of extended benefits, and by the end of the year that number will rise to 1.5 million.

The Labor Department reported Thursday that 550,000 workers filed new claims for unemployment compensation in the week ended August 1, a drop of 38,000 from the previous week, but still far above the 250,000 to 300,000 figure that typically characterizes a stable US labor market. Among states in the industrial Midwest, the jobs crisis was reflected in Wisconsin, which reported that initial jobless insurance claims through last week were 80 percent higher than at the same point last year.

The Obama administration’s response to the unemployment figures demonstrates again that its real constituency is Wall Street and the financial aristocracy, not working people. Obama declared in his brief appearance—without taking questions—that the jobless figures showed “the worst may be behind us” and “today, we’re pointed in the right direction.”

“We’ve rescued our economy from catastrophe,” he said, referring to the bailout of the banks. He hailed the run-up on the stock exchange, while trying to put a populist spin on it, saying that “a rising market is restoring value to those 401(k)s that are the foundation of a secure retirement.”

In fact, retired workers are being systematically robbed—like tens of thousands of General Motors retirees cut off from medical benefits and facing drastically reduced pensions—but Wall Street is celebrating higher stock prices with huge bonuses.

The actual direction of the US economy is reflected in reports that GM is expected to announce another 7,500 layoffs because too few workers accepted early retirement or buyout packages. An even bigger job cut is looming at the US Postal Service, which has already eliminated 27,000 jobs over the past year. USPS officials went before a Senate committee Thursday to propose the elimination of Saturday delivery and the closure of at least 700 post offices.

There was also a plunge in July retail sales figures, down 5.1 percent from June. There were sharp drops at Abercrombie & Fitch, Gap, JC Penney and Macy’s, and even sharper declines at some of the upscale retailers. This reflects the growing economic distress among broad sections of the population.

Meanwhile, the bankrupt insurance giant AIG revealed that it has set aside $249 million for “retention bonuses” for executives for the second half of 2009. This includes $93 million for AIG’s Financial Products division, whose speculation in derivatives led to the company’s near-collapse last year and a federal bailout of more than $182 billion.

U.S. Congress May Extend Unemployment Benefits

August 7, 2009

Reuters - The U.S. Congress will consider extending unemployment benefits when it returns to work in September, Senate Majority Leader Harry Reid said on Friday.

"Soon after Congress returns to Washington we'll need to address this matter," Reid said of workers who will exhaust their unemployment benefits soon. "There is an economic case to be made for extending unemployment benefits."

U.S. employers cut 247,000 jobs in July, far less than expected and the least in any month since last August. With fewer workers being laid off, the unemployment rate eased to 9.4 percent in July from 9.5 percent the prior month, Labor Department data showed, the first time the jobless rate had fallen since April 2008.

But the number of long-term unemployed continues to rise as the country struggles with the worst recession since the Great Depression of the 1930s, the department said. Since the start of the recession in December 2007 the economy has shed 6.7 million jobs, the department said.

Older Workers Hang On to Jobs Longer — They Have to

August 5, 2009

McClatchy Newspapers — Americans have been losing their jobs in droves, yet one group has gained ground in employment during this recession: workers 55 and older.

The reason — economic necessity — says a lot about what aging baby boomers may face as retirement age approaches.

The nation's unemployment rate stood at 9.5 percent in June and is expected to top 10 percent before a sustainable growth cycle ends the recession. Americans of all working-age groups have lost a significant number of jobs in the downturn, but older workers have fared less poorly as a percentage of the work force.

"Everyone is seeing huge increases in unemployment — people dropping out of the labor force across the board — but older workers have seen a big increase in labor-force participation since the start of the recession. And I think it has a lot to do with declining retirement security," said Heidi Shierholz, an economist with the Economic Policy Institute, a liberal research group.

A close look at work force data reveals that when the recession began in December 2007, workers 55 and older constituted 18 percent of the labor market. Today, they make up more than 19 percent. That means more Americans are working well into what would have been retirement, by choice and, increasingly, by necessity. In addition, the jobless rate for that age group is rising more slowly than it is for younger groups.

The economic crisis has condemned many baby boomers — the roughly 75 million Americans born from 1946 to 1964 — to longer working lives.

"For older people right now, the crisis is not jobs, it is wealth," Shierholz said. "They thought they had money tied up in their homes, and that's gone or halved. If they have a 401(k), they've also seen a decline there ... they are simply not leaving the labor force. In fact, they are still coming in."

Older workers are hanging on longer, and the Employee Benefit Research Institute, a clearinghouse for information on all things related to pensions and benefits, put out a study Tuesday that helped explain why. It estimated that the median value of assets in 401(k) plans and individual retirement accounts fell by at least 15 percent from the end of 2007 through mid-June...

The financial market turmoil last year wiped out about $6 trillion in stock market wealth, according to estimates by JP Morgan Chase & Co.

