U.S. Unemployment Benefits Rank 31st in the World – Below Venezuela, Azerbaijan and Belarus



The Great Recession cost the U.S. labor market 8.4 million jobs, or 6.1% of total payroll employment – “the most dramatic employment contraction of any recession since the Great Depression,” according to The State of Working America, an annual publication of the Economic Policy Institute, a Washington, D.C. think tank.

Even after the recession technically ended in the summer of 2009, the economy’s growth has been so weak that the number of jobs created hasn’t even kept pace with population growth, much less helped to clear the backlog of jobs lost during the devastating downturn.

Now comes the news that not only are U.S. workers more vulnerable than workers in other rich, industrialized democracies when it comes to factors that measure employment stability, they also receive, on average, a paltry 27.5% of their previous pay in unemployment benefits. That percentage places the United States 31st among 91 countries recently ranked for an International Monetary Fund working paper.

A list of the top 51 countries is available on the blog “European Welfare States,” but below is the Top 10 and how the United States stacks up against them:

Rank
Country
% of pay replaced by UI
1
Netherlands
71.0%
2
Switzerland
68.7%
3
Sweden
68.5%
4
Portugal
65.0%
5
Spain
63.5%
6
Norway
62.0%
7
Algeria
61.2%
8
Taiwan
68.0%
9
Ukraine
56.9%
10
Italy
52.7%
31
USA
27.5%

Not only that, but the United States falls behind 13 other countries not widely regarded as leading world countries – including Algeria, Taiwan, and Ukraine – all of which provide at least double the percentage of pay replaced by unemployment benefits of America, according to political science professor and author Kenneth Thomas
 

Longer Recoveries = Longer Dependence on UI Benefits

As mentioned above, the recovery from the Great Recession has been excruciatingly long, much longer than of any economic downturn since the Great Depression. For example, in October 2010, 16 months after the official end of the recession, the economy still had 5.4% fewer jobs than it did before the recession started, according to the EPI. Contrast that to the average of 10 months it took for jobs to be restored following post-World War II recessions that occurred before the early 1990s. (After the early 1990s recession, that span grew to two years, while it took three-and-one-half years to recover jobs lost during the 2000-01 recession.)

“Thus, the Great Recession has brought the worst of both worlds: extraordinarily severe job loss, combined with an extremely sluggish recovery,” the EPI concluded.

Another way of looking at the situation is that more Americans have depended on unemployment benefits for a longer period of time in the aftermath of the Great Recession than at any time since the benefit was created in 1935. 

Not only are these benefits important to individual recipients, but they also serve to stabilize the overall economy by providing the unemployed with money they  spend on goods and services they’d otherwise stop buying because of the loss of their pay checks, Tim Vlandas, a PhD student at the London School of Economics, noted on the European Welfare States blog. “It also prevents workers from falling into poverty when they lose their jobs,” he added.

But with American jobless workers receiving only about 28 cents in unemployment benefits for every dollar they earned while working, it’s clear they don’t have the economic wherewithal to help jumpstart – or even sustain – a robust economic recovery.

Protections for U.S. Workers Dead-Last Among OECD, BRIC Countries

If that’s not alarming enough, U.S. workers are more vulnerable than any other workers in member countries of the primarily advanced, industrialized democracies that comprise the Organization for Economic Cooperation and Development, or even in BRIC countries (Brazil, Russia, India, and China). According to Thomas, the United States is dead-last in the 21 measures the OECD uses to determine how well workers' rights are protected, including:

  • being fired unfairly
  • not getting severance pay
  • getting the least notice on mass layoffs
  • being relegated to temporary positions.

“The bottom line is that American workers enjoy the least protection out of all major economies in the world,” Thomas writes on his “Middle Class Economist" blog. “Protections against individual firing, collective dismissals, and the ability to get off temporary employment are as weak as they can be.”

The original database of the 91 countries, which served as the basis for the IMF working paper, can be found by clicking here.

Requiring its drivers to act like employees, but treating them as contractors saves FedEx big bucks - but is it legal?

