Fewer benefits mean harder times for the jobless
It is one of the most watched, and most politically potent, of the monthly economic figures issued by Washington, and it keeps creeping upward. The unemployment rate in the U.S. last December reached 8.9%, in contrast to 8.4% the previous month and 8% in October. In human terms, the number meant that 9.5 million American workers had no jobs in December. This week the Bureau of Labor Statistics will announce the unemployment rate for January and it will almost certainly be up again, perhaps surpassing the previous postwar record of 9% reached in May 1975.
The growing jobless rate comes at a crucial time for the nation, since the Reagan Administration's economic program of budget and tax cuts is only now beginning to take effect. As the President pointed out in his State of the Union message, a 1% jump in the unemployment rate raises the federal deficit by $25 billion because of lost taxes and additional unemployment benefits. For the first time in years, polls show that more Americans are worried about unemployment than inflation. The jobless rate, if it keeps climbing, could well become the primary focus of the political debate right up to the November elections. At stake are not just Republican fortunes in the House and Senate, but Reagan's effectiveness as President in wooing Congress to do his bidding. Says one White House official: "You don't lose elections because of inflation. You do lose elections because of high unemployment. If unemployment breaks 10%, we're in big trouble. And if it's not down to 8.5% by the election, it's going to have serious consequences."
It is doubly troublesome that the ranks of the jobless are growing at a time when many of the cushions softening the pain of unemployment have been deflated. Reaganomics has whittled away at unemployment compensation and has tightened eligibility rules. At the height of the 1973-75 recession, for example, more than 75% of the 8.4 million jobless Americans received benefits; last December only 37% of those out of work got unemployment compensation. By eliminating 300,000 public service jobs provided by the Comprehensive Employment and Training Act (GETA), the Reagan Administration shut off a source of work that has been both praised as a safety net for minorities and damned as a boondoggle. Finally, there have been major cuts in public employment services, which placed 3.7 million people in jobs last year, including 583,000 who had been drawing unemployment benefits.