Federal Unemployment Extensions: The Doomsday Prepper Model

unemployment

Happy New Year, everyone!  We made it to 2014!

Thanks so much for reading and for making A Map of California such a success in 2013.  I could not do it without you.

We have been down south in the Central Valley for the last couple of days.  We visited my parents in Madera, had lunch with old friends in Modesto and attended a Scrabble party in Fresno with acquaintances whom we have not seen in a while.  After writing nearly every day for the past three months, it was refreshing to take a little break to ring in the new year.  But I’m glad to be home and back at my keyboard in California’s rural north country.

Sitting in my parents’ living room past midnight, I had an interesting conversation with my mother regarding the American system of unemployment insurance in general, and particularly, Congress allowing federal extensions to expire and heading off on vacation.

My mother, who will be turning 80 in a few months, states that most of the people she knows are currently unemployed and may continue to be out of work for a while.  She believes that state unemployment (the 26-week “initial claim”) is important because it provides newly laid off employees with income long enough for them to “make arrangements.”  In other words, while we sit at our computers applying for one job after another, we need to review our spending and our lifestyle choices, to batten down the hatches for the long haul.  We may need to cut unnecessary expenses, re-evaluate our cell phone and cable service and, perhaps, relocate to more economical accommodations.  If we make the most of these 26 weeks of government largesse, my mother believes, and if we have been saving money as everyone should be, and if we are not wasteful of those savings, then we should be able to get by for some time without the need to resort to federal unemployment benefit extensions.

I call my mother’s approach to layoffs the “doomsday preppers” model.  While this might not involve building an underground bunker, storing up canned food, devising a water filtration system and packing a “bug out bag,” it might well involve some of these things.  When I was laid off at the end of September after serving three years as a middle manager with a firm in southern California, we immediately sent a notice to quit to our landlord and proceeded to liquidate nearly all of our belongings, including our furniture, courtesy of my wife’s resourcefulness and the local “buy, sell and trade” site on Facebook.  We knew that a state unemployment check would not allow us to continue paying $895 monthly on our rental house.  We made arrangements to relocate 650 miles to northern California, where we could move in with my mother-in-law and drastically cut our expenses.  We also knew (from hard experience) that we would not be able to afford to hire a moving company to pack us up and move the detritus of our lives.  Thus, we sold everything, from the TV to the refrigerator to our king-size bed, our chairs and our dishes, most of it at a fraction of the purchase price.  We knew we would need the cash for God only knows how many months or years until I would once again become gainfully employed.  If ever, I told myself, in recognition of the fact that employers are not exactly falling all over themselves to hire those of us who are eligible for the senior discount at Denny’s.  I entertained the notion, much to my wife’s consternation, that this might be it for me, the end of my working life.  The big R.  Retirement.  Retirement with no pension.  I tossed and turned through many a sleepless, fitful night, wondering if I would end up as one of those old guys who are greeters at the front end of Wal-Mart.  Decades of working with nothing to show for it.  And how could we ever hope to help our aging parents when we can’t even help ourselves?

Conventional wisdom once dictated that families maintain a “rainy day fund” sufficient to cover expenses during a three or six month period of unemployment.  These days, we see recommendations that the slush fund be fat enough to take us through nine to ten months of joblessness.  For many of us, this is not nearly enough.  Depending upon your skill set and the degree to which it has become technologically obsolete, a layoff may leave you out of work for two or three years or more.  And it has been suggested that the increasing number of long-term unemployed who have been out of work for five years or more are unlikely to rejoin the workforce at all.  After all, erudite explanations of economic trends never does get one very far when trying to explain to an employer what you’ve been doing all those years.

Back before the sequester, when federal emergency benefit extensions stretched unemployment checks to 99 weeks, frugal living could make it possible for you to go for a while before dipping into savings and cashing out the 401(k).  But now, with all federal extensions having expired, it’s a different world.

Without even this limited federal security net, how is a newly unemployed person supposed to make plans to get by without any income at all?  The doomsday preppers recommend preparing economical dinners at home rather than eating out, giving up your Starbucks coffee and renting out your spare bedroom or basement to help pay the mortgage.  We should dump Netflix, get a library card and never pay a penny for entertainment.  Ask credit card companies for lower interest rates and ask for reduced payment on your car loans.  In other words, do what you can to save money now in the hope that you pinching pennies til they squeak may keep you from being bounced out on the street before you get hired again.

While it may be practical to take extreme budgetary measures while the unemployment checks are still coming in, the fact is that they won’t do the trick for someone who hasn’t been able to find a job for the past three years.  Most of us don’t have anywhere near the resources required for such a spate of unemployment.  Family ties do help, as extended families are forced to crowd in together and share their resources.  But not everyone has this option.

Unfortunately, there are still a lot of Scrooges out there who insist that someone who has been out of work for two or three years just isn’t looking hard enough.  Cutting off unemployment benefits, the theory goes, serves to light a fire under the employed, creating a sense of urgency to find a job, any job.  For one thing, this fails to take into account the fact that many of us are turned down for even unskilled jobs on the grounds that we are overqualified (and even if we do land that job at the fast food drive-thru, how is that supposed to support us?).  For another, it unfairly characterizes as “lazy” those of us whose skills have become technologically obsolete.  A good example of this sad lack of understanding of American suffering is Senator Rand Paul (R-Ky.), who last weekend opined that federal extension of unemployment benefits beyond the 26-week state initial claim constitutes “a disservice” to workers.  “When you allow people to be on unemployment insurance for 99 weeks, you’re causing them to become part of this perpetual unemployed group in our economy,” Paul told the media.

There is hope.  Congress goes back into session on Monday, and influential voices from President Obama to House minority leader Nancy Pelosi have argued that restoring federal benefits to the unemployed must be legislators’ number one priority.  Even House Speaker John Boehner (R-Ohio) agreed to consider the move, but only if a way can be found to offset the cost.

A bipartisan bill in the Senate would extend federal unemployment benefits for three months while the details of a more comprehensive plan to assist the unemployed are hammered out.

The cumulative effects of failure to help those who are out of work due to no fault of their own has not been lost on Congress.  The decreased spending power of an additional 1.3 million Americans will cause businesses to suffer, will result in further layoffs and could lead to a downward spiral that would suck our economy into a recession from which it would be difficult to recover.

Congress’ actions in allowing federal unemployment benefit extensions to expire hurts everyone.  If this blatant nonfeasance is not rectified promptly, many of those currently holding jobs will soon be receiving pink slips and making doomsday preparations of their own.

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