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Today's Top News
America’s Jobs Deficit More Important than the Budget Deficit
The most significant aspect of January’s jobs report is political. The fact that America’s labor market continues to improve is good news for the White House. But as a practical matter the improvement is less significant for the American work force.
Falling unemployment figures still hide the millions of Americans who have dropped out of the workforce during the recession. (Photograph: Jewel Samad/AFP/Getty Images)
President Obama’s only chance for rebutting Republican claims that he’s responsible for a bad economy is to point to a positive trend. Voters respond to economic trends as much as they respond to absolute levels of economic activity. Under ordinary circumstances January’s unemployment rate of 8.3 percent would be terrible. But compared to September’s 9.1 percent, it looks quite good. And the trend line – 9 percent in October, 8.6 percent in November, 8.5 percent in December, and now 8.3 percent – is enough to make Democrats gleeful.
But the U.S. labor market is far from healthy. America’s job deficit is still mammoth. Our working-age population has grown by nearly 10 million since the recession officially began in December 2007 but many of these people never entered the workforce. Millions of others are still too discouraged to look for work.
The most direct way of measuring the jobs deficit is to look at the share of the working-age population in jobs. Before the recession, 63.3 percent of working-age Americans had jobs. That employment-to-population ratio reached a low last summer of 58.2 percent. Now it’s 58.5 percent. That’s better than it was, but not by much. The trend line here isn’t quite as encouraging.
Given how many people have lost their jobs and how much larger the total working-age population is now, we’ve got a long road ahead. At January’s rate of job gains – 243,000 – the nation wouldn’t return to full employment for another seven years.
When they’re not blaming Obama for a bad economy, Republicans are decrying the federal budget deficit and demanding more cuts. But America’s jobs deficit continues to be a much larger problem than the budget deficit.
In fact, we can’t possibly achieve the growth needed to reduce the budget deficit as a proportion of the total economy unless far more people are employed. Workers are consumers, and consumer spending is 70 percent of economic activity. And cutting the budget means fewer workers, directly (as government continues to shed workers) and indirectly (as government contractors have to lay off workers) and therefore fewer consumers.
Yet deficit hawks continue to circle. State and local budgets are still being slashed. The federal government is scheduled to begin major spending cuts less than a year from now. Republicans are calling for more cuts in the short term. Austerity economics continues to gain traction.
Meanwhile Congress is debating whether to renew extended unemployment benefits. This should be a no-brainer. The long-term unemployed, who have been jobless for more than six months, comprise a growing share of the unemployed. (In January they rose from 42.5 percent to 42.9 percent).
Republicans say unemployment benefits are prolonging unemployment, that people won’t get jobs if they get unemployment checks from the government. That’s claptrap, especially when there’s only 1 job opening for every 4 people who need a job. Republicans also say we can’t afford to extend jobless benefits. Also untrue. Jobless workers spend whatever money they get, and their spending keeps other people in jobs.
Government should extend unemployment benefits, and not cut spending until the nation’s rate of unemployment is down to 5 percent. Then, and only then, should we move toward budget austerity.
The job situation is better than it was but it’s still awful. The jobs deficit is still our number one economic problem. Forget the budget deficit until we tame it.
Robert Reich, one of the nation’s leading experts on work and the economy, is Chancellor’s Professor of Public Policy at the Goldman School of Public Policy at the University of California at Berkeley. He has served in three national administrations, most recently as secretary of labor under President Bill Clinton. Time Magazine has named him one of the ten most effective cabinet secretaries of the last century. He has written thirteen books, including his latest best-seller, Aftershock: The Next Economy and America’s Future; The Work of Nations; Locked in the Cabinet; Supercapitalism; and his newest, Beyond Outrage. His syndicated columns, television appearances, and public radio commentaries reach millions of people each week. He is also a founding editor of the American Prospect magazine, and Chairman of the citizen’s group Common Cause. His widely-read blog can be found at www.robertreich.org.
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11 Comments so far
Show All"Republicans say unemployment benefits are prolonging unemployment, that people won’t get jobs if they get unemployment checks from the government."
No what prolongs unemployment is employers advertising that the unemployed need not apply. And it's been going on since the bank bailouts. Blatant discrimination of this sort hasn't taken place for a long time. Today it's common place. It's an entitlement for HR departments. Their corporations got bailed out without terms or oversight, their CEOs got their bonuses. The only people that took a hit were the "little" ones, who still pay taxes and fees. Why not discriminate? It's open season on the little guy. Hire a replacement for less, he can't complain he has nowhere to turn. Can he complain? Not if he can't afford to. Afterall money equals speech.
http://articles.chicagotribune.com/2011-09-04/features/ct-biz-0905-work-advice-huppke-20110904_1_unemployed-residents-online-job-postings-unemployed-people
Besides all they have to do to make the picture rosie is change how they compute the figures. Drop people from the roles...afterall they must not want a job.
