Almost two-thirds of those who are out of work do not qualify for unemployment benefits. The law that created unemployment insurance was passed in response to the Great Depression of the 1930s.
But since then, much has changed in the labor force, including the large numbers of self-employed who are left out of the system.
Most people believe if they're laid off — downsized or simply out of a job — they will get unemployment insurance benefits. While each state has different guidelines on the amount paid and the length of time people can receive benefits, the federal system, created in 1935, simply does not cover the majority of today's workers.
"The largest group of people that do not qualify for unemployment insurance are the nontraditional employees," says Howard Rosen, a labor market expert with the Peterson Institute for International Economics. He says millions who are not full-time, permanent employees are out of luck.
A growing number of people who are consultants, self-employed, temporary employees, part-time employees — a whole plethora of different kinds of arrangements — are not currently eligible for assistance, Rosen says.
Among this group are Barbara and Gary Ratner. Gary Ratner completed a doctorate in biochemistry from Emory University. Barbara Ratner has been a self-employed architectural illustrator since 1990, when she was laid off from a company in Atlanta.
"And I actually never had to worry about work," Barbara Ratner says. "The phone just kept ringing. It was — it was like magic."
She had so much work when she was laid off, she didn't apply for unemployment benefits. Now, because she's self-employed, she doesn't qualify for them.
She says business began slowing down last spring and by December, she had finished her last job.
"I'm beginning to identify with the frog in the pan of water where someone turned the heat up and it took me a while to realize that yes, this isn't like it has been before — and I don't know where it's going," she says.
Dipping Into Retirement, Cutting Costs
At the cozy dining table in the home where they have lived for more than 20 years, Barbara Ratner showed off her office and handmade drawings.
She has created architectural drawings for some big projects, including Atlanta's Olympics, a financial center in Taiwan, retail shops in China — even the Los Angeles and Portland zoos. And she usually makes between $80,000 and $100,000 a year. But now that new construction has slowed dramatically, there's no demand for her drawings.
The Ratners have already pulled nearly $10,000 from their retirement account. They are cutting back where they can — eliminating a phone line and canceling memberships to civic groups. Gary Ratner decided to retire late last year. And because they're in their 60s and do not have a group health plan, the couple pays $1,500 a month for health insurance.
"I've actually been considering getting rid of medical insurance," Barbara Ratner says. "It's huge. And so if we wanted to gamble, we could just drop the health insurance."
The couple is using their retirement savings, and that worries them. They're looking for creative ways to get by. Barbara Ratner says she's seriously considering raising chickens in her backyard, like her parents did way back when.
"They lived through the Depression and my father always felt like his family basically did better than other families because they had a chicken coop and they had a big garden," she says. "And they lasted it out."
Gary Ratner is hoping to get a biochemistry fellowship, while his wife continues to look for work. And both hope that President-elect Barack Obama's economic plan will create new jobs and ultimately turn the economy around.