TIME: Almanac 1993/TIME Almanac 1993.iso/time/caps/82/82unemp

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                                                                                February 8, 1982

ECONOMY & BUSINESS

Unemployment On the Rise

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 now 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
(CETA), 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.

Traditionally, Congress has tried to bring down unemployment
with public works projects and public service jobs. But those
familiar panaceas have been largely discredited, and even many
Democrats are skeptical that old methods should be tried again.
Says Massachusetts Senator Paul Tsongas:  "We've been down that
road before. It doesn't produce anything."  The legislation
being offered now to fight unemployment would stress job
training for the private sector, not creating public jobs.
Democrat Ted Kennedy, who last week called unemployment "the No.
1 issue now nationwide," has joined forces in the Senate with
Republican Dan Quayle of Indiana to sponsor a $4 billion
job-training program. In the House, California Democrat Gus
Hawkins has proposed a $5 billion training program that would
allow local officials to use some of the funds to create public
service jobs. House Speaker Tip O'Neill has criticized Reagan
for the growing unemployment lines, but so far has not suggested
a plan of his own. An aide to the Speaker may inadvertently have
been summed up the Democrats' plight. "Our alternative is that
the President should advocate an alternative," said the
spokesman. "That's our alternative."

Unemployment has historically been a good issue for Democrats,
as inflation has been a good one for Republicans. Yet for all
the White House worries about G.O.P. fortunes in the fall, it
is not clear that Reagan will suffer much politically.
Interviewing the jobless across the nation last week, TIME
correspondents found relatively few who blamed the President for
their plight. Rudy Barker, 62, was laid off in 1980 from his job
at a lumber mill in Willamina, Ore., and he has not worked since
then. "All this started before Reagan," he says. "It's been
coming on for the last two or three Presidents."  Says Samuel
Ehrenhalt, Middle Atlantic regional commissioner for the Bureau
of Labor Statistics:  "A lot of people are just not ready to
call it quits with the President."

In pushing its revolutionary program of budget and tax cuts to
cure the nation of nagging economic ills, the Administration
realized that some suffering was inevitable. Indeed, the White
House anticipated a rise in unemployment during the early stages
of the program; it was felt that a hike in joblessness was
necessary to dampen wage demands and cool inflation, which
Reagan regarded as the nation's chief economic problem. But
Administration officials never expected that the rate would
surge so high or inflict so much hardship.

When Reagan took office last January, the unemployment rate
stood at 7.4% and the President's Council of Economic Advisers,
headed by Murray Weidenbaum, predicted that the average annual
rate for 1981 would be 7.8% and that it would rise to 8% for at
least part of the year. Instead, the rate dipped to 7% in July,
but then began climbing again as the economy started to buckle,
partly because of high interest rates. The exorbitant cost of
borrowing especially plagued the automobile and construction
industries, which in turn affected their suppliers, such as
steel, rubber and timber firms. With orders down, layoffs of
workers spread.

The surging interest rates were caused in part by the Federal
Reserve Board's tight grip on the money supply, a policy
designed to bring down inflation. But there is little agreement
about other causes. Officials of the Fed blame ballooning budget
deficits for kindling more fears about inflation and thus
keeping interest rates high. Administration officials complain
that the Fed's erratic control of growth in the money supply
scared lenders into keeping interest rates high. Whatever the
cause, most economists now agree that the unemployment rate will
gradually rise into the summer, perhaps hitting 10%, before
beginning to dip again. White House officials fervently hope
that by fall the rate, no matter how high, is headed in the
right direction--down.

High unemployment is not unique to the U.S. It is afflicting
other Western industrial democracies as well. (Although
Communist bloc nations profess to have no unemployment
whatsoever, the severe troubles afflicting their economies belie
that ideological stance.)  In Canada the jobless rate is 8.6%,
up from 7.4% the year before. In the ten nations of the European
community, the unemployment rate stands at a postwar high of 9%,
leaving more than 10 million unemployed. In France the rate is
8.7% (up from 7.5% in December 1980), in Italy 9.1% (up from
8.3%). In West Germany the figure is 7.3%, the highest since
1956. After the announcement last week that the unemployment
rate for Britain and Northern Ireland had reached 12.7%--which
meant a record 3 million out of work--Prime Minister Margaret
Thatcher was greeted in the House of Commons with opposition
cries of "Resign! Resign!"

