What happens when the benefits run out?

Cashing out retirement accounts. Selling off personal possessions. Moving in with relatives. Declaring personal bankruptcy.

Those are some of the fates met by victims of the Great Recession who exhaust their unemployment insurance benefits before finding a new job. 

Probably because of the especially cruel duration and severity of this economic downturn, the federal and various state governments have decided they want a more complete picture of what happens to people once they come to the end of their available benefits and thereby drop off of both the official rolls and count of America's jobless.

The Huffington Post today reports that about one-third of people who run out of benefits eventually do find jobs, while another third are forced to instead tap into another safety net program. The final third manage to scrape by relying on family members. Those findings came from a new report from the federal Government Accountability Office.

"Using the most recent available data, the GAO found that of the 2 million people who lost jobs and ran out of unemployment insurance from 2007 to 2009, only 35% had found work by January 2010," reported The Huffington Post's Arthur Delaney, author of A People's History of the Great Recession. "Eighteen percent left the workforce and 46% remained totally unemployed (twice the jobless rate for "exhaustees" before the recession)."

But far from the picture painted by any number of Republican office holders and presidential candidates who insist that the jobless are lazy bums who want to live off of the public dole the GAO found that just 18% received some type of Social Security benefit, only 15% received food stamps, and less than 3% landed on welfare. 

Several states last year also checked in on people who ran out of benefits and came up with similar results. In my home state of Nevada, 27% of those who ran out of unemployment insurance turned to another part of the state's safety net, according to the Silver State's November 2011 report. More than one-third of Connecticut and Washington state residents who exhausted their benefits landed jobs after tapping out their unemployment insurance benefit. 

Of no surprise to those of us who have lost jobs during the Great Recession, even when they do find new work, most of those who lose their jobs and exhaust their benefits have to settle for dramatic reductions in their standards of living, all of the studies found.

The GAO found that among the 35% of those who had exhausted their benefits but found work by the beginning of 2010, 71% earned less in their new jobs, and one-half had seen their paychecks shrink by more than 26%. The surveys in Connecticut and Washington also reported that the majority of those who had found new jobs after using up their UI benefits also earned much less than before they were laid off.

CBO: Country Experiencing Longest Stretch of High Unemployment Since Great Depression

The rate of unemployment in the United States has exceeded 8% since February 2009, making the past three years the longest stretch of high joblessness in the country since the Great Depression, according to a new report issued by the Congressional Budget Office.

And the stigma associated with long-term unemployment is actually contributing to the problem, The Huffington Post notes in its article about the CBO report. "As workers sit idle for months and years, their skills deteriorate and the very fact of their joblessness makes them even less employable," The Huffington Post's Arthur Delaney writes.

"The CBO estimates that stigma and skill-erosion combined have boosted the unemployment rate by a quarter of a percentage point since the start of the recession in December 2007 — and that the jobless rate will be half a percentage point higher for the next several years." This occurs, in large part, because of "an employer's inference that people who have been unemployed for a long time are low-quality workers," the CBO report concludes.

The CBO projects that the unemployment rate will remain above 8% until 2014. The share of unemployed people who have been looking for work for more than six months — referred to as the long-term unemployed — topped 40% in December 2009 and has remained above that level ever since.

American Airlines buys CEO $30M London home while trying to terminate employee pensions

The Washington Post this morning published the latest chapter in the ongoing saga of American Airlines' bankruptcy and its effort to terminate four employee pensions for 130,000 workers and retirees. The airline, which has saved $2.1 billion thanks to two congressional measures that allowed it to reduce contributions to its pension plans, now wants the federal government’s Pension Benefit Guarantee Corp. to bail out its unfunded pension obligations to the tune of $9 billion.

That news came along with the airline's announcement that it intends to cut 13,000 jobs, or 15% of its workforce.

That American Airlines is in serious financial trouble and needs to take drastic steps to improve its balance sheet is indisputable. It's the only major airline that, in the aftermath of 9/11 and the Great Recession, did not avail itself of the benefits bankruptcy proceedings can provide to troubled companies.

But the question is if the company's books should be balanced on the backs of its retirees and employees. 

“This is not a case of runaway labor costs. This is a case of poor management,” Jamie Horwitz, spokesman for the Transit Workers Union, told the Post. And then the kicker: the bankruptcy filing revealed that amid its poorhouse pleadings, the airline bought a $30 million London home for its recently named CEO, Tom Horton. 

Now $30 million won't exactly cover a $9 billion pension shortfall, but if American spent that kind of money on a home for one executive, what other dubious spending has it done?

That question was hinted at in the Post story by Josh Gotbaum, director of the PBGC.

“We know that other airlines have successfully restructured, preserved their jobs and kept their pension plans. We don’t see why American can’t, too,” said Gotbaum, a former investment banker who spent two years as bankruptcy trustee for Hawaiian Airlines and ultimately restructured the company by repaying creditors and preserving its defined benefit pensions. “We hope that before American takes the drastic action of terminating the pension plans covering 130,000 American employees that it tries hard to find an alternative and shows the world that there is no other alternative.”