I keep repeating this like a mantra, but an economy that relies on households buying 70% of it’s production, and households that rely on wages for 67% of their income, is not going to get healthy until it creates more jobs. That’s why Robert Riech, Paul Krugman, and this Cajun Country Economist are still stuck on job creation and the unemployment rate. It appears the DJ and other stock indexes are taking notice too. This is from today’s Gray Lady.
The American economy lost 263,000 jobs in September — far more than expected — and the unemployment rate rose to 9.8 percent, the government reported on Friday, dimming prospects of any meaningful job growth by the end of the year.
The Labor Department’s monthly snapshot of unemployment dashed hopes that the pace of job losses would continue to slow as the economy clawed its way back from a deep recession. Economists had expected 175,000 monthly job losses.
“People have been celebrating that we’re through the financial crisis, but the underlying issues are all still there,” said Dean Baker, co-director of the Center for Economic and Policy Research. “We’ve lost trillions of dollars in housing wealth, and consumption’s going to be weak. It’s not the ’30s, but there’s really nothing to boost the economy.”
You’ll recall that it’s been two years since the NBER dated the beginning of this Great Recession. That means the U.S. economy has been hemorrhaging jobs for TWO years now. We’ve got it bad and that ain’t good. Robert Reich, President Clinton’s former Labor Secretary has the “Truth about Jobs” in his blog entry today.
Unemployment will almost certainly in double-digits next year — and may remain there for some time. And for every person who shows up as unemployed in the Bureau of Labor Statistics’ household survey, you can bet there’s another either too discouraged to look for work or working part time who’d rather have a full-time job or else taking home less pay than before (I’m in the last category, now that the University of California has instituted pay cuts). And there’s yet another person who’s more fearful that he or she will be next to lose a job.
In other words, ten percent unemployment really means twenty percent underemployment or anxious employment. All of which translates directly into late payments on mortgages, credit cards, auto and student loans, and loss of health insurance. It also means sleeplessness for tens of millions of Americans. And, of course, fewer purchases (more on this in a moment).
Unemployment of this magnitude and duration also translates into ugly politics, because fear and anxiety are fertile grounds for demagogues wielding the politics of resentment against immigrants, blacks, the poor, government leaders, business leaders, Jews, and other easy targets. It’s already started.
That’s right! Because of the way we actually count the unemployed, there are actually a lot more problems out there than the unemployment rate measures. All you have to be is employed 1 hour of paid work and that dumps you into the ranks of employed. So that means if you’ve been furloughed, had your hours cut, or had to take up part time employment, you may be miserably underemployed, but your still employed. You also have to be have been actively searching for a job if you don’t have one for the last four weeks to stay in the ranks of the unemployed. You start giving up, you’re considered not in the labor force and by definition not eligible to join the numbers of the unemployed. (These are so-called discouraged workers.)