Find stories in the ripple effects of unemployment

By Flickr user Clementine Gallot

The U.S. Senate last week failed to pass another extension to supplemental, federally funded unemployment benefits, as this CNN Money article summarizes.

With the federal extension passed late last year, some former workers could get up to 99 weeks of jobless pay, but barring any further bailout – which Congress seems reluctant to do as federal deficits grow – thousands will be losing benefits each week.  Yet long-term unemployment has reached an historic high, according to the New York Times, with 44 percent of jobless falling into that category.

Check with your state’s workforce commission or unemployment office for the latest numbers; illustrating your story with specific numbers of  those losing benefits each week – as in this piece about Montana benefits by the AP. And here’s another comprehensive explainer by SFGate.com

The local economic ripple effects as this income stream dries up is well worth coverage by your business desk.  A few ideas include:

Earning strategies. Competition for low-wage, entry-level jobs may heat up as the checks wane.  And workers taking multiple jobs to make ends meet is the basis for a fascinating business feature, as this Good Morning America article attests.  Staffing firms and small business owners are good sources here.

Business impact. I see a lot of “for rent” signs in my region lately.  How are landlords faring as renters lose benefits and move in with family, head out of state or otherwise abandon leases?  (Be sure to check with individual property owners as well as management companies and large residential complexes.)  Are evictions up?

Talk with Main Street merchants, too.  Not just retailers but eateries and service providers like dry cleaners, auto mechanics, car washes.  What discretionary spending suffers as more displaced workers fall short of cash?

The contrarian view. Some pundits and employer organizations have expressed the politically incorrect but intriguing notion that prolonging jobless benefits undermines the will of job-seekers and prompts them to coast instead of taking any work to make ends meet.

This NYT op-ed from Monday illustrates the conundrum and outlines some of the backlash that may be developing toward the persistently unemployed.  Some of the points expressed in the article might make interesting fodder for Q&As with local recruiters, HR pros, CEOs or workforce development experts.  Reader surveys and polls would be stimulated, too.

Another approach to the unemployment picture is illustrated by this Detroit News article.   The story became quite a talker after it quoted a trade group as saying workers were difficult to recruit for seasonal duties because they could make as much by continuing to collect unemployment pay.  You can localize this story by checking with industry groups in your state or region.

The underground economy. People in dire need of income may be more inclined to work “off the books” or “under the table” for cash payments – especially in the somewhat transient marketplaces of child care, construction, agriculture, handyman work and small trades or independent businesses.

I doubt you’ll get too many individuals or businesses owning up to the practice, but you might check with state commerce and tax regulators about any stepped-up scrutiny or enforcement action – especially in a climate where states are desperate for any revenue they can get.  Talk with economists at local universities and business schools about estimates of your region’s underground economy value.  Don’t overlook the pros as well as the cons – untaxed income, while illegal, does make its way back into the retail and service sectors.

Here’s a report from Washington state detailing the lost tax revenue from legal businesses failing to report transactions; it’ll help you with questions for local officials.

Personal finance: Many people in reduced circumstances may be taking the risk of working off the books because they don’t realize how small their tax liability will be this year.  Out-of-work professionals failing to report day-care income or other cash streams may benefit from a personal finance primer by a CPA or enrolled agent outlining prospective taxes at various income levels, self-employment tax liability and deductible job-hunting expenses.

And of course – even people whose jobless pay is running out will owe taxes on what they’ve already collected – the cruel sting of unemployment benefits.  A mid-year reminder of that will be a service to readers who otherwise may be caught unawares when tax-prep time rolls round.