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Economics Perspective of the Unemployed

I have been laid off three times from jobs. Oddly or not, all three times came when a Democrat was President. The most recent condition came a couple weeks ago, when my company decided to 'reorganize', a useful word that can mean anything from making judicious use of your resources to maximize effectiveness, to panic-induced blunders that will eventually hurt everyone involved in the matter. During the settling of things after the decision, I put my resume on the internet and was soon invited to interview as a salesman for Saturn. Since I am not a sales person by nature, along with - hmm - things I have read in the news, I have decided not to pursue that wonderful opportunity.

I also have been making adjustments in how I live. Since my healthcare coverage was going to end soon, I made sure that I, my wife, and my daughter all had trips to the doctor, and my daughter's dentist visit was also moved up, just to be sure. Which brings me to that unending fountain of joy, COBRA coverage. When I say 'Cobra', I don't mean that venomous snake or the nemesis of the G.I. Joe team - or at least I don't think there's a connection - I mean the "Consolidated Omnibus Budget Reconciliation Act", also known as the "you want how much for health insurance?" plan.

Near as I can make out, the way COBRA works is that the government has set up health insurance coverage for people who lose their jobs. The formula for what you pay is really very simple; simply calculate how much you could realistically afford, double that then add another 20 percent, and that's your COBRA premium. I think it's mean to remind us how nice our employers were to offer us healthcare coverage, and to punish us for losing our jobs. Here's a place where I actually give out some props to the Obama Administration - that Stimulus bill that passed earlier this year includes a government subsidy for some of the COBRA cost. The bad news is that the process is a bit long and complex, and my insurance contact said they'd "get back to me" when they knew what COBRA would cost with the reduction from the subsidy. I sure hope that subsidy money didn't end up being used for Cash For Clunkers, instead.

Obviously, losing your job makes you very conscious of how much everything costs. I haven't exactly been living hand-to-mouth, but the sudden end to an income, even with a severance package, means that everything is considered in terms of budget life, how long you can live on a certain asset if you need to do so. The first order of economics is really determining how much you have to have, and where you will get what you need. The short-term is no problem, but until interviews and job offers come in, you really become much more aware of the financial horizon.

Ironically, you also become cautious about what sort of job you will consider. I don't mean that you become overly picky about jobs you apply for (I've sent out about three dozen applications so far), but you consider all the aspects of a job, including elements that did not seem important before, such as how far you would have drive to get to work, how much travel is involved, whether you would be willing to relocate and if so to where, what base bay is acceptable, what working conditions are must-have, what nature of work you would consider, and the like. I found some surprises already, like two jobs for different companies which are very similar in their requirements and duties, yet one pays barely half of what the other pays. Or the company which is extremely particular about whom they will even consider, which explains why the job has been open since May. For the same general responsibilities, some companies are very demanding about who they want, which makes it hard to get in but at least you are clear about what they want, while other companies are very general, even vague, which may seem attractive until you ask whether they know what they are looking for in a candidate. I've already had one job in my past where the business owner did not know what the job needed. You have to consider everything in the job posting, to make sure you understand what you are walking into in a job.

The economy is a big topic of discussion among the unemployed. The Workforce office is jam-packed, so is my out-sourcing company, and so are the employment recruiters I have talked to. Pretty much no one believes that the economy is in good shape or that finding work is easy. The rotten economy is also punishing the poor more than anyone else. People on the low end of pay and position get let go more often than anyone else, and they get less in severance as well. All the fine speeches spinning how making businesses pay more in taxes will be good for the economy somehow gets no traction when all you see is belt-tightening. What's interesting, to me at least, is that most folks just want to work a decent job. No one is looking for a free ride that I have met, and they are all getting pretty disgusted with a government that spends so much time on spin, that it never considers the effect its new laws have on regular people.

Sooner or later, it will dawn even on Congress that unemployed people vote too, and they are in no mood to continue on the present course.


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Comments (30)

Sorry to hear of your dilem... (Below threshold)

Sorry to hear of your dilemma DJ. Also don't envy you having to deal with COBRA. Had to deal with them for a little over two years for coverage for my daughter. In that time, premiums went from $320 to $460. And I lost track of how many times I had to call to find out what the hell was going on as my daughter would present her ID card during doctor's or dentists visits only to be told her coverage had "expired". You will never know the joy I experienced when she got a job with full medical coverage and I could call those bastards and tell them to cancel the coverage.

What having to pay for COBR... (Below threshold)

What having to pay for COBRA really reminds us is just how much less we get paid because our employers are footing the bill for lots of our health insurance. People tend to forget that while 'their employer is paying part of their premium', all that is really happening is that they're paying you that much less and steering it directly to the insurance company.