Joblessness in the U.S. takes on many faces and breaks into
many patterns, and some of the trends displayed in December's
statistics are especially disturbing. Unemployment among blacks
is a record 17.4%. The rate for teen-agers was 21.75% (for
nonwhite teenagers the figure is a shocking 39.6%). "Discouraged
workers," who have not looked for work in the previous four
weeks and thus are not included in the monthly unemployment
totals, reached a post-war high of 1.2 million during the last
three months of 1981, up from 1.05 million the year before. And
the number of people working part time, because their hours were
cut below 35 a week or because they were unable to find
full-time work, grew to a record 5.4 million, up 360,000 in a
single month.

The unemployment rate for adult men jumped to 8%, a post-World
War II high, from November's 7.2%. Economists consider this
figure quite significant, since it indicates a growing number
of layoffs among the traditional family breadwinners. The
unemployment rate for adult women was lower than for men (7.5%),
but the rate of joblessness among women with families to support
was also a postwar record 10.75% during the last three months
of 1981. And while the burden of joblessness still falls most
heavily on blue-collar workers, it is spreading into the ranks
of white-collar employees:  from December 1980 to December
1981, white-collar unemployment rose from 4% to 4.6%.

Other trends among the work force cloud the statistics. More
women and teen-agers now seek jobs than ever before, pushing up
the number of people in the labor market--and thus the number
of unemployed. In 1955, for example, women accounted for 30.2%
and teen-agers 6.6% of a labor force that totaled 68 million.
In 1980 the comparable figures were 42% and 9% in a labor force
that was 57% larger. Both women and teen-agers also change jobs
more often than adult men, and this tends to raise unemployment
rates. Some experts contend that these tendencies may have
inflated the rate by as much as 2.5% over the past two decades.

On the other hand, critics argue that the Labor Department
survey, which is conducted monthly among 60,000 households,
underestimates the jobless because "discouraged workers" are not
included in the figures. Had they been counted in December, for
example, the unemployment rate would have reached 9.9%. It is
also argued that part-time workers seeking full-time employment
should be somehow included in the unemployment figures. If half
of the part-time workers were included in the December figures,
the rate would have been 11.5%.

The unemployment rate is devastating in two industries,
automobiles and construction, that have been wounded by high
interest rates. In December, 18.1% of construction workers were
unemployed, and joblessness among auto-workers was 21.7%. That
is a drop from 28.6% in May 1980, but auto industry figures are
misleading. Many unemployed car workers have given up hope of
returning to the assembly line and have sought different careers
entirely. The downturn keeps spreading to industries that supply
materials to automakers and house builders and is ripping
through nearly all manufacturing firms. In past recessions,
Government employment rolls tended to rise, but the
Administration's efforts to reduce Government spending have
stopped that trend. During the past year, 269,000 state and
federal employees have lost their jobs.

One notable exception to the distress is in the so-called
service- producing sector, which includes transportation, real
estate and health care. The service fields employ 66 million
people--three times as many as manufacturing firms--and have
added 737,000 jobs over the past year. But even this market is
softening:  the rate of increase in these jobs last year (1%)
was down from 1980's increase (2%).

The unemployment lines snake haphazardly across the country,
with the Midwest, the Pacific Northwest and parts of the South
suffering the highest rates of joblessness. Michigan, with its
crippled auto industry, is at the top of the charts at 14.4%,
with 627,000 unemployed. Oklahoma boasts the enviable rate of
3.9%, thanks to its thriving oil industry. A survey of the
national unemployment scene:

THE NORTHEAST. For the most part, the state from Maine to
Maryland have not been hit heavily by the recession. In
November, the average unadjusted unemployment rate for the six
New England states was 6.2%. The New England Economic Project,
a consortium of public and private interests, forecasts the rate
for the region will peak at 7.4% in the second half of 1982.
Pennsylvania has troubles:  the sagging steel industry helped
push the state's unemployment rate up to 9.3%. One laid-off
Pittsburgh steelworkers recalled Reagan's comment two weeks ago
that the newspapers were bulging with help-wanted ads:  "I read
the want ads too," he grumbled. "But I'm not a nurse."

