Wednesday, December 24, 2008

Looming Issue: The Fragile Safety Net

During the Republic Windows and Doors labor action, I argued in a series of articles (here's an example) that progressive activists focused on the wrong issues. Although they rightfully focused on the workers' rights under federal and state law, their advocacy missed the boat in other areas.

First, they demonized Bank of America even though the company, which relocated and dumped its workforce, was the only culpable party. Furthermore, they failed to pay any attention to the overly burdened and insufficient economic safety net. With unemployment and rates of uninsured rising, these conversations need to take place. We can use the bailout as an analogy for that discussion, but bailout money cannot solve this part of the economic crisis -- which seemed to be an assumption of much of the activism surrounding Bank of America.

Today's San Francisco Chronicle reports that two think tanks have released studies on the declining safety net. One of the studies covers the State of California exclusively, but another, prepared by the Urban League, is national in scope. Here's a snippet from the article:
The Urban Institute reports paint the recession as the worst downturn in decades, and suggest that its severity will shock workers under 40 who have become accustomed to a relatively strong job market.

Simms said the hardest hit segment will be workers at the low end of the wage scale who are more likely to get laid off and less likely to collect unemployment benefits under current rules. Federal estimates suggest only 36.3 percent of unemployed people nationwide received benefits in 2007. Eligibility rules are set by the states, some of which have made it easier for low-wage workers to claim benefits.

And recently, the New York Times reported that many states' unemployment insurance funds are becoming insolvent as the number of people seeking benefits surges:
With unemployment claims reaching their highest levels in decades, states are running out of money to pay benefits, and some are turning to the federal government for loans or increasing taxes on businesses to make the payments.

Thirty states are at risk of having the funds that pay out unemployment benefits become insolvent over the next few months, according to the National Association of State Workforce Agencies. Funds in two states, Indiana and Michigan, have already dried up, and both states are borrowing from the federal government to make payments to the unemployed.

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