Unemployment figures don't always tell the whole story.
Although I'm employed now, I've spent plenty of time unemployed, believe me.
I grew up having been taught that if I do good, honest work, I'll keep my job. That was usually the case in my father's generation who would stay with the same company for 20 or so years, get a watch (supposedly) and a pension, as my parents taught me (although ironically, he was self-employed).
After graduating college, though, I was laid off from my first professional job after about 3 years. The company was losing some $15 million a year, and was dropping whole departments. This was in the late 80s; I was humiliated to have lost my job, even though it wasn't due to any perfidy on my part.
I don't believe I filed for unemployment. I equated that with welfare, and viewed it as an indictment that I was unable to find a job and was worthless scum.
I had been living with my parents and was unemployed for about 18 months, I think, then I got a job in another city. I moved and kept it for 2 1/2 to 3 years, then the company's sole client got bought out by another company, and we lost the contract and, therefore, there was no work for us, so the company closed, everyone scattered to the winds, and I was unemployed again. This time, I think I filed for unemployment. I had no choice, since I was living on my own at that time.
I was fortunate to get some contract work from my former company's former client. Over the next 12 years I grew this into a solid consulting company pulling in, at peak, $450k/year with a handful of employees. I personally was making $200k to $250k at the peak (although many years I had failed, and went through a bankruptcy at one point).
Then the tech industry bottomed out (dot-com crash). And I was unemployed again.
Unfortunately, I could not file for unemployment. Why? Because I was an "officer" of the company, even though we had no business, and also because I was still performing work in hopes to get a client - meaning, if the phone rang, which it didn't after 9/11, I would answer it. Thus, I was still "working".
Summary: If you're self-employed, you don't count on the list of those "looking for work". In other words, you're not in the statistics of the unemployed. And you don't need to run a company to fall into this - you could, as so many were during the dot-com boom, be a consultant or contractor. You'd work contracting jobs, going from one six-month assignment to the next. A lot of people did this - there was quite decent money to be made. However, being self-employed meant you didn't qualify for unemployment, and when the market collapsed, you were left without a safety net.
As an employer, I had to pay unemployment insurance for my employees. So, it's not necessarily welfare, insofar as it's an insurance pool in case I had to lay off people. People who are fired for cause (it depends on the state) or quit voluntarily may not qualify for unemployment.
The roles of people unemployed are higher than the percentages indicate. They don't count people who have fallen off the unemployment roles because their unemployment ran out. They don't count people who are underemployed - used to make $90k, but now are lucky to make $12/hour. They don't count contractors or otherwise self-employed. America has a rich history of self-employment, but if the economy tanks and you're unable to drum up enough business, you're SOL, but you're not technically "unemployed" and you're not in those numbers. They don't count the failed self-employed businesses. It sucks, but that's the case.
True unemployment is always higher than official unemployment. The unemployment "figures" only count those who might have qualified to begin with. So many in this country do not. The situation during the Bush years was far more dire than the numbers implied.
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