Joseph Fetchik, 44, has been out of work since he was laid off
from the Ford plant in Mahwah, N.J., 18 months ago. He signed
up for benefits under the Trade Adjustment Assistance program,
but the checks will stop coming this spring, and Fetchik cannot
find a job. His wife Thelma earns $6,800 a year driving a school
bus, but her salary will not nearly support her husband and two
children. "I'm in big trouble, and my whole family is going to
be in big trouble," says Fetchik.

Deryl Watson, 31, was fired from her $180-a-week job as a
security guard at Newark public schools last September. An unwed
mother with two children, she receives $168 every two weeks in
unemployment benefits and $99 per month for food stamps. "We
used to eat spaghetti and meatballs, but now we just have it
with tomato sauce," she says. Watson has no intention of
applying for welfare because "I want to work. I want to have my
own money. Besides, they don't treat you right on welfare.
There's no respect at all."

THE MIDWEST. Michigan's woes have spread to nearby states,
forcing thousands of layoffs in plants that supply the auto
industry. Both Ohio, with a rate of 11.8%, and Indiana, at
12.4%, were among the most ravaged states in the nation. Cities
were particularly hard hit. There were 38 metropolitan areas in
the U.S. where the unemployment rate exceeded 10% in November,
and 14 of them were in the Midwest.

The pain and frustration of unemployment shows up in small yet
telling ways. The Detroit Free Press offered to let any and all
unemployed job seekers run a free classified ad touting their
skills; nearly 5,000 people took the paper up on its offer. At
a blood plasma donation center in St. Louis, Director Ron Wilson
says business is up 10% partly because more housewives and
part-time workers are coming in to collect the $8 paid for every
pint of plasma. In Louisville, the number of people calling the
city's crisis hot line and asking for food and clothing is up
32% from last summer.

Dzintar Dowling, 37, lives in a three-bedroom house in the
Chicago suburb of Brookfield with her two children, ages 15 and
10. She has been out of a job since last October, when she was
laid off at International Harvester. Dowling is separated and
gets no financial support from her husband. Her weekly
unemployment check of $199 ran out weeks ago, and she is "down
to my last $20."  She is now considering what would be to her
a drastic measure:  applying for welfare. "This morning I sat
down after my son had gone to school and just bawled."  she
says. "It isn't because I'm worried about myself. It's, my God,
what am I going to do with the kids?  If it was just me, I could
find a room somewhere and live on Campbell's soup and bologna
sandwiches. But when you have children, it's different."

In Peoria, Ill., the Caterpillar Tractor Co. will lay off 1,700
workers this week, and those who are about to join the jobless
are still disbelieving. "It's like being wounded in battle,"
says Jim O'Connor, president of United Auto Workers Local 794.
"The initial shock is buried. Until a couple of months ago,
people were walking around here with Reagan buttons on. Now I'm
asking them if they liked inflation and a job better than no
job. And they're saying `I'd rather have a job and raise hell
about inflation.'"

Some who cannot find jobs locally are taking Reagan's advice
and "voting with their feet" by moving to other states. When
General Motors closed its plant in St. Louis last July and
shifted to a more modern factory in Bowling Green, Ky., about
800 of its 900 hourly workers followed from St. Louis.

Some of the jobless who stayed put are struggling to cope. From
the Detroit suburb of Hazel Park, Larry Hampton, 26, sets out
once or twice a week in his pickup truck to search the streets
for scrap. Sheet metal brings a penny a pound; cast iron $45 a
ton. On a good day, Hampton earns $15, and it keep shim busy.
"I've just got too many bills and not enough money to pay them,"
says Hampton, who lost his job in a machine shop last November.
"It's scary."

Wayne Addison, 39, of Kokomo, Ind., lost his job with Chrysler
last August, and has seven children to support, but claims not
to be worried. "We've been cutting corners for years," he says.
Addison's wife returned to work testing transistors at Delco,
a division of General Motors. He buys most of the family
groceries directly from farms, spending only $55 a week on food.
Addison also barters his services, repairing a neighbor's
clothes dryer in exchange for a new shirt. Still, Addison is
bothered that his two eldest daughters must pay most of the
bills for their weddings this spring. Says the father: "There
ain't a man that likes to say, `Well, daughter, I can't afford
it for you.'"

