Posts Tagged ‘unemployment’

If You’re Poor, Forget College

Ok, I haven’t done one of these in a while, but I was browsing through my Google Reader today and in comes this post from Frugal Dad.  It’s a post about student loan debt, which I can agree with the author is too high. However, the guy actually says this nonsense:

Do you need to go to college? A college degree not only doesn’t guarantee a job, but it also doesn’t guarantee a high paying job. Before you go to college because “it’s expected of you,” or “that’s what the cool kids do,” you should take a few minutes and try to determine your career goals, what is required to achieve those goals, whether or not you need a college degree, and if it is worth the expense. Many times college isn’t the answer and taking student loans while you try to determine your career goals is a recipe for disaster.

Well, instead of throwing a bunch of opinion out there without any facts to back it up, let’s take a look at some hard numbers. The unemployment rate for those with no degree is 10.1% as compared to only 4.5% for those with a bachelor’s degree. The numbers don’t lie. While the author is correct: a college degree doesn’t guarantee you anything, it just may make finding work a little easier for you. You need every edge you can get these days!

Here’s another fact: many jobs that previously did not require a college degree now require one. For example, an entry level manager trainee position at Enterprise Rent-A-Car, which really is a glorified sales position, requires a college degree.  Not having a degree can seriously limit the number of jobs available to you today.

What troubles me more than the stupid platitudes espoused in this post as well as many other similar ones I have seen since the economy went into the ditch is that we now seem to be “ok” with telling people with humble backgrounds that they need not even try to reach beyond the station to which they were born. Think about what posts like these suggest: you should not go to college if you cannot afford to pay for it yourself, or if your parents cannot afford it. Furthermore, you ought to evaluate any degree you do pursue by its dollar value, not by personal interest or by the desire to look at a career as more than just a way to make money.

Look, I am not going to suggest that college is the answer for everyone or that it can guarantee you anything, because it isn’t and it can’t. However, if you want to go to college and you need to take out a loan to do it, then you ought to be able to do so, regardless of the cost later. Student loans need to be reformed to be in line with what they used to be: an investment in the future. Investments may not pay off and that’s the risk the banks take in loaning the money. Furthermore, repayment terms need to be made easier and interest rates capped. Half the problem with student loans today is how onerous they are to pay back. You shouldn’t have to indenture yourself to the banks for the rest of your life for a chance at a piece of the pie.

Finally, I just want to say that employers also need a reality check. Is it really necessary to require a college degree for a job that pays $30K? Do you really need to limit your pool of qualified employees to those with college degrees? A bit of common sense here would be welcome about now.

Walking Away To Better Times

Much ado has been made about “walking away” from your mortgage by the financial services industry and the government. They say that it is wrong, that you signed a contract when you bought your home and you should honor it. They promise dire consequences ahead for you if you just walk away and hand your lender the keys to your home.

Homeowners walking away from their homes certainly is a problem for the banks: it causes them to have to face some serious losses and is a gigantic reality check. Banks don’t like reality checks much…they love playing with their funny money.

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Unemployment Extension Passed Both Houses and Signed by President

The millions of Americans who are depending upon their unemployment checks to pay their bills and put food on the table can rest easier today. A 60 day extension to the time to file for extended benefits in any of the four tiers of benefits available has passed in Congress and has been signed into law by President Obama.

While no additional weeks have been added, this extension would allow anyone who has exhausted a particular tier to move on to the next tier of benefits. The deadline to file is now June 2, and it applies retroactively to April 5th, so any missed benefits will be paid.

A Rebuttal To “Jobless pay is a privilege, not a right”

In this post entitled “Jobless pay is a privilege, not a right,” Ruben Navarrette argues against extending unemployment benefits, essentially saying that paying people for “doing nothing” is counterproductive.

Far from being counterproductive, unemployment benefits are a critical safety net that prevent people from becoming homeless and unable to feed themselves and their families in times of economic distress.  If you’ve lost your job through no fault of your own, then yes, jobless pay is your right as an American and a human being.

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Senator Snowe Provides the 60th Vote To Extend Unemployment Benefits Another Month

Along with three other Republican senators, Senator Olympia Snowe provided the 60th vote necessary to move  forward the bill that would extend unemployment benefits for another month (well, actually, only two weeks, now.)  The bill is expected to pass later this week.

This means that if you’re unemployed and in transition between one of the four tiers of available extended federal benefits, you’ll be able to do so for the next two weeks. The bill will also apply retroactively, so that anyone who missed benefits due to the delay will be able to collect them.

A bill that would extend the deadlines to file for extended benefits through the end of 2010 is also in the works. So far, no new tiers of benefits have been created.

More People Are Returning Home To Live With Mom and Dad

A Mortgage Bankers Association study of 80 metropolitan areas across the United States revealed that 1.2 million households were lost between 2005 and 2008. A household is defined as a single person, couple, or family renting or owning a home. At the same time, populations in those areas increased by 3.4 million. More disturbingly, the study also found that the percentage of homes with more than one person per room grew from 2 percent to 10 percent among U.S. born residents.  Read the entire report here.

