Early this week I wrote about unemployed workers getting hit with bank fees when they access their unemployment insurance benefit. Thankfully, Charles Rangel, Chairman of the House Ways and Means Committee, and Jim McDermott, chairman of the subcommittee on Income Security and Family Support, have decided to act. This week they sent a letter to Hilda Solis, Secretary of the Department of Labor asking for an investigation of state-level disbursement of unemployment benefits.

Here is an excerpt:

We write today to request that the Department of Labor determine the extent and impact of, as well as alternatives to, banking fees that are imposed upon unemployed workers who receive their weekly unemployment insurance (UI) benefit payments through debit cards. It has recently come to our attention that a number of States issue UI payments via debit cards, and that charges made to these cards, as well as customer service inquiries, may be subject to banking fees. Additionally, there is some evidence that UI beneficiaries are often unaware of the fees they might face when using such cards.

Losing your job is bad enough, right? Well, the AP has reported that as states partner with banks to dispense unemployment benefits, many recipients find themselves paying a fee to get their cash:

Thirty states have struck such deals with banks that include Citigroup Inc., Bank of America Corp., JP Morgan Chase and US Bancorp, an Associated Press review of the agreements found. All the programs carry fees, and in several states the unemployed have no choice but to use the debit cards. Some banks even charge overdraft fees of up to $20 - even though they could decline charges for more than what’s on the card.

While cards may provide extra convenience and lower administrative costs, they come at the expense of the unemployed and create a potential boon for banks.

In Missouri, for instance, 94,883 people claimed unemployment benefits through debit cards from Central Bank. Analysts say a recipient uses a card an average of six to 10 times a month. If each cardholder makes three withdrawals at an out-of-network ATM, at a fee of $1.75, the bank would collect nearly $500,000. If half of the cardholders also dial customer service three times in any given week (the first time is free; after that, it’s 25 cents a call), the bank’s revenue would jump to more than $521,000. That would yield $6.3 million a year.

The idea of bank cards shouldn’t be scrapped altogether, since they boost efficiency and save states money. But they deserve another look - especially as the new stimulus plan will increase unemployment benefits by $40. The goal should be to increase efficiency and help the unemployed, not the banks.

The Huffington Post reported that six republican governors have considered turning down money from the federal stimulus package.

A handful of Republican governors are considering turning down some money from the federal stimulus package, a move opponents say puts conservative ideology ahead of the needs of constituents struggling with record foreclosures and soaring unemployment.

Though none has outright rejected the money available for education, health care and infrastructure, the governors of Texas, Mississippi, Louisiana, Alaska, South Carolina and Idaho have all questioned whether the $787 billion bill signed into law this week will even help the economy.

I am really dumbfounded that anyone would consider this an option and agree with Atlantic blogger, Ta-Nahisi Coates, that this is “politically stupid.”

How do you tell your citizens, yes the federal government was going to give us billions to repair our schools and create jobs, but I said no? Especially given the economic conditions of these states:

Unemployment Rates

• South Carolina - 9.5 percent (Ranked 49^th)
• Mississippi - 8.0 percent (Ranked 40^th)
• Alaska - 7.5 percent (Ranked 35^th)
• Idaho - 6.4 percent (Ranked 22^nd)
• Texas - 6.0 percent (Ranked 17^th)
• Louisiana - 5.9 percent (Ranked 16^th)

This is probably just a play for press coverage. But if they are seriously considering refusing the money, they should listen to constituents like Ruby who wrote the following comment to this post:

Governor Stanford,
Given the percentages of the unemployment rate in South Carolina and the number of families who will, if not already, lose their homes through unemployment, how will you help these people stay in their homes. Building one retail mall will not cut it. Maybe you and your supporters are feeling the pressure of a failing economy but believe there are more people who would benefit from the stimulus package than from your pride and possible other hangups. That old southern mentality needs to be put on the shelf. The good ole boys way of thinking will get the people of S.C. nowhere, unless of course you have a few billion dollars lying around to bail out the people in S.C.

This afternoon the House will probably approve the stimulus package, sending it to a Senate vote this evening. If all goes as planned, President Obama can sign the new legislation this weekend.