THE WEST. The region is an economic patchwork quilt. Wyoming has
an unemployment rate below 5%, California copes with 8.6%, and
Oregon and Washington are suffering badly. Because the lumber
trade has been crippled by construction woes. Oregon has an
unemployment rate of 11.4%; Washington has 11.1%. By the middle
of last month, 19,000 of the region's 102,000 sawmill employees
had been laid off, while another 41,000 were working curtailed
shifts. "It's like Chinese water torture," says John Hampton,
chairman of Hampton Affiliates, a Portland-based logging
company. "There's been no relief."  Two weeks ago, the U.S.
Postal Service in Portland announced that it would have between
800 and 1,000 new job openings over the next three years; 18,642
applications flooded in.

Since losing his job as a forklift driver at a mill in Molalla,
Ore., last August, James Wittig, 35, has been scrambling for a
job. He applied to work as an exterminator and tried to land a
job laying gravel. "I'll try anything, but there's nothing," he
says. "If there's a job open in Oregon, there's at least 100
people trying to get it."  Wittig's wife works as a cook for
$360 a month to support him and their two children, but it is
not nearly enough. Says Wittig: "I'd like to talk to the
President for half an hour. I'd say, `You're living high off the
hog. You're telling us how good everything's going to be in two
years. But we're starving today!'"

Hilton Ridgeway, 41, never even got a job in the Northwest. He
resigned as a computer programmer in Albany and moved to Oregon
with his wife and four children last June, expecting to find a
new job easily. After several months of looking, he tried to
enlist in the Army, but was too old. Just before christmas,
Ridgeway found six weeks of work at $3.35 an hour on a Christmas
tree farm. He doesn't like to recall that until recently he made
$30,000 a year.

THE SOUTH. The recession is blooming late in the region.
Unemployment rates in many Southern states are below the
national average, but they are gradually climbing upward.
Georgia (6.8%) and Florida (7.7%) are relatively well off, but
other Southern states have already surpassed the national rate:
 the figure is 10.2% in Arkansas and 10.4% in Tennessee. "We
can't see any bright side," says Gene Keenum, a UAW union
official in Memphis. "Everywhere we look, they're cutting
back." The picture is totally different in booming Texas, where
the rate is 4.5%. Says Terence Travland of the Texas Employment
Commission: "There is no sense of crisis here--yet."

Shutdowns and layoffs can be especially devastating in
textile-mill towns that depend on only one or two factories for
their existence. In Newberry, S.C. (pop. 10,000), the first blow
came last month when the Collins & Aidman hosiery plant was
closed down, idling 340 workers. Two weeks ago, Newberry Mills
began shutting down its obsolete, 98- year-old cotton mill for
good; 330 workers are being fired. Unemployment in Newberry
County is now 16%, triple the rate of last December. "I've got
two kids in college, and the mill didn't give us any pension,"
says Everett Mays bitterly. "What kind of a job can a man get
who's 48?  Damn right I'm scared."  Says Mill Superintendent
Melvin Blackwell, 59, who also will be fired:  "You meet people
in the store crying. These people put their whole lives in that
mill, their whole heart, and they get nothing out of it. Just
a closing."

For white-collar workers thrown out of work, the hardships can
be just as painful. Virginia Hall runs a job-counseling club for
unemployed professionals in Atlanta, and she has discovered that
the psychological toll often exceeds the financial loss. "All
these people have mortgages and are committed to certain
life-styles," she observes. "In a way, they're more pitiful than
the blue-collar workers who are unemployed. This is their first
experience of losing a job, and they are stunned. They have no
idea of how to cope."

