a compilation of my work and thoughts

Unemployment is worsening. What are you going to do?

In middle class prose on March 6, 2009 at 6:22 am
jenn_jenn, flickr.com

(Photo: jenn_jenn/Flickr.com)

Are you out of work? Laid off? Or worse, fired (these days most employers don’t even need a reason)? If so, my prayers are with you.

If not, then you’d better get down on your knees and start praying for yourself! For every day we wake up with an office to scurry to is a blessing.

New unemployment numbers from the Department of Labor released today show 651,000 jobs were lost just last month, bringing today’s unemployment rate to 8.1 percent.

While dismal enough, unfortunately the situation is actually far worse. What many fail to realize is that the unemployment rate is the percentage of the total labor force that is unemployed but actively seeking employment. It does not include the millions of people that have lost their jobs and now forced to work part-time. Nor does it include the millions of people who are, indeed, unemployed, but, for whatever reason, have given up on trying to find a job. When you throw in those numbers – 8.6 million part-timers and  2.1 million discouraged workers, according to the labor department – you get a total of 23.2 million people out of work!

Economists predict the current rate of job loss will continue for at least a few more months until the effects of the president’s $800 billion economic stimulus package can even begin to be felt.

But, if we learned anything from the Katrina tragedy, if you’re waiting on the government to bail you out or throw you some kind of financial life jacket, you’re setting yourself up for a world of hurt.

The truth is everyone can say, with some degree of certainty, that things will get worse – but no one actually knows how much worse. My advice: don’t wait around to see.

Start preparing yourself for the “what if…” right now. Even if you’re like me, and don’t have a lot of money – and certainly not a lot tied up in stocks and bonds and things like that – there are quite a few things us average, everyday people can do to protect ourselves and families.

Here are some helpful links  on how…

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  1. I own a small business that has been around since 1976. In the non to far distant past I had 16 employees, now there are five (not counting myself). Those much missed employees who are gone can thank our leadership and Congress for their inept and/or corrupt servitude.

    I have a good friend in PA that owns a company that has a couple hundred employees; he had to lay off a quarter of his workers in December (he does not own a seasonal business). He called me a couple weeks ago, after E-mailing me some documents he had received pertaining to COBRA coverage for the laid off (or released) workers. He was sick to his stomach. He was telling me that now, due to one part of this stimulus package, the company is in jeopardy of closing due to mandatory COBRA payouts for the 1/4 of the employees he “had” to let go in order to save 3/4 their jobs. This is insanity. In a nutshell the document started off like this:

    “Critical COBRA Changes 03/01/09!”
    The American Recovery And Reinvestment Act (Stimulus Bill)

    The following is a brief, but not exclusive, overview of
    required COBRA changes:

    ♦ Changes are retroactive to September 1, 2008. Special enrollment notices
    need to be sent to all employees who terminated employment since
    9/1/2008. [Ain’t it spiffy how they can go retro to whatever date they like? H.G. Wells would have been envious of the powers of Congress.]

    ♦ For employers whose Health plans terminate coverage at the end of the
    month of a qualifying event, the law is effective March 1, 2009. If coverage
    terminates on the date of a qualifying event, the law is effective February
    18, 2009.

    ♦ Employer pays 65% of the premium. Qualified beneficiary pays 35%.
    Employer claims subsidy as a credit against payroll taxes. [Ahhhh… the old “credit” ruse. Freakin’ thieves.]

    ♦ Allow 60 day election period for those eligible for the subsidy but never
    originally elected COBRA. [Oh… now they can change their minds now that someone else is going to pay the bulk of it. Unreal!!!]

    ♦ Allows current COBRA participants to switch to any other medical option
    under the employer’s plan. [Employee can “up” their coverage at the employer’s expense.]

    ♦ Must notify eligible beneficiaries who were terminated 9/1/2008 or later
    (through 12/31/2009) and inform them of the subsidy and offer them
    COBRA coverage, even if they did not elect COBRA initially. Determining
    who and how to find them may be difficult. [More administration costs and now telling employers that they must become detectives.]

    ♦ Must prepare special notice to existing COBRA participants informing
    them of the new subsidy and allowing them the opportunity to change
    medical options. [More administration costs]

    ♦ New administrative procedures (new premium structure, notices calculating
    subsidy for credit against employer taxes, additional mailed notifications,
    notification of COBRA participants of new premium, etc.) [More administration costs]

    ♦ Must notify current COBRA continuants of subsidy provision and provide
    new coupons for coverage going forward. [More administration costs]

    ♦ Must update payroll systems to accommodate subsidy. [Our payroll will charge us more]

    ♦ Must create notice to inform COBRA participants when they reach the
    subsidy limit. [Now employers are being imposed upon to become health care administrators]

    I would like to point out that this COBRA change is “retroactive” to September 2008. That the employee has the opportunity to choose even “better” insurance coverage than they originally had (at the past employer’s expense).

    I bring all this up because many people who do not own businesses do not realize all that we as business owners are subjected to; not that I am discounting all the other people who do have a working knowledge or understanding even if they don’t own a business.

    Business has been hard enough to keep going with all the laws, restraints, taxes and such that have been piled upon us for years… but now it is as if they are planning on how to make the majority of us fail.

    The people of America better start to wake up to what is going on or this country as we knew it is doomed.

    Thanks for listening to me vent.

  2. Degarmo,

    Thanks so much for your comment! It was extremely informative and has prompted me into doing a bit of investigating into the COBRA issue on my own (stay tuned for another post). At the very least, you have definitely offered my readers a different side to the story. It’ll be interesting to see what others – from both sides of the issue – have to say about it.

    To everyone else, what are your thoughts?

  3. Thanks for this, Toya. I was hoping for some good news on this issue, but it looks like it will get worse before it gets better. Thanks for staying on top of the issue!

  4. I really enjoyed reading this article. I am thankful that I experienced this recession at a young age. This experience will forever change the way that I spend money. Another good tip is to use http://www.restaurant.com for coupons. For the next three days, you can get a $25 gift card for $2, most of the time you will need to spend $35. This turns out to be $12 minus the tax. Thanks again, Dorothea

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