Hat tip to ya DJ for sharin... (Below threshold)

Hat tip to ya DJ for sharing your situation with us.

I do frequently confuse omnibus, succubus, and incubus, however. Always thought COBRA was more of the "succubus" variety.

Sorry to hear about that. ... (Below threshold)

Sorry to hear about that. Check out Blue Cross Blue Shield and specifically look into Temporary Health Insurance. You can get 6 months coverage for about $1500 for a family of 4 to carry you over till you get another job. You can do it again 1 more time if you need it.

The key is to apply for coverage and get underwriting approval before your current coverage lapses.

I know, because I have done it. I'm on my second 6 months of coverage. It's not the best, but it's a $2,000 deductible and I will not have a gap in coverage where most people run into problems.

"Near as I can make out,... (Below threshold)
Victory is Ours:

"Near as I can make out, the way COBRA works is that the government has set up health insurance coverage for people who lose their jobs."

Typical uniformed Republican. 100% wrong. You stay in your current plan - it's not government health insurance.

No wonder you're a right wing blogger. You happily write about subjects you know nothing about so long as it lets you take a misplaced shot at your fellow Americans.

Here, this took all of 10 seconds to find:

The word COBRA is an acronym for Consolidated Omnibus Budget Reconciliation Act. The COBRA act is a federal law that requires employers with twenty or more employees to provide a continuation of benefits under the employers group health insurance plan, for employees and their families. Coverage may be continued for 18 to 36 months.

Employees and other qualified family members, who would otherwise lose their coverage because of a qualifying event are allowed by COBRA to continue their coverage at their own expense at specified group rates. COBRA specifies the rates, coverage, qualifying events, beneficiaries, notification of eligibility procedures, and time of payment requirements for the continuation of insurance.

Yes, the Democrats have provided a subsidy for COBRA payments.

You're welcome.


Really sorry to hear about ... (Below threshold)

Really sorry to hear about your situation. What all the statistics leave out are those of us who are 1099 people. We never got health insurance or unemployment benefits and since the economy went south, most of us have been looking at significantly reduced income or no income.Insurance agents, real estate agents, commissioned sales people, consultants - none of us are making any money in this economy. You never even hear about us. Almost everyone I know over 50 years old is underemployed at this point. Furloughs,shut downs,layoffs all combine for lower income and less fun. No dinners out,no vacations, no new cars. Congress is living in a dream world. I worked hard all my life, put two kids through college only to watch my savings disappear at a time when there is very little chance I can earn enough to replace what has been lost.And they wonder why we are angry.....

As an employer I have to kn... (Below threshold)
Mac Lorry:

As an employer I have to know a bit about COBRA. COBRA is the same healthcare plan your employer provided, only who pays the premiums changes. Employers often farm out the administration of COBRA to independent companies who collect 105% of the premium that was mostly being paid by the employer before a worker was laid off. It's these independent administrators who make the process either work well or not. Under the stimulus plan, 65% of the premium is eventually paid by the government, but initially it's charged back to the employer who then gets to claim it as a credit against their payroll taxes. COBRA is generally good for 18 months, but the reduce premium is only good for 9 months.

Being unemployed means a person has to scramble to keep enough money coming in to support their household or face losing everything. Of course business owners dance to that tune all the time. In that regard I've been unemployed for more than 20 years. A job is when someone like me says, look you just do the work I want done and I'll do all the scrambling for you. Maybe it's just me, but I find that people who have been laid off for a long time make the best workers. They understand that no one works for a poor man and if liberals keep penalizing business owners then soon everyone will be scrambling for themselves.

Potentially cheaper than CO... (Below threshold)
jim m:

Potentially cheaper than COBRA would be to cover people who are receiving Unemployment through Medicaid. Since unemployment is temporary (it always has been for me thankfully) this would not represent a huge increase in medicaid costs, especially when you consider the new government subsidy for COBRA.

Of course few if any people still take the COBRA benefit because unemployment does not cover their other expenses and so the offer of a subsidy is meaningless. That's pretty much like most Dem offers of assistance: meaningless.

I'm just completing a round of unemployment and will be starting shortly a new adventure. I did not take COBRA because it would still have been too expensive. Fortunately the plans where I am going do not have any restrictions on preexisting conditions.

Vic - Most people really do... (Below threshold)
jim m:

Vic - Most people really don't give a damn about COBRA subsidies. What they want is a robust economy that will provide good paying jobs. People don't want a hand out they want to be able to work and be successful. Obama's promise of more government handouts that never quite get you everything you need is just not attractive.