At the community kitchen run by St. Luke's Episcopal church in
Atlanta, about 300 people a day showed up for free hot meals
last winter. Today some 500 eat there daily, and Director Bill
Bolling believes most of the newcomers are workers who have lost
their jobs. "We have always had the derelicts," says Bolling.
"But now we're seeing a different type of person--women,
children, families."  Even in prosperous Texas there are storm
clouds on the horizon. Though jobs are still plentiful for
skilled workers in Houston and Dallas, the rush of jobless from
the North and Midwest has forced some less skilled natives out
of work. Charles Croucs, 27, of Fort Worth lost his job as a
painter two months ago. He blames outsiders who are willing to
work for $6 an hour rather than the $8 or $9 he once collected.
Says Croucs angrily:  "All those people from up north just
flooded the market."

As unemployment casts an ever longer shadow across the country,
some labor unions are attempting to save jobs by making
concessions to employers on wages and benefits. At troubled
Eastern Air Lines, the pilots have agreed, in principle, to a
twelve-month wage freeze, while the Teamsters Union struck an
agreement three weeks ago with 284 trucking companies that left
them with one cost of living increase a year instead of two. The
United Auto Workers had been negotiating with General Motors to
hammer out a new contract that exchanged "givebacks" in benefits
for greater job security and lower car prices, but the talks
ended in failure last week. The UAW will nevertheless try to
negotiate a similar contract with Ford Motor Co. this week.
Charlie Renfro, an axle checker at a Ford truck plant in
Louisville, is not happy with the prospect of givebacks but
takes a common view:  "Half a loaf is better than none."

Many union leaders grumble that they are being unfairly called
upon to fight a battle that Washington should be waging, and are
demanding that the Administration take some action to curb the
recession. AFL-CIO President Lane Kirkland last month blasted
Reagan's economic program as "a hodgepodge of crank monetarism
and bizarre macroeconomic nostrums," and urged the White House
to take immediate steps to ease unemployment. Among the
AFL-CIO's recommendations:  revive the emergency local public
works program, budgets at $6 billion in 1975 but not funded
since then; restore CETA public service jobs; and create a new
reconstruction finance corporation that would extend loans,
loan guarantees and tax benefits to hard-hit companies in basic
industries. The union also wants to get more help for the
long-term jobless by renewing the 13 weeks of nationwide
unemployment benefits that the Administration canceled last
year.

Kirkland's call for actin is being echoed in Congress, but
members are divided on what should be done. Senators Kennedy and
Quayle defend their $4 billion jobs program bill as sufficiently
different from the much criticized CETA program to make it
worthwhile. Their bill would forbid local governments to use the
federal funds to hire their own employees, such as policemen or
firemen. Local businesses would also have a say in setting up
job-training programs, thus ensuring that prospective employees
were not trained in skills that were no longer in demand.

Many Congressmen and economists reject the remedy of job
programs to cure unemployment. "It's like trying to put a
Band-Aid on a cancer after it's already grown, instead of
preventing it in the first place," says Democratic Senator Bill
Bradley of New Jersey. Observes Barry Bosworth, an economist at
the Brookings Institution:  "A federal job program inevitably
turns into nothing more than an income-maintenance program, for
the simple reason that when workers graduate from training
programs, there are still no jobs for them. In a couple of
months, 10 million people are going to be unemployed. To talk
of job training is ridiculous. It's a flim-flam."  Charles
Schultze, who was chairman of President Carter's council of
Economic Advisers, argues that job programs "wouldn't make much
of a dent" in recession. One traditional problem is that
Congress usually votes for such programs in the middle of a
recession, but by the time the money gets around the country
the economy has recovered and the added federal spending merely
fuels inflation.

Instead of job programs, Bradley suggests a short-term remedy
of extending unemployment benefits; he predicts there will be
growing pressure from Congress within the next two months as the
2.5 million people who lost their jobs late last year begin to
run out of benefits. But in a meeting of the Cabinet Council on
Economic Affairs last week, in which unemployment was on the
agenda, Reagan and his aides did not discuss the proposal to
extend benefits. Said a White House aids:  "We feel we need to
demonstrate concern for unemployment, but without reinstating
benefits that would affect the budget."  If the unemployment
rate worsens, aides predict, Reagan may move up the starting
date of some federal construction projects already approved by
Congress, which would produce a limited number of jobs without
raising the budget.