>>http://newsfeedresearcher.com/data/articles_t5/employees-companies-apple.html
>>San Francisco: Google, Apple and five other technology companies must face a lawsuit claiming they violated antitrust laws by entering into agreements not to recruit each other's employees, a federal judge said. U.S. District Judge Lucy H. Koh in San Jose, California, Thursday said that even if she dismisses some claims, she will give the plaintiffs a chance to amend their complaint and re-file it
These are the kind of laws and regulations Ron Paul wants to get rid of. That is restrictions on companies colluding not to hire one anothers employees.
BTW these firms paid a fine to the Justice Department for these practices under the "admitting no guilt" clause that the Government and the Corporations use now to bypass the laws while they work to rid the nation of those "needless regulations".
Unemployment, especially among young Amurkins is being exacerbated by millions of older Amurkin workers who are delaying or canceling retirement due to high medical insurance costs. Many older workers would retire today if Obama had reduced the Medicare eligibility age to 55 or even 60 from the current 65 years of age. Obamacare will result in additional workers delaying retirement.
When Obama guts Social Security and Medicare during his second term, the unemployment rate will rise further.
When Obama guts SS and Medicare? Explain please, every Republican votes to give SS to wall street, and turn Medicare into a voucher system. Turning a Seven hundred and fifty thousand job loss per month onto a two hundred fifty gain Is not all together bad. Saving millions of jobs In our auto industry isn't bad, although there are some on this forum that hate Obama so much that they will promote Forgiegn manufacturing.
Thanks to RR for showing that the mass media's giddy hysteria over recent positive blips in unemployment numbers is an empty celebration indeed.
The fact that young people are not even able to enter the "job market" is horrible enough. Couple that with the bookend fact that seniors are forced to work longer, taking jobs that would normally open to the young, and add the overall decline in wages, and you have a formula that describes economic disaster.
No wonder that the numbers for long-termed unemployed are nearly immutable. After a point, we (yes, I have committed the sin of being unable to find work) become officially "unemployable." Try living with that scarlet letter.
So, as Reich points out, this is really a PR election ploy by the Dems.
For Plan B, there is the impending attack on Iran that Obama probably wants and the Israelis will most certainly execute in any case. His re-election is guaranteed, no matter how much money the other side of the Duopoly can throw at him.
Besides, the Repubs will pretty much sweep the Congress and the states.
More ho-hum and so-it-goes in this increasingly fascistic place we call Amerika.
There is a simple way to accurately depict Merka. I hope that this contributes to universal enlightenment, so that people everywhere can more simply, accurately frame their political experience. There are three dominant cultures in Merka: Conservative, Liberal, and Progressive. Liberals, like Robert Reich, go with the Conservatives over on the right, because both are pro-elite, pro-empire. Progressives are on the left, pro-social, pro-people, pro-nature, pro-solidarity.
Many of us can now see dominant patterns among these three cultures, having experienced all three: Conservative is cooperative, and Liberal is knowledgeable. But Progressive is both. Robert Reich is in the knowledgeable but uncooperative liberal culture. In conservative areas, people tend to be more cooperative but less knowledgeable. In progressive areas, we find both knowledge and cooperation. A good example of this is evident in the Ashland, OR Food Coop Newsletter.
Now the context is crucial: Progress emerges ONLY from LOCAL knowledge coupled with LOCAL cooperation.
In your day to day experience, getting things done, in your interaction with people in your community, I think you will find you prefer both knowledge AND cooperation, that the whole is far greater than the sum of the parts. Knowledge and cooperation are the two fundamental elements of local community that Merkan elites split into two poles of political disconnect, to divide/conquer/enslave the people.
It's very clear to me that elites consciously chose these poles for dividing/conquering the people. These unnatural poles, liberalism, local knowledge without cooperation, is a concocted urban culture, while conservatism, local cooperation without knowledge, is a concocted rural culture. Elites have worked very hard, decade after decade, to divide us along these lines. Liberals ban local cooperation. Conservatives ban local knowledge. Both know that this destroys the local community. Hence mass dependence/enslavement to giant, elite-controlled, institutions: Delaware korporations, Washing-town bureaucrats, Wall-Struck banks.
Demand both knowledge and cooperation in your local community. You will find strong resistance in liberal areas, from Reich, et al. Challenge the liberal uncooperators to bridge the divide. Support the progressives who bridge the divide.
