Tuesday, July 23, 2013

No Return Of "Breadwinner Jobs", No Economic Recovery

No Return Of "Breadwinner Jobs", No Economic RecoveryThere has been no material recovery of the job market since the economy crashed in 2008. While the aggregate number of jobs has been improving somewhat, the quality of jobs remains poor. The overwhelming majority of new jobs created are of the part-time, low wage variety, and, increasingly, 20-something college grads are being relegated to menial jobs. I've said it over and over: the economy cannot recover until the jobs return. There can't be a "jobless recovery" with an unemployment/underemployment problem this severe.

Mort Zuckerman, chairman and editor in chief of U.S. News & World Report, recently penned an op/ed that also argued that there can't be a jobless recovery. In the editorial, Zuckerman argued that scarcity of full-time, well-paying jobs are stifling economic recovery. Some important points from the piece:
What's going on? The fundamentals surely reflect the feebleness of the macroeconomic recovery that began roughly four years ago, as seen in an average gross domestic product growth rate annualized over the past 15 quarters at a miserable 2%. That's the weakest GDP growth since World War II. Over a similar period in previous recessions, growth averaged 4.1%. During the fourth quarter of 2012 and the first quarter of 2013, the GDP growth rate dropped below 2%. This anemic growth is all we have to show for the greatest fiscal and monetary stimuli in 75 years, with fiscal deficits of over 10% of GDP for four consecutive years. The misery is not going to end soon...
Why? The jobless nature of the recovery. In June, the government's Household Survey reported that since the start of the year, the number of people with jobs increased by 753,000—but there are jobs and then there are "jobs." No fewer than 557,000 of these positions were only part-time. The survey also reported that in June full-time jobs declined by 240,000, while part-time jobs soared by 360,000 and have now reached an all-time high of 28,059,000—three million more part-time positions than when the recession began at the end of 2007...

At this stage of an expansion you would expect the number of part-time jobs to be declining, as companies would be doing more full-time hiring. Not this time. In the long misery of this post-recession period, we have an extraordinary situation: Americans by the millions are in part-time work because there are no other employment opportunities as businesses increase their reliance on independent contractors and part-time, temporary and seasonal employees...
Zuckerman correctly connected the feeble economic recovery to the dearth of good jobs. Michael Snyder of The Economic Collapse Blog recently detailed just how elusive these so-called "breadwinner jobs" have become:
On Friday, we learned that the U.S. economy added "195,000 jobs" last month.  But when you look deeper at the numbers, another story emerges.  Last month, the U.S. economy actually lost 240,000 full-time jobs.  Overall, the U.S. economy has only added 130,000 full-time jobs in 2013, but it takes about 90,000 full-time jobs a month just to keep up with population growth.  So we are losing quite a bit of ground as far as full-time jobs are concerned.  Meanwhile, the U.S. economy has added more than 500,000 part-time jobs so far this year.  Unfortunately, there are very, very few part-time and temp jobs that can be considered "breadwinner jobs".  Part-time jobs are great for teenagers, university students and elderly people that only want to work a limited number of hours, but what most Americans need are good paying full-time jobs with benefits that will allow them to take care of their families.  Unfortunately, those jobs are continually becoming a smaller part of our economy.
An economy that's 70% consumer spending can't recover when more and more Americans are working part-time, low wage jobs instead of "breadwinner jobs". Chronic underemployment is a much a problem for our economy as chronic unemployment.

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