CHRISTOPHER S. RUGABER
A record 20 million-plus people collected unemployment benefits at some point in 2009, a year that ended with the jobless rate at 10 percent.
As the pace of layoffs slows, the number of new applicants visiting unemployment offices has been on the decline in recent months. But limited hiring means the ranks of the long-term unemployed continues to grow, with more than 5.8 million people out of work for more than six months.
The number of new claims for jobless benefits dropped last week to 432,000, the Labor Department said Thursday, down sharply from its late March peak of 674,000. The decline signals that the economy could begin adding a small number of jobs in January, several economists said.
Still, hiring is unlikely to be strong enough to quickly bring down the unemployment rate, which fell from 10.2 percent in October to 10 percent in November. December's rate will be announced Jan. 8.
Companies will remain cautious about adding staff until they are confident the economic recovery is sustainable -- something they remain unsure about as consumers and businesses keep a lid on spending, and as the government begins to wind down various stimulus programs.
The Federal Reserve and private economists expect joblessness to stay above 9 percent through the end of 2010.
The slow pace of hiring will force Congress and the Obama administration in 2010 to spend as much as $70 billion to extend jobless aid for the long-term unemployed, or else let benefits -- which were extended several times in 2009 -- expire for millions of people.
"Fewer people are getting fired, but nobody is finding a job," said Dan Greenhaus, chief economic strategist at Miller Tabak.
Thursday's report illustrates the two different trends: first-time jobless claims are falling as layoffs ease, but the total number of people collecting unemployment checks is still rising.
More than 10.1 million people collected jobless benefits in the week of Dec. 12, the latest data available. That's up by about 200,000 compared with the previous week.
That figure includes 5.3 million people receiving the 26 weeks of aid customarily provided by the states, and 4.8 million people that have shifted to the extended benefit programs enacted by Congress over the past two years and paid for by the federal government. Unemployment insurance averages about $300 per week.
But the extensions are set to expire in February. That could mean as many as 1 million people would run out of unemployment aid in March, according to the National Employment Law Project, a nonprofit group.
The total number of people who at one point collected benefits in 2009 -- roughly 20.7 million -- is also a record. A larger proportion of the unemployed received jobless benefits in the last steep recession in 1981-82, but the work force has grown by about one-third since then.
Fifteen million Americans are out of work, an increase of 3.8 million since the start of 2009. There are six unemployed people, on average, for each available job. And the so-called underemployment rate, counting part-time workers who want full-time jobs and laid-off workers who have given up their job hunt, stands at 17.2 percent.
Budget-strapped state governments will struggle with higher spending on unemployment insurance in 2010. States are required to set aside money in a trust fund to pay jobless benefits, but 25 have already run through their funds and have borrowed $26 billion from the federal government.
The Labor Department has projected that 40 states may need to borrow as much as $90 billion by 2012.
Thirty-five states have already increased the unemployment insurance taxes they levy on employers for 2010, according to the National Association of State Workforce Agencies. Some are also cutting benefits as they try to reduce the size of budget shortfalls that are expected to reach $180 billion in the coming fiscal year.
The drain on federal and state finances could force Congress to consider raising the federal unemployment insurance tax, which is currently 0.8 percent on the first $7,000 of wages, or making other changes.