The United States is on its longest unemployment run since 1948 and Mary Kay Coyne, after having sent her 1,862nd job application feels it. She lost her job 3 years ago and her unemployment benefits have expired last year. She stays with a friend, contributing as much as she can as she gets by on Medicaid. She feels pains in her chest, not a medical condition she says, but due to pressure. The federal government and most states have been supporting people like Coyne who used to earn $70,000 yearly and she relies on that help. But the growing budget deficit pressures may force cuts on social welfare programs. Economists say the cuts may not reduce unemployment as it may lead to weak consumer demand and reduced output and affect the wider economy.
Over 14% have already been unemployed for 99 weeks or longer. Most have exhausted their unemployment benefits. May’s jobless rate was 9.1% and no changes are seen for June. Most “99ers” rely on social services and Medicaid which are now threatened by deeper budget cuts proposed by Republicans before Congress can raise the debt cap. About 46% of job seekers have been jobless for 6 months or longer. Gaps from job searches to hiring extended 10 weeks.
JPMorgan Chase’s ex-employee Cindy Paoletti didn’t think she’d be jobless for over 3 years after she resigned to care for her dying father. She manages on loans borrowed against her depreciated home value, Medicaid and food stamps – a far cry from what she used to enjoy with an annual salary of $34,000 when she was with JPMorgan. The Bureau of Labor Statistics said short-term unemployed find jobs faster than the long-term unemployed.
While the U.S. plans spending cuts to deal with its fiscal crisis, major aid programs’ demand went up. Signee for food stamps from the Supplemental Nutrition Assistance Program (SNAP) went to a record high. 2010’s Medicaid enrollment was a record 68.2 million. These programs’ cuts are looming as the White House was said to have nodded to $100 billion in cuts to Medicaid over the next 10 years. Some House Republicans want 7 times more cuts than that.
With a thyroid condition to take medication for, Coyne was told that her New Jersey Medicaid benefits would be $25 less. She has to reduce doctor visits so as not to interrupt her medication but she fears losing her food stamps more than that. She can’t rely on someone for her food. In Washington, the food stamps program is being discussed. Republicans’ 2012 budget proposes 20% ($127 billion) cut for the program for the next 10 years. Unemployment benefits are under pressure too but there were some signs that long-term unemployment may ease. The decline may be due to seasonal factors, said economists who question if it’s timely to cut benefits. Some argue though that the present benefit systems are too generous. Labor economist James Sherk said that is just not the purpose of the safety net. He added that supporting the wealthy unemployed is a flaw in the benefit system. He said the labor market remains weak to eliminate the federal unemployment extensions and recommended a cut of 70 weeks total.