While main goal of the bill is to create jobs - 4 million jobs according to Obama’s directives- it also contains much needed funding to assist those who are currently unemployed. Specifically:

• Unemployed workers could receive 20 more weeks of unemployment benefits. Those in states with particularly high unemployment rates could get up to 33 more weeks;
• Trade Adjustment Assistance health benefits could be available to 160,000 more people who are out of work because their job moved over seas; and
• People who have been laid off could receive a subsidy for health insurance up to 60 percent for nine months.

The bill also includes a one-time grant for states that reform their unemployment insurance programs, making it easier for low-wage and part-time workers to apply for the assistance.

We know that nearly 600,000 people lost their jobs in January, increasing our national unemployment rate to 7.6 percent. Too often, however, we concentrate on the statistic and forget the faces of the people who make up the unemployed population. Yesterday, Michael Luo of the New York Times wrote a profile of the citizens of Manchester, Ohio who are still seeking solid ground after Manchester Tool Company closed its doors 10 months ago.

The lessons we learn from this small town shine a light on the broader economy. Only 15 percent of the hourly workers have found steady employment. Older workers, like John Foss, age 50, find it especially hard to transfer their skills to other sectors of the economy:

Mr. Foss, who started as a machinist at Manchester, applied for scores of jobs after his layoff, combing the newspaper and Internet and dropping in on employers to fill out applications. He has not heard back from anyone.

A job search he initially thought might take a few weeks has stretched into its 11th month. And his initial hopes of landing a job that paid close to the $18.12 an hour he used to make have faded. He now believes $8 to $12 an hour is more likely.

For those laid off workers who can afford schooling, the healthcare field has shown the most promise:

Cindy Starcher, 35, and Lorraine Norrod, 50, are among the small group of Manchester workers who decided to seek retraining in a new field. Their rationale is easy to understand: in Ohio, more than 280,000 manufacturing jobs have been shed since 2000.

The women carpool now to classes Monday through Thursday at Northcoast Medical Training Academy, studying to become medical assistants. Those jobs typically pay about $20,000 to $30,000 a year, they said, much less than what they used to make.

But as Ms. Norrod put it, “It pays more than being laid off.”

Ms. Starcher, who has two young children at home, said she settled on health care as a potential career after much deliberation, concluding the jobs would always be needed.

“There’s always going to be sick people,” she said. “It’s the one thing you can’t send overseas.”

The tales from Manchester, Ohio should guide policy makers as we look for ways to create jobs and help people find work. Education and training are key pieces to this puzzle. As we move forward we must connect people to growing sectors of the economy and give them the tools to make an easy transition.

The U.S. economy lost 598,000 jobs in January, marking the largest one month job loss since December of 1972. Unemployment is now at 7.6 percent. More than 11 million Americans who want a job are out of work.

As the Senate continues to debate the terms of the Economic Recovery Package, the economy is in free fall. President Obama gets it:

“I don’t care whether you’re driving a hybrid or an SUV,” he said. “If you’re headed for a cliff, you have to change direction. That’s what the American people called for in November, and that’s what we intend to deliver.”

We are at the cliff. The Wall Street Journal reports:

Unemployment filings have soared so high in recent months that seven states have already emptied their unemployment-insurance trust funds, which were supposed to see them through recessionary periods. Another 11 states are in jeopardy of depleting reserves by year’s end, according to the National Conference of State Legislatures, which published a January report entitled “The Crisis in State Unemployment Trust Funds.” So far, states have borrowed more than $2.3 billion in emergency funds from the federal government, money they are required to pay back.

Mark Zandi, former advisor to McCain has created this graph that shows the danger of inaction:

Job loss creates more job loss. The Senate needs to speed up their compromise and get our people back to work.

Today the National Governors Association (NGA) and the National Conference of State Legislatures (NCSL) called on Congress and the next administration to assist states and localities through a new stimulus package.  According to NGA:

Twenty states already have cut $7.6 billion from their fiscal year (FY) 2009 budgets, and 30 states have identified additional shortfalls totaling more than $30 billion. Twenty-five states also have identified shortfalls of $60 billion for FY 2010. However, these numbers tell only a portion of the story, with previous budget actions and the continuing downturn producing cumulative budget gaps of more than $140 billion for FY 2009 and FY 2010. Additionally, states feel the greatest impact on their budgets in the year after a recession ends, primarily because Medicaid growth occurs late in the recession and employment growth lags the recovery. Thus, the repercussions of this downturn will last for several years-and will be much worse without swift action.

