Economy Alarm: CBO Warns: For Jobless, Recession Will Linger for Years
CBO Warns: For Jobless, Recession Will Linger for Years
Recession Worse than Predicted, Unemployed Will Experience Lasting Setbacks
Democrats Claim The Stimulus ‘Saved Or Created’ Up To 2 Million Jobs Last Year:
“The Obama administration, offering evidence that its much-maligned efforts to spur economic recovery have begun to take hold, said Tuesday that the $787-billion stimulus program saved or created 1.5 million to 2 million jobs last year… [Chairwoman of the White House Council of Economic Advisors Christina Romer] expressed confidence that the package of tax cuts and government spending — the largest of its kind in U.S. history — ultimately would fulfill President Obama’s promise of boosting employment by 3.5 million jobs by the end of this year.” (Don Lee and Jim Tankersley, “White House credits stimulus,” Los Angeles Times, 1/13/2010)
Speaker Pelosi Asserted The Stimulus Was On Track To Save Or Create 3.5 Million Jobs By the End of 2010:
“The almost year-old stimulus bill’s progress is ‘on track,’ House Speaker Nancy Pelosi (D-Calif.) asserted Wednesday… ‘When we passed the Recovery Act nearly one year ago, we pledged to create and save 3.5 million jobs over two years,’ Pelosi said in a statement. ‘This analysis shows that we are on track so far – with only half the money committed.’… Pelosi said further spending out of the stimulus act would mean more of an economic boost to the U.S.” (Michael O’Brien: “Stimulus Bill’s Progress ‘On Track,’” The Hill, 1/12/2010)
Credibility Crash: CBO: Jobless Will Experience Lasting Setbacks:
Losing a job is always tough, but losing it in the middle of what’s been dubbed the “Great Recession” could hurt for years, according to a new report by the Congressional Budget Office that hints at just how deep the damage could be to those laid off.
CBO analysts are forecasting that even when the out-of-work do find jobs, they’ll be well behind their peers who stayed employed and will lose out on thousands of dollars of earning potential over their lives.
Worse still, the study found that, unlike past recessions, the jobs picture won’t improve as quickly this time, meaning more people will feel the pain for longer. The CBO says unemployment will remain above 5 percent for another six years.
“Workers and family incomes are going to be taking this on the chin for a very long time,” said Heidi Shierholz, an economist at the Economic Policy Institute, a labor-oriented think tank.
Alison Doyle, a job-search specialist for About.com, said workers laid off now just don’t have the same bargaining power in negotiations with potential employers as those laid off during better economic times. That lack of bargaining power leads to lower paychecks.
“I don’t know that they will be able to make up what they’ve lost over their working life,” she said. “For job-seekers, it’s tough to negotiate salary when there is so much competition for every job.”
The CBO analysis warned that the problems from losing a job go beyond just economics.
“People who lose a job tend to have more health problems later in life, their family life can suffer and entire communities may struggle, especially if job loss is concentrated in particular geographic areas,” the report’s authors wrote.
Ms. Doyle said that losing a job can begin a bad cycle where the unemployed find their credit records shredded and their bills mounting. That makes it harder to get a job with a firm where an employer runs a credit check as part of the hiring process.
“Those unemployed workers are in dire straits,” she said. “People who have worked their entire lives, some at the same company for even 20 or 30 years, are losing everything – their retirement funds, cars, homes.”
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Congress and President Obama last year enacted an $862 billion economic-stimulus plan, but the unemployment rate still rose well beyond their projections. The administration now says it underestimated how deep the recession was.
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The CBO said this recession is so deep and the job losses so extensive that nearly 55 percent of the unemployed exhausted their regular jobless benefits. That’s more than 10 percent higher than after the last recession. (Stephen Dinan, “Jobless likely to feel pain long-term,” Washington Times, 4/30/2010)
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