Hey, DJ. Sorry for your job... (Below threshold)
Jeff Shaw:

Hey, DJ. Sorry for your job loss. I'm in the same boat. MacLorry is correct- take advantage of the stimulus deal on COBRA- You only have to pay 35% of the coverage! My employer was paying over $1000/mo. for my plan. My bill? $354. Good for nine months. Hope and change indeed!

Jeff - But if you are like ... (Below threshold)
jim m:

Jeff - But if you are like me and you are getting ~$1000 per month from unemployment and trying to pay your mortgage and pay the bills and keep a growing kid in clothes, much less food, taking away over a third of what little income you have is not helpful and offers little peace.

That's why I said above that what we'd all really prefer is a robust economy and government programs are but little comfort.

In most states the rate an ... (Below threshold)
Mac Lorry:

In most states the rate an employer pays in unemployment tax depends to some degree on their record of the amount of unemployment benefits paid out against their account. However, because of the FUTA tax, even an employer who has never laid off an employee pays a minimum of several hundred dollars per employee per year. If a small business has 10 employees and hasn't had a layoff in 10 years they have paid $30,000 or more into the system. Then if they are forced to lay off 3 employees, most of the amount those employees will collect in unemployment benefits have already been paid into the system. In addition, the employer has to pay an even higher unemployment tax rate for years to come. For most businesses, they pay in more than their laid off employees will ever receive.

The way I look at it is that unemployment taxes are an insurance premium and unemployment benefits are the payout of that insurance. What I pay in unemployment taxes I don't have available to pay to my employees, and it's their work that generates the review. Thus, unemployment benefits are not "taxpayer's money" any more than health insurance benefits are. It only looks like taxpayers are on the hook because federal and state government squander the unemployment taxes as they are paid in, you know, like they do with the FICA taxes. If the government had to set aside funds paid for a specific purpose then you would start to see just how out of control government spending is.

Bottom line, no one should have any qualms about accepting unemployment benefits, because it's money your employer paid into the system on your behalf. It's like taking your insurance company's check to repair your home if it's damage by a storm.

"Vic - Most people reall... (Below threshold)
Victory is Ours:

"Vic - Most people really don't give a damn about COBRA subsidies."

Except the unemployed who need COBRA to maintain health insurance coverage.

And their spouses and children.

I assure you that the 9%+ of Americans who are unemployed care give a damn about it, and I care about giving them help and support in the current economic climate.

Some don't give a damn. Some are only interested in making sure that tax cuts for the rich are protected. Some are only lining their own pockets and to hell with anyone who's unemployed.

I get that.


A survey by the Lincolnshir... (Below threshold)
jim m:

A survey by the Lincolnshire, Ill.-based Hewitt Associates found that monthly enrollment rates for workers eligible for the subsidy averaged 38 percent from March 2009 to June 2009, up from 19 percent from September 2008 to February 2009

So just over a third of the people eligible took advantage of COBRA and your blessed subsidy only made a difference for 1 in 5. that's 19% of your 9.8% unemployed or 1.86%.

Like I said you could provide Medicaid for ALL 9.8% and it wouldn't cost that much more and they would all be covered, but that's a conservative idea so it's no good. You lefties don't really care about helping people you just want to look good and brag about your useless subsidy that most people still can't use.

Why don't you find out what you're talking about first Vic? Dumbass.

I hated Cobra. UEI here in ... (Below threshold)

I hated Cobra. UEI here in AL did not begin to pay enough to have COBRA and make living expenses, so I did without. No great shakes but it did make me a lot more careful to watch what my kid did and how I took care of my health.

Good luck in your job hunt, it took me 13 months but I now have the best job I've ever had and the pay is twice what I was getting at my previous employment.

Good health pays for itself.

As one of those who's job T... (Below threshold)

As one of those who's job The One failed to save with his stimulus designed to keep unemployment under 8%, your post rings very true.

Employers who are actually hiring are being very particular about what they are looking for - because they can. It's a buyers market.

In addition to trying to find a job, I've been lucky enough to find enough freelance work - graphic design - that when my severance runs out I'll have a little extra in the bank to keep us going.

If they don't Cap & Trade or Healthcare Reform the economy into the ground, we just might make it.

The COBRA subsidy was a goo... (Below threshold)

The COBRA subsidy was a good deal that significantly decreased the insurance premium for those unemployed who could afford the reduced premiums.

If you become self employed working for direct payments, you can keep your COBRA. Eventually you will need to either become employed with benefits, or get your own program.

The best reform in health care would be having tax deductions for individualized insurance you take with you from job to job, rather than company plans. The worst thing we could have is one size fits all government care that limits access.

Former Labor Secretary Robe... (Below threshold)
jim m:

Former Labor Secretary Robert Reich blogged on Friday: "This morning's job numbers are bad enough -- 263,000 more jobs lost in September, and unemployment now at 9.8 percent -- but look behind them and the news is even grimmer. The only reason the numbers don't look worse is that 571,000 workers dropped out of the labor force. Remember, too, that the economy needs about 125,000 new jobs every month just to keep up with a growing population. So we're even further behind."