While most state leaders are pleased with President-elect Obama’s plan to boost the economy by “creating and saving 2.5 million jobs, jobs rebuilding our infrastructure, our roads, bridges, modernizing our schools and creating the clean energy infrastructure of the 21st century,” one governor said no thanks.

South Carolina Governor Mark Stanford has vocally opposed all federal bailouts, including those that would provide funds for his state. In a November op/ed in the Wall Street Journal, Stanford wrote:

I find myself in a lonely position. While many states and local governments are lining up for a bailout from Congress, I went to Washington recently to oppose such bailouts. I may be the only governor to do so.

What Stanford fails to mention is that his home state of South Carolina has the highest unemployment rate - 8 percent - in the Southeast and the fourth highest in the nation.

When the nation’s governors meet with president-elect Obama tomorrow, let’s hope the new leader will follow the needs of South Carolina residents instead of the wishes of its governor.

In October alone, the U.S. economy lost 240,000 jobs bringing the unemployment rate up to 6.5 percent - the highest in 14 years. The statistics are disheartening:

• 1.2 million jobs were lost during the past 10 months;
• More than 10 million people are  without jobs and looking for a new one;
• Manufacturing lost 90,000 jobs, construction lost 49,000 jobs, retail lost 38,000 jobs and professional and business service companies shed 45,000 jobs; and
• The number of people receiving unemployment benefits is at a 25 year high.

It’s a good thing Obama is meeting with his economic team today because some economists believe the unemployment rate will be even higher by the time he takes office in January.

Yesterday’s news papers brought more proof that the economic fallout has reached most Americans. (Not that we really needed the extra proof to believe it.)

The USA Today reports that the number of homeowners in foreclosure grew by more than 70% in the third quarter compared to the same quarter in 2007. Just between July and September 766,000 homes received at least one foreclosure-related notice.

The Washington Post writes that there were more layoffs in September than in any month since September 2001. Close to half a million workers have filed for unemployment benefits in the last four weeks alone. With many companies imposing hiring freezes, it doesn’t seem like we will near rock bottom anytime soon:

Anecdotal reports suggest that the hemorrhaging in the job market has only begun. Companies that announced plans this week to cut jobs include Internet company Yahoo (1,500 positions), pharmaceutical company Merck (7,200), National City bank (4,000) and Comcast, the cable company (300).

In speaking to the House Oversight Committee, former Federal Reserve Chairman, Alan Greenspan, called the economic situation a “once-in-a-century credit tsunami.” Greenspan apologized for some of his previous positions noting that there “was a flaw in the model that I perceived is the critical functioning structure that defines how the world works.  He also gave a dire forecast for the near future:

“Given the financial damage to date, I cannot see how we can avoid a significant rise in layoffs and unemployment,” Greenspan said. “Fearful American households are attempting to adjust, as best they can, to a rapid contraction in credit availability, threats to retirement funds and increased job insecurity.”

Hold onto your seats, folks.

Stateline published an article today about the effects of unemployment on state budgets. As the number of unemployed Americans reaches the highest point since 9/11, many states are struggling to find the money to pay unemployment benefits and if they do have the money, there are too many requests to deliver the benefits efficiently and on time. According to the article:

Unemployment insurance trust funds are in danger of insolvency in California, Michigan, Missouri, New York, Ohio, South Carolina and Wisconsin. According to the National Employment Law Project, a policy group based in New York that advocates on behalf of the unemployed, 11 additional states are facing financial challenges paying their jobless benefits.

One has to look no further than California to find evidence that the credit crisis is now hindering state governments. According to the Stateline article, state leaders have found it harder to borrow from their traditional lenders due to the tight credit market and may have to turn to the federal government for a loan to pay their unemployment benefits.

Experts do not expect unemployment to decrease anytime in the near future, despite the bailout bill.  But unemployment is not the only cause of concern for state governments worried about tight budgets:

The jobless not only will file for unemployment checks, but some will be forced to turn to Medicaid, the federal-state health insurance program for low-income Americans that already is pinching state treasuries.

At the same time states face a significant increase in demand for essential services, they are also facing significantly lower revenues due to weakening economies.  It is likely that the cycle of budget cutting will continue for the next year or two.  In fact, due to the credit crunch and the struggling economy, Governor Schwarzenegger announced that he may call a special session in California this month to address a budget that was just signed two weeks ago.

I think we can officially say that regular Americans — those who had nothing to do with the creation of those credit defalt swaps and derivatives — need extra help too.