"I think with the stock market crash, retirements have really slowed," Johnson said. "We don't see as many older people dropping out of the labor force as we used to." The EBRI retirement survey, published in April, hinted at that.

"They basically lost three years of contributions and (wealth) accumulation. They typically said, on average, they were delaying their retirement, and they told us it was because they need to," said Craig Copeland, an EBRI researcher who conducted the survey. His study found that about two-thirds of workers who said they were delaying their retirements came to their decisions after last September's financial meltdown.

"They've decided it's better to hold on to the job you've got; you are more certain to have insurance and health care," said Larry White, a senior legislative representative for economic security at the AARP, the lobby for Americans 50 and older. "Retirement isn't as attractive an option as it had been, especially before the downturn."

Florida Highrise Has 32 Stories, But Just One Tenant

July 30, 2009

Associated Press (Fort Myers, Fla.) – The Vangelakos' southwest Florida condominium has marble floors, a large pool overlooking a river, and modern furnishings that speak of affluence and luxury. What they don't have in the 32-story building is a single neighbor.

The New Jersey family of five purchased their unit four years ago, when Fort Myers was in the midst of a housing boom and any hints of an impending financial crisis were buried in lofty dreams of expansion and development. They made a $10,000 down payment and eagerly watched as builders transformed an empty lot into an opulent high rise, one that now symbolizes the foreclosure crisis.

The future was going to be southwest Florida," said Victor Vangelakos, 45, a fire captain who planned to eventually retire and live permanently in the condo.

Most of the other tenants in the 200-unit condo didn't close on their contracts, and the few that did have transferred to an adjacent building owned by the same company because more people live there.

The Vangelakos' mortgage lender will not allow them to do the same.

That leaves them as the sole residents of the Oasis Tower One.

"It's a beautiful building," said their attorney, John Ewing, who is representing 27 others who made deposits on units. "The problem is, it's a very lonely building."

When the Vangelakos' travel from Weehawken, N.J., to spend a week or a few days in their Florida home, they have exclusive use of the pool, game room and gym, but they miss having a few tenants around.

"Being from the city, it's very eerie," Vangelakos said. "It's almost like a scary movie."

A large, circular fountain in front of the building is dry. The automatic glass doors that lead to the front lobby are locked. On the front desk is a guest sign-in sheet. The last entry: Feb. 13, 2009.

"It's like time froze here six months ago," Ewing said.

Vangelakos said they closed on the apartment in the fall, unaware the other tenants had failed to follow through. When they visited around Christmas, they didn't think much of the emptiness. They were just happy to be there.

"We wanted to believe," Cathy Vangelakos said. "We were looking for what we were offered."

On subsequent visits, however, the building grew more deserted.

The lights on the pool and palm trees were off. Their garbage shoot was sealed; a trash bin placed in front of their unit instead.

Despite the empty units, they faithfully parked in their assigned spot on the second story of the parking garage. Then those lights went off, too.

Then there were security concerns. One night, someone pounded on their door at 11 p.m. They called the front desk at the next door building, which contacted police. A search turned up no one, though a pool entrance was open.

Another morning they awoke to find lounge chairs in the pool.

The parents and their children sleep with their cell phones by their beds.

"I'm not a chicken, but this is a big building," Cathy Vangelakos said.

Betsy McCoy, vice president and associated general counsel with The Related Group, which sold the family their unit, said they have tried to help find a solution — even offering them a unit in the building next door, free of cost, while the situation is resolved.

"They haven't wanted to take us up on that," McCoy said Friday. "They frankly rejected every solution and offer and proposal that we've come up with."

McCoy said some of the interested buyers who put down deposits lost their jobs, others were unable to get mortgages, and some were just nervous when the financial collapse came.

The Cape Coral-Fort Myers metropolitan area in Lee County has some of the worst economic stress — a combination of foreclosures, unemployment and bankruptcies — in the country, according to The Associated Press' monthly analysis of more than 3,100 U.S. counties.

The latest AP Economic Stress Index, which assigns each county a score from 1 to 100 with higher numbers reflecting the greatest stress from the recession, found Lee County had a score of more than 20. Anything above 11 is considered stressed.

Victor Vangelakos said they don't want to move to the tower next door because they would still be paying the mortgage and maintenance costs on the condo they own. They paid $430,000 for the unit and took out a $336,000 mortgage — essentially spending their life savings.
He'd like for The Related Group to buy them out.

"They want us to be refugees in Tower II," Victor Vangelakos said. "That's not how I expected us to live here."

The family's attorney said he has filed two lawsuits on behalf of would-be tenants because the building wasn't finished as promised. He said they expected a clubhouse, marina, private cinema and restaurants. McCoy said those amenities could be developed, but were never promised.

On Friday evening, the pool area was dark, most of the doors locked. Cathy Vangelakos and her 19-year-old daughter, Amanda, stepped into an elevator to head up to their unit. "Going up," an automated voice chimed.

"Going up," Cathy Vangelakos said. "That's all we hear."