SUBSCRIBE TO OUR FREE NEWSLETTER
Daily news & progressive opinion—funded by the people, not the corporations—delivered straight to your inbox.
5
#000000
#FFFFFF
5
#000000
#FFFFFF
The Jobs Stall Has Arrived
The economy has stalled.
Friday's jobs report for April was even more disappointing than March. Employers added only 115,000 new jobs, down from March's number (the Bureau of Labor Statistics revised the March number upward to 154,000, but that's still abysmal relative to what's needed). We need well over 250,000 new jobs per month in order to begin to whittle down the vast number of jobs lost in the Great Recession. At least 125,000 new jobs are necessary each month just to keep up with an expanding population of working-age people.
May 04, 2012
The economy has stalled.
Friday's jobs report for April was even more disappointing than March. Employers added only 115,000 new jobs, down from March's number (the Bureau of Labor Statistics revised the March number upward to 154,000, but that's still abysmal relative to what's needed). We need well over 250,000 new jobs per month in order to begin to whittle down the vast number of jobs lost in the Great Recession. At least 125,000 new jobs are necessary each month just to keep up with an expanding population of working-age people.
With only 115,000 jobs in April, the hole is getting even deeper.
Most observers pay attention to the official rate of unemployment, which edged down to 8.1 percent in April from 8.2 percent in March. That may sound like progress, but it's not. The unemployment rate dropped because more people dropped out of the labor force, too discouraged to look for work. The household survey, from which the rate is calculated, counts as "unemployed" only people who are actively looking for work. If you stop looking because the job scene looks