The implications of the data in this study are clear: as more families lose their homes to foreclosure and as unemployment remains high,  previously independent adults are forced to return home to live with their parents or are living with other family members or friends.

The study, conducted by Gary Painter of the University of Southern California, forecasts that the number of households will not increase until 2012, when unemployment is expected to decline. However, Painter cautions that even then, a complete recovery will not occur for many years.

200,000 Americans May Lose Unemployment Benefits This Week

Since the Senate failed to pass even a one month extension on Extended Unemployment Compensation (EUC) before adjourning for the Spring recess, over 200,000 people could run out of the unemployment benefits they’re relying on to make ends meet until they find work.

What is sad is that it doesn’t appear that either side, Democrat, or Republican, is against extending the EUC program. The argument is about how it should be paid for. Republicans want it paid by drawing on previously committed stimulus funds. They say that not doing so will grow the deficit and that this is unacceptable.  Democrats argue that doing so would negate the stimulating effect, since it would take away money from another part of the stimulus package.

To be fair to the Democrats, the Republicans did not care much about the deficit when they unanimously voted to pass President Bush’s tax cuts, which were not paid for at all, nor were they concerned about the deficit when they voted to continue funding the wars in Iraq and Afghanistan, which were also not paid for.  Why they should be so concerned about the deficit now, and over a $9 billion dollar expenditure, which is a drop in the bucket compared to those other things, is baffling.

Black Homeowners 50% Less Likely To Receive A Permanent HAMP Modification, Survey Reveals

foreclosure1 In what is already an under-performing program, a recent NCRC survey discovered yet another disturbing flaw in the Obama Administration’s loan modification program: black homeowners were 50% less likely than white homeowners to receive a permanent loan modification.

Reasons why this might be happening (aside from discriminatory practices) could be unemployment. The black unemployment rate has jumped to 15.8 percent while the national average is 9.7%.

In recent months, the Administration has come to realize that defaults due to unemployment or underemployment are rising and is at last moving on programs to assist the unemployed stay in their homes. This aid will take the form of forbearance plans that would either reduce the unemployed borrower’s mortgage payments to no more than 31% of their income, or wipe out the payments entirely for a period of no less than three months.  Some borrowers could receive six months of relief under this program.

While it is clear that black borrowers aren’t getting a fair shake, according to the survey, it is also apparent that not everyone who qualifies for a modification is getting one, regardless of race. There is currently plenty of carrot for lenders and servicers, but no stick to go with it, to force the banks to “do the right thing.”

Obama Administration To Give Aid In Combating Foreclosures To Five Additional States Through HFA Hardest Hit Fund

The Obama Administration announced today that it would be expanding funding for its “HFA Hardest Hit Fund” to include five additional states. Those states are North Carolina, Ohio, Oregon, Rhode Island, and South Carolina. An additional $600 million will be apportioned  to those states to assist them in combating the continuing foreclosure crisis.

The first “HFA Hardest Hit Fund” concentrated on states where property values had decreased by 20% or more. Those states were allocated a share of  $1.5 million and included  California, Nevada, Arizona, Michigan, and Florida.  This second “HFA Hardest Hit Fund” is about high concentrations of economic distress, meaning areas where the average unemployment rate for 2009 was 12% or greater.

The Myth Of The “Responsible” Homeowner

blame We hear it everywhere, even President Obama says it. Only “responsible” homeowners deserve help. Yet, does anyone really know what “responsible” homeowner means?  I don’t think so.

Naturally, there are some situations where no help should be provided, such as for people facing foreclosure on vacation homes or multi-million dollar residences. Such people don’t really need the help since alternatives exist for them that don’t include homelessness and, further, represent a small fraction of people facing foreclosure today.

Other than those situations, everyone else deserves help,  regardless of the circumstances that lead up to the problem. Why? Well, beyond the moral reason that we should help our fellow Americans where we can, it only makes economic sense on the broader scale.

As the foreclosure crisis continues largely unabated by the President’s HAMP program, housing values continue to take a dive. This has a number of effects, including more people becoming underwater on their mortgages, or sinking them deeper underwater, which in itself leads to more mortgage defaults, and you guessed it: more foreclosures.  Another effect is that the housing market remains depressed, meaning  new home construction remains dormant and therefore no new construction jobs are available. No new construction jobs means no real stimulus to the economy which would spur more consumer spending and create more jobs, which in turn leads to continued high unemployment for everyone.

While not the sole problem facing our economy, the foreclosure crisis remains a major threat to any sort of meaningful recovery. We need to tackle it in order to set the economy back on track. This means we need to stop trying to assign blame and just fix the problem.

At the end of the day, does it really matter that a low income family bought a home they never should have qualified to buy in the first place? Does it really even matter who is at fault or who has the greater share of fault? The result is still the same: another family out on the street, another foreclosed home driving property values down further, another nail in the coffin of our economy.

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