FedEx: Failing to deliver for its drivers?
Should FedEx be able to enjoy all the benefits of having employee drivers, but treat them like independent contractors - leaving those workers with about 30% less in wages, benefits and other worker protections, like unemployment compensation?

iWatch News, a project of The Center for Public Integrity, has taken on that topic. "Employees are eligible for a host of legal benefit and protection programs that governments run and regulate," according to the report, by American University iWatch Fellow Amy Biegelsen. "Employers must pay into those programs on behalf of 'employees,' but not [on behalf of] 'independent contractors.'

Businesses have strong incentive to classify employees as contractors - they save about 30% and reduce regulatory exposure, according to the report. But such "misclassification" cause workers "to lose legal rights, governments [to] lose tax revenue, and businesses [to] gain an unfair advantage over competitors who pay the extra costs to treat their workers as employees."

Biegelsen used the example of FedEx driver Gary Terrio, who signed on as a contract driver, thinking that meant he'd control his schedule, route and enjoy other flexible working conditions independent contractors typically do.

But Terrio was required to be at the FedEx terminal at 6 AM daily, was paid by the delivery, not by the hour, and was docked if a package was late. He had to purchase and insure his own FedEx-approved truck. He also had to pay his entire Medicare and Social Security contributions (which are typically split between an employer and worker when the latter is classified as an employee), and was not eligible for sick, disability or family leave, or unemployment compensation. He also couldn't affix bumper stickers to the truck he had paid for, or run a quick personal errand in it in between deliveries or at the beginning or end of the day.

All of that expense and aggravation netted him only about $500 a week. “I would have loved to have been just an independent contractor,” he told Biegelsen. Instead, “I felt like an employee.”

The implications for this shift is far greater than FedEx's workforce because of the sizable and growing number of independent contractors across all U.S. industries and professions.

In its inaugural annual "Independent Workforce Index," MBO Partners found that there were 16 million independent contractors (what the company calls "career independent workers") in the United States in 2011. By the year 2020, the consultancy predicts that 70 million people - more than 50 percent of the private workforce - will be independent.

New Yahoo! CEO - with $27 M Comp Package - Champions Company's Largest-Ever Layoff

Yahoo! Headquarters in Sunnyvale, California

Yahoo CEO Scott Thompson - who joined the company in January with a guaranteed $27 million annual compensation package set to increase by at least $1 million annually - has announced his first big move at the Silicon Valley internet company: he's laying off 2,000 employees, or 14% of the total workforce.

This round of cuts comes about three months after Thompson inked his multimillion compensation package. Citigroup analyst Mark Mahaney - not exactly someone to regularly call attention to excessive executive pay - pegged the amount as "unusually high."

Although Thompson promised "a bold, new Yahoo" in a written statement this morning, he's resorting to a tired - and not very effective - tactic to try to achieve that goal: this will be the company's sixth mass layoff in four years, and the deepest one to-date. He's the third CEO during that time period to unsuccessfully try to grow the company's revenues by slashing jobs:

  • February 2008 - 1,000 jobs (under founder and former CEO Jerry Yang)

  • December 2008 - 1,500 jobs (under Yang)

  • April 2009 - 700 jobs (under former CEO Carol Bartz)

  • December 2010 - 600 jobs (under Bartz)

  • April 2011 - 100 to 150 jobs (under Bartz)

  • April 2012 - 2,000 jobs (under Thompson)

Yahoo CEO Scott Thompson

And the layoffs, which were first reported yesterday by AllThingsD, may not be the last: Wednedsday’s round is “just the tip of the proverbial iceberg” and more are to come, the technology website said.

Not that Thompson has much to worry about - at least financially - should his grand, albeit not very original, plan not take. If history is any guide, an "exit" from Yahoo! would be softened considerably by a generous golden parachute. Former CEO Bartz left the company in September 2011 with a $14 million severance package after a "murky record, at best" marked by an expletive-laced send-off when the company's board of directors fired her.


Yahoo! reported a net profit of more than $1 billion on revenue of nearly $4.4 billion last year.


Read more here: http://www.newsobserver.com/2012/04/04/1980558/job-cuts-at-yahoo-6-rounds-of.html#storylink=cpy