Monday, February 18, 2013

America Remains In A Jobs Depression

Seth Mason Charleston SC blog 34
In a recent op-ed in the Wall Street Journal, business mogul Mort Zuckerman recently penned an editorial that argues that the United States remains in the depths of a protracted "jobs depression" that's far worse than the mainstream media reports:
Jobs! President Obama has set a record. In his speech to Congress on Tuesday, he uttered the word "jobs" more than in any of his previous four State of the Union addresses. His 45 mentions were more than double the references to any of the other policy ambitions encapsulated in his speech by such words as health, education, immigration, guns, deficit, debt, energy, climate, economy, Afghanistan, wage, spend or tax (the runner-up).
If only the president's record on unemployment were as good.

After four years America remains in a jobs depression as great as the Great Depression. 
Notice that Zuckerman said "as great as the Great Depression". Comparisons of this economic depression to the Great Depression are apt.
But the crisis isn't seen in that light because the country isn't confronted daily by scenes of despair like the 1930s photographs of bread lines and soup kitchens and thousands of men (very few women then) waiting all day outside a factory in a forlorn quest for work.
But the jobless are still in the millions across the land, little changed in their total since the 1930s: 12.3 million today officially fully unemployed compared with 12.8 million in 1933 at the depth of the Depression.

Yes, the U.S. population is much larger now, but 12 million out of work still means 12 million lives devastated. And that number masks the true vastness of the modern disaster.
The jobless today are much less visible than they were in the 1930s because relief is organized differently. Today in the "recovery," the millions are being assisted, out of sight, by government checks, unemployment checks, Social Security disability checks and food stamps.
He's correct: Entitlements are the new soup lines. Not seeing the desperate masses doesn't mean that they don't exist.
More than 48 million Americans are in the food-stamp program—an almost incredible record. That is 15% of the total population compared with the 7.9% participation in food stamps from 1970-2000. Then there are the more than 11 million Americans who are collecting Social Security checks to compensate for disability, also a record. Half have signed on since President Obama came to office. In 1992, there was one person on disability for every 35 workers; today it is one for every 16.

Such an increase is simply impossible to connect to direct disability experienced during employment, for it is inconceivable that work in America has become so dangerous. For many, this disability program has become another form of unemployment compensation, only this time without end.

But the predicament of our times is worse than that, worse in its way than the 1930s figures might suggest. Employers are either shortening the workweek or asking employees to take unpaid leave in unprecedented numbers. Neither those on disability nor those on leave are included in the unemployment numbers.
I've repeated this line a number of times: the government and the MSM discount the fact that there's a quality component to jobs as well as a quantity component. Not only is the aggregate number of unemployed people worse than reported, but the majority of jobs created during this depression have been of the part-time, menial variety.
The U.S. labor market, which peaked in November 2007 when there were 139,143,000 jobs, now encompasses only 132,705,000 workers, a drop of 6.4 million jobs from the peak. The only work that has increased is part-time, and that is because it allows employers to reduce costs through a diminished benefit package or none at all.

The broadest measure of unemployment today is approximately 14.5%, way above the 7.9% headline number. The 14.5% reflects the unemployed and three other categories: the more than eight million people who are employed part-time for economic reasons (because their hours have been cut back or because they are unable to find a full-time job), the 10 million who have stopped looking for work, and those who are "marginally attached" to the workforce.
In its latest report, Gallup, a very reliable source, reported that the underemployment rate is north of 19%:

America Remains In A Jobs Depression - unemployment chart
The labor-force participation rate has dropped to the lowest level since 1981.
It reflects discouraged workers who have dropped out of the labor force. If it were not for the dropouts, the formally announced unemployment rate would be around 9.8%, not the headline 7.9%.

Sometimes the employment numbers that are announced are simply not understood. January was supposed to have seen 157,000 jobs created. The news provoked relief and even enthusiasm in some quarters. But the supposed hiring was based on seasonally adjusted numbers—numbers adjusted to reflect regularly occurring shifts in employment, such as increased hiring of farm workers during crop harvests or retail employees after Thanksgiving. The real, unadjusted figures for January show that nearly 2.8 million jobs disappeared, which happened to be worse than the 2.63 million lost in January 2012. Even though the 157,000 jobs created were fewer than the 311,000 of January 2012, many commentators cheered because they don't understand the effects of seasonal adjustment.
So there is no solace in the statistics. Job seekers are only one-third as likely to find work as they were five years ago, and a record number of households have at least one member looking for a job, which affects everyone. And most of the newly available jobs don't match the pay, the hours or the benefits of the millions of positions that have vanished.
It typically takes 25 months to close the employment gap from the employment peak near the start of the downturn. Yet this time, more than 60 months after employment peaked in January 2006, nonfarm unemployment is still more than three million jobs below where it started.
Sobering stuff.

Eileen Appelbaum, senior economist at the Center for Economic and Policy Research, argues that recovery cannot become self-perpetuated until the unemployed get good jobs and resume contributing to consumer spending at their maximum potential. Unfortunately, many of the long-term unemployed aren't finding jobs; they're falling off of the radar screen.

I can't stress this enough: Those who are unfortunate enough to find themselves among the ranks of the perennially jobless typically face a lifetime of depressed earnings. (One study suggests that long-term unemployment can cut one's lifetime earning potential by as much as 20%.) The longer that the job market remains bleak (remember, it's been 5 years and counting), the more people fall into the category of long-term unemployed, whether or not the government counts them as such. In the short term, that means a drag on the economy. In the long-term, that means the creation of a new underclass.

Seth Mason, Charleston SC


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