Unemployment Rate Stayed Steady in February

The nation's employers reduced their payrolls by 36,000 in February.

ByRich Blake and Troy Mcmullen
March 05, 2010, 5:32 PM

March 5, 2010— -- The jobless rate in America held at 9.7 percent in February and employment declined less than forecast.

Payrolls dropped 36,000 last month after a 26,000 decrease in January, according to the Labor Department. The February number is significantly better than the 68,000 jobs losses economists were expecting. Though more people entered the workforce, the unemployment rate was unexpectedly unchanged. the Labor Department says.

The Obama administration Friday touted that the 36,000 jobs lost in February was a sign of an improving job market, since economists had expected 68,000 lost jobs due to record-setting snowstorms during the month.

"The job market was strong enough to withstand the avalanche of snow that hit a major part of the country in February," said Alan Krueger, chief economist at the Treasury Department.

However Krueger also cautioned that the job market will still face future obstacles as the country's economic recovery continues.

"Recoveries do not move in straight lines," he warned. "The labor market is still facing stresses."

One sign of the snowstorms' impact on the jobs market last month, Krueger cited, could be a slight decline in the average number of hours worked per week, which dropped from 33.9 hours to 33.8 hours.

But the report has done little to ease the pain of chronic unemployment in the U.S., with many Americans going months and in some cases years chasing an elusive job.

When Doug Wood lost his job managing a Ruby Tuesday restaurant near Los Angeles in late 2008, he figured on collecting unemployment for only a couple of months until he found another spot.

He's still looking.

"In a few weeks the benefits completely run out," said Wood, 47, a resident of Norco, Calif. "I'm trying to look on the bright side of things, but I'm running out of time, and options."

Wood is one of more than 11 million Americans currently collecting unemployment insurance benefits, paid for by a mix of state and federal money. Some 40 percent of the nation's jobless, like Wood, have collected benefits for at least the past six months.

With the national jobless rate still near 10 percent, the recession grinding onward and benefits claims continuing to mount, the entire unemployment system is being stretched beyond capacity.

Since the end of 2008, some 29 states, including California, have completely run out of funds to pay unemployment claims, and have resorted to borrowing federal money. It comes to about $33 billion, according to George Wentworth, a policy analyst with the New York-based National Employment Law Project.

If jobless claims continue at current rates, the Federal Unemployment Account (FUA), part of the Unemployment Trust Fund (UTF), which is administered by the Department of Labor, could, by 2012, be facing billions in shortfalls. By that time, a projected 40 states will have borrowed approximately $90 billion, twice as much as what the government earmarked last year for the entire UTF. Private employers will likely face higher state and federal taxes to keep the Labor Department's trust funds solvent, Wentworth explained.

"This recession is pushing the country's unemployment system to the limits," Wentworth said. "With the majority of state trust funds insolvent it's time for Congress to get involved."

After single-handedly derailing a stopgap spending measure last week to extend unemployment benefits, Republican Sen. Jim Bunning of Kentucky relented this week, allowing the U.S. Senate to pass a 30-day unemployment benefits extension this week.

The $10 billion appropriation, which President Obama signed into law Tuesday, also covered the cost for an extension of unemployment benefits for laid off workers.

Bunning, who is set to retire, had repeatedly resorted to a filibuster, objecting to the addition of $10 billion to the deficit without Congress having identified a way to pay for the measure.

The dispute had already caused thousands of unemployed workers to see their unemployment benefits expire and led to a furlough of 2,000 Department of Transportation workers.

One of those affected was Joung Moon, an unemployed microbiologist in Texas whose benefits just expired, no unemployment check means she has to move out of her house.

"I don't know what's the next step," Moon told ABC News, grimacing.

The new pact extends jobless benefits for as many as 400,000 people, among other things.

States Short Billions

Among the 29 states that have run through their own unemployment insurance benefit funds, incidentally, is Bunning's home state of Kentucky, which has borrowed around $700 million from the Federal Unemployment Account. California, Florida, Illinois, Indiana, Michigan, New Jersey, New York, North Carolina, Ohio, Pennsylvania and Texas all have borrowed more than $1 billion from the federal government since 2008; in fact, California alone has borrowed more than $7 billion.

Currently, there are three unemployment benefits programs. First, there are state-paid benefits. These usually last 26 weeks, and vary, depending on the state, usually averaging out to no more than a few hundred dollars per week.

When the state benefits run out, the unemployed can qualify for federally funded emergency unemployment compensation, followed, finally, by an extended benefits program, for up to 20 weeks. Some unemployment benefits, depending on the state, can run as long as 99 weeks.

During the last extended recession, in the early 1980s, most unemployment programs lasted no longer than 55 weeks.

Cher Horner, 62, lost her job at a Naples, Fla., newspaper where she sold classified ads. That was in November 2008. Since that time, her husband has been diagnosed with cancer. She had never filed an unemployment claim in her life, but she figured she had no other choice.

Horner's unemployment benefits, around $175 per week, run out in a few weeks unless she can get a federal extension -- which now may not be possible if Congress can't figure out a way to secure funding.

"I'm at age when I'd like to retire," Horner sighed. "It's to the point where we'll have to walk away from our home and move in with our daughter. I literally do not know what to do next. No one will hire me."

As for Wood, he's gone through all possible extensions of benefits and is not sure what he will do next. He has sent resumes to every restaurant in the area and hopes for the best.

"If my benefits could be extended, sure, that would be great," he said. "But I'm certainly not counting on the government to help me."

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