Friday, September 4, 2009

More news on employment

Two tidbits on unemployment in today's news:
1) North Carolina's fund for unemployment benefits is running on near-empty. Many fail to realize that these benefits are funded by payroll taxes, the same funding mechanism used for Social Security and Medicare. In theory employer taxes pay for the benefits their laid off workers receive, i.e., a tax on layoffs. However, all employers must pay into the system and those who provide job security subsidize those who layoff employees regularly. One problem right now is that employers are being slow in sending in their contributions and obviously those who have gone belly up will not be sending in any more money. States are borrowing from the federal government to cover the gap. Do not be surprised if you hear the word "bailout" sometime soon.
2) Another disappointing employment report issued today. The rate of job loss again slowed down, but the unemployment rate is now up to 9.7 percent. My guess is that we will hit the 10 percent threshold in another month or two.

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