The Administration plainly plans to stick to its conviction that
its program of tax and budget cuts will revive the economy and
eventually cure the triad of economic troubles:  high inflation,
high unemployment, high interest rates. Liberal and conservative
economists tend to agree that the only real solution to
unemployment is to focus on the entire economic picture. To a
certain extent, though, the Administration's goals are
contradictory in a faltering economy. "In large measure, you're
stuck with a choice between unemployment and inflation," says
Economist Rudolph Penner of the American Enterprise Institute,
a conservative think tank. "The politicians who say they will
not use high unemployment to cure inflation are just dreaming."

Inflation is indeed dropping:  the rate for 1981 stood at 8.9%,
down from 12.4% in 1980. The political question centers on how
much unemployment the public is willing to accept to continue
the battle against inflation. "There are a lot of people out of
work now who aren't used to it, from General Motors executives
to Oregon timbermen," says Frank Leary of Washington's Urban
Institute. "A lot more people are feeling the cold breath of
unemployment." j On the other hand, inflation touches all
Americans, and the country as a whole would pay a price if the
White House switched from fighting inflation to combatting
unemployment. Warns Federal Reserve Board Member Henry Wallich:
 "By the time you've made a dent in Detroit's unemployment,
you've sent inflation through the roof for everyone."  In
effect, Reagan is betting he will not have to make that switch,
but if the unemployment rate continues to climb, he may have no
real choice.

--By James Kelly. Reported by Gisela Bolte/Washington, with
other bureaus


Less for More

As the unemployment lines are growing longer across the country,
the jobless are discovering a painful lesson of Reaganomics:
fewer of them are eligible for unemployment benefits, and many
of those who do receive benefits are getting smaller checks.

Begun in 1935, under the auspices of the Social Security Act,
unemployment compensation is funded by a combination of federal
and state payroll taxes imposed on employers. Though benefits
vary, most states give eligible workers a maximum of 26 weeks
of unemployment pay. The checks, which are based on workers'
previous earnings and length of employment, range from a weekly
maximum of $222 in Alaska down to $90 in Alabama. By comparison,
the average weekly manufacturing wage in September last year was
$288.

Congress raised unemployment benefits considerably during the
1970s. If joblessness among workers covered by unemployment
insurance reached 4% within a state, or if the rate nationwide
topped 4.5%, for example, an additional 13 weeks of benefits
were paid out; Washington and the states split the extra costs
evenly. Under the Trade Adjustment Assistance Program, as
amended in 1974, employees who lost their jobs because of
foreign competition, such as auto and steel workers, received
up to 70% of their wages for a maximum of 18 months. These
jobless workers, whose numbers reached 281,000 in fiscal 1981,
also received regular unemployment checks, and some of them
wound up with more money after taxes than they had when they
were working.

Then came the Reagan revolution. As part of its budget-cutting
efforts, the Administration last August abolished the national
unemployment trigger that provided an additional 13 weeks of
benefits, but kept the individual state triggers intact. It is
estimated that 640,000 workers will not get such payments during
fiscal year 1982, for a savings to the Government of $690
million. Also stopped were unemployment benefits for servicemen
who choose not to reenlist. The rationale was that military
service during peacetime is an occupation, and those who leave
voluntarily are in effect quitting their jobs. Finally, the
budget cuts virtually eliminated the extra benefits paid under
the Trade Adjustment Assistance Program. In December 1980, some
233,000 jobless were given such aid. Only 12,100 received it
last December.

On Oct. 1, all states must raise their own trigger rates of
unemployment that make the jobless eligible for 13 extra weeks
of benefits by one percentage point, from 4% to 5%. In addition,
new regulations will also require that any person drawing
extended benefits must have worked at least 20 weeks during the
previous year before losing his job:  there is no such minimum
requirement now. The logic behind these reductions in
unemployment benefits was simple enough: the employer taxes that
pay for them no longer cover the costs.

The most ironic cut of all involves the firing, for budgetary
reasons, of more than 18,000 employees from the public
employment service, which helps the unemployed find jobs and
which is linked to the unemployment insurance offices that
process claims. Since the firing is being done by seniority,
many specialist in job placement may be reassigned to process
benefit claims. The probably result:  more errors and long lines
for those trying to pick up their checks. The lines could well
include out-of-work employment service clerks who once were on
the other side of the counter.