Notice that the labor union is not a real cooperative institution. It masks the master /slave relationship under a pretense of cooperation. If labor unions were truly progressive, they would have merged with the co-op movement many decades ago, providing their members with a path to ownership/control of production. But they didn't. So don't support them. Challenge labor unions to merge with the co-op today. 2012 is the year of the Co-op.
Support the synergy of local knowledge and local cooperation.
Why would a company hire if they have developed ways of getting more work done with the minimum ammout of people at the lowest possible salary? They have a captive audience, they know people need the work, or more accurately the pay packet since they know the workers' personal expenses are rising. Workers can't just up and leave for another job....its a hirers' market and they aren't hiring and they won't untill they absolutely have to and even then will pay as little as they can. They don;t even have to compete for new people. Thus just watch as what used to be called 'benefits' get stripped away. The sooner health insurance is taken out of their control the better....universal health care would at least mean employers won't be able to use that particular stick to keep employees in jobs just to pay for insurance. Salaries have been flat for years, profits are rising as is the market and still no benefit for working people. I'm glad to see the jobless numbers decreasing but how well paid are these jobs etc etc I wonder.
...However, this does not square at all with contemporary realities. The global integration of the world economy in recent decades, above all, rendered impotent and reactionary the efforts of nationally based labor organizations. The AFL-CIO, and its offshoot in Change to Win, hardly resisted that transformation. Saturated with national chauvinism and corporatist class collaboration, the American trade unions decades ago abandoned the defense of the conditions and rights of their unfortunate members.
The unions in the US have facilitated and presided over the precipitous decline in decent jobs and living standards and consequent growth in social inequality that sparked the current protest movement. A recent report indicating that median US household income plunged 9.8 percent in only four years, from December 2007, the official start of the recession, to June of 2011, is some measure of the worthlessness of the existing “labor movement” for the purposes of defending the working population from the predations of capitalism.
The American unions at present are only good for policing their members, imposing sell-out contracts, enriching their own officialdom and launching verbal and physical attacks on their critics. They are business organizations that fully identify with corporate America and subordinate workers politically to the present system through their support of the Democratic Party (and, most immediately, the 2012 Obama re-election effort).
http://wsws.org/articles/2011/oct2011/unio-o28.shtml
==The jobs deficit is still our number one economic problem.==
This would be a redundant but sincere statement, if the number one problem of the human condition were economic.
But its not. The number one problem is, with Great Ape genes, how to stop power from corrupting and absolute power from corrupting absolutely in human intercourse. The second defect is breeding breeding breeding breeding breeding.
An interesting reference for =the human condition= is that as we speak the Milky Way galaxy and the Andromeda galaxy are revolving around their common gravitational center - like two wrestlers facing off with each other - and their fate is to pass through each other. The outcome of that will be that the black holes at their centers will come together to make a super-sized black hole at the center of a super-sized galaxy. After this, each body in each former galaxy has to come to terms with a new identity. "Where was I?"
I laugh at the years I spent as a State Vocational Rehabilitation Counselor, using a huge battery of psychological tests to match individuals to jobs, sending some folks for training programs to gain useful new skills. To day, if a job were to become available sucking the mucous from the nostrils of a dead rhinoceros, there would be hundreds of screaming applicants, some willing to have sex, and governments would proudly take taking credit for creating a new job.
Trylon
Of course the Republican, Mitt Romney view is reactionary claptrap. The question is whether it will win him the election. My view of the American public is that it will. What will be the consequences--things will get much worse in the US. I can only think very darkly about these consequences. Riots and crackdowns and the end of even the pretense of civil liberties. I have gone down to occupy and talked to the people there. They are not violent but they have absolutely no stake in the existing capitalistic order of things and they are radically disaffected. They feel that the political system has no place for them and has no help to give them. Occupy is the canary in the mine. When will the tinder get dry enough to start the brush fire? Elect Romney and we shall see.
Yesterday my wife and I sat down with the owner of a local good and fairly inexpensive restaurant to hear from this good friend of ours why he was closing. Could he not lay off more personnel? No, he was already operating at the minimum number of personnel to be efficient and was in big debt already. He would have to declare bankruptcy. He offered his view that this had been the major reason why the unemployment rate had bottomed out last year; enterprises cannot cut their personnel below a safe level or go under. Taxes and regulations? No, these were not the principal reasons for closing. Then what were? Decreasing numbers of frequently returning customers, especially retired people.
Now, this may not have been a reason for closings and lay-offs in many cases but we thought that it had to be a significant one nationwide especially for so-called small businesses. Will the heist of funds from the social network, falsely named a tax cut, end the recession? No, it cannot be more than a temporary band-aid. Historically the only trend that truly ended recessions/depressions at least transiently until the next one came around was significantly increased median family income. It will be the same this time around. It is time for the wage-earning class to stop looking to Washington for its savior.