Grand Rapids, MI -- (SBWIRE) -- 08/13/2013 -- Have trouble keeping up with what is going on with the world's economy?

Dennis Tubbergen, a financial advisor, author, radio show host and CEO of PLP Advisors, LLC can help out. Whether people enjoy his monthy newsletter at www.moving-markets.com or his blog at www.dennistubbergen.com, Tubbergen is dedicated to sharing his viewpoints and opinions. On August 12, 2013 his blog was titled Unemployment Rate Falls - Good News, Right?

"The U.S. unemployment rate recently dropped to a four and a half year low," began Tubbergen. "That’s good news, right?"

Tubbergen went on to say that while there is some good news in the recent employment report, when you dig into the report a bit, the news isn’t all as good as it might seem on the surface.

Below he quotes from an August 2, 2013 article in The Atlantic.

The jobs report in July was practically the same as the jobs report in June, which was practically the same as pretty much every jobs report each month going back to 2011. In fact, we can all save ourselves a bit of time if you just go back and read what I wrote last month: The recovery is the same as always.

Now, that doesn't mean nothing changed. The economy added 162,000 jobs in July, which was actually a bit below expectations, but basically in line with the recovery we've come to know and complain about. Meanwhile, revisions to the two previous months subtracted 26,000 jobs. But despite this, the unemployment rate fell from 7.6 to 7.4 percent for the good reason that we are creating jobs and the worse reason that some people left the labor force.

Is there any surprisingly good news here?

Well, long-term unemployment has fallen from 5.1 to 4.2 million in the past year, which certainly sounds good. But is it? Keep in mind that the economy has only added 1.6 million full-time jobs and 300,000 part-time jobs over this period -- and we know that firms often won't even look at the resumes of the long-term jobless. So it seems unlikely that many of the 900,000 people who were long-term unemployed last year but aren't this year and actually got jobs. They probably gave up looking.

And they probably gave up looking because long-term unemployment benefits have gotten cut. Now, conservatives like to blame these benefits for our high unemployment, and they're right -- just not for the reason they think. They say that too-generous benefits turn the safety net into a hammock for the fun employed, but the reality is that long-term benefits keep long-term unemployed people who otherwise would have stopped looking for work to keep looking. Indeed, Jesse Rothstein, a professor at the University of California-Berkeley, estimated back in 2011 that extended benefits had increased unemployment by 0.1 to 0.5 percentage points, but that least half of this increase came from fewer labor force dropouts. And more recent work by Boston Fed visiting scholar and Northeastern Ph. D. candidate Rand Ghayad found that the Beveridge curves the unemployed who are and aren't eligible for benefits are equally bad -- so it's hard to see much of a disincentive effect. In other words, extended unemployment benefits haven't kept people from trying; they've kept people from giving up.

But unemployment benefits have fallen fast the past year. Congress cut them from a maximum of 99 to 93 weeks back in February 2012 -- and even that seriously overstates what people can actually get. See, different states offer different benefit lengths. States with more unemployment have longer benefits -- but so do states with more generous governments. A chart from the Center on Budget and Policy Priorities shows that most states now offer benefits in the 40-63 week range. Just two years ago, it was 93 weeks or more for most states.

Shorter benefits mean fewer long-term unemployed have a reason to keep looking for work. So they don't. And voilà, unemployment comes down. At least more than it otherwise would have. And this raises a troubling possibility. The recovery might not just be leaving the long-term unemployed behind; it might be leaving them on their own. In other words, falling unemployment means falling benefits -- and the long-term unemployed get the short-end of the stick on both. It's perverse. And it's why the government might need to start hiring people who've been out of work for a long time -- who else will?

There are two possibilities here. Behind door number one, the government does something, anything, to help the long-term jobless. Maybe it hires them. Or maybe it gives companies a tax-incentive to hire them. And then there's door number two: we keep doing what we're doing, and maybe less. The recovery continues to ignore the long-term unemployed until they fall entirely out of the labor force into the uncounted masses where nobody can attach a statistic to their suffering, and we declare mission accomplished.

Something has to change.

"Inherent in the unemployment statistics is the fact that if an unemployed person quits looking for work, they are no longer considered to be unemployed," explained Tubbergen. "I agree. Something has to change."

To read the blog in its entirety go to http://www.dennistubbergen.com and select his August 12, 2013 entry.

Tubbergen’s syndicated radio show can be heard on metro Michigan stations WTKG 1230 AM and WOOD Newsradio1300 AM and 106.9 FM.

About Dennis Tubbergen
Dennis Tubbergen has been in the financial industry for over 25 years and has his corporate offices in Grand Rapids, Michigan. Tubbergen is CEO of PLP Advisors, LLC and has an online blog that can be read at www.dennistubbergen.com. To view Tubbergen’s latest Moving Markets? newsletter, go to www.moving-markets.com.

The opinions expressed herein are those of the writer and not necessarily those of USA Wealth Management, LLC. This update may contain forward-looking statements, including, but not limited to, statements as to future events that involve various risks and uncertainties. Forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause actual events or results to differ materially from those that were forecasted. Therefore, no forecast should be construed as a guarantee. Prior to making any investment decision, individuals should consult a professional to determine the risks, costs, benefits and fees associated with a particular investment. Information obtained from third party resources is believed to be reliable but the accuracy cannot be guaranteed.