If the workforce had stayed the same unemployment would be up to 10.2%

Retirements are up 23% over last year. Disability applications are up 20%.

People can't find jobs so they are taking early retirement, or trying to qualify for disability or just giving up and dropping out.

Vic - weren't you saying recently that the economy was doing great?

Having been laid off four t... (Below threshold)

Having been laid off four timrs Ive seen that the higher paid/older employees are more vulnerable and the extra duties are foisted on the lower paid workers who are now doing two jobs for one low salary.

DJ - This being my fourth b... (Below threshold)
jim m:

DJ - This being my fourth bout of unemployment I can relate to everything you wrote.

During my second unemployment I decided that I could no longer wait for the job I wanted in my chosen profession and ended up selling Audi's for a summer. At least the economy was good and it was he right time of year to be in that profession. It taught me a lot about what I was willing to do to get by and gave me a lot of sympathy for people in that job. Most are not scumbags and it's really hard to make a living doing that job.

This time around I decided to return to my professional roots where there was a bit more job stability. Unfortunately, there were no jobs in Illinois in that field and at my level of experience. Not wanting an entry level job I decided to look elsewhere. Ultimately, I received offers from organizations in Las Vegas, Cleveland and Boston. I'll be moving to Boston shortly. Even Massachusetts has a better economy than Chicago.

But I found it interesting, working in health care, that no one was hiring at all this year until the August recess and it became clear that health care reform was probably going to die. Then all of a sudden everyone wanted to hire. Kind of lays the lie to the notion that health care reform will benefit the economy.

In each period of unemployment what I found to be true is that God truly does provide and somehow I always ended up in a better place and position than when I started. This time it was much easier to trust that I would find a good position, that my needs would be provided for and that somehow it would all work out. It has. God has been faithful as He always is.

But, but, but jim m, Clevel... (Below threshold)

But, but, but jim m, Cleveland ROCKS!

And Boston SUCKS!

an extra $30k a year makes ... (Below threshold)
jim m:

an extra $30k a year makes Boston suck a lot less. I know more people there too.

"Vic - weren't you saying r... (Below threshold)

"Vic - weren't you saying recently that the economy was doing great?"


"Vic - weren't you saying r... (Below threshold)
Les Nessman:

"Vic - weren't you saying recently that the economy was doing great?"

Ah, another weekend, another round of bank closures - this time it's banks in Colorado, Michigan and Minnesota that are going belly up.

DJ,Best of luck to y... (Below threshold)
Elroy Jetson:

Best of luck to you and your family. I had to pay into COBRA once; the cost was exactly how you described.
One expense that you might want to cut out: cable TV. It's amazing how much you don't miss the mental wasteland. Why pay for spike, the shopping channels, lifetime, usa network or animal planet? Everything you and your family need to know can be found via the web. Just rent a movie every once in a while for entertainment, or play board games with the family. That may bring you all closer.
I pray for you and millions of others facing similar situations. Unfortunately we have an administration in power that doesn't want to take the right steps to stimuate the economy.

#13 13 mockingbird lane.... (Below threshold)

#13 13 mockingbird lane.. Posted by VIC

You sound like kind of a liberal, so, Im not going to read past Your moniker. But, I gave You a neg for style points anyways..


Hows it lookin? jp2, SAUD, ... (Below threshold)

Hows it lookin? jp2, SAUD, VIC??, Bright and cheery job outlook right?

'Not to worry...' Obama has already proposed bailouts for burnouts and weirdos who live in their Grandma's basement legislation.

Good Luck, DJ. ... (Below threshold)

Good Luck, DJ.

DJ, just keep grinding unti... (Below threshold)

DJ, just keep grinding until you find something better. Even those of us who still have businesses are hurting. Mine is down about 30%, but I'm grateful for what I have left. I'm even more grateful that I was able to finish paying off my mortgage a year ago.

Vic, I honestly don't know what planet you come from, but you ain't local.

That cobra plan with its go... (Below threshold)
L Eliou:

That cobra plan with its government subsidy you mentioned. I signed up for it immediately when it became available this year. Three months and many inquiries later, ( and after I had secured a new job that would insure me after 90 days), I was informed that I had to pay for the three months in which I had no coverage before I could get any coverage at all. I kid you not three months had passed and I still had not one speck of coverage and was asked to pay up for the three months,( taken by those morons to process my perfectly fine paperwork), to continue. Since I had secured employment, I bought temp coverage for the time it took me to get eligible at my new job.May you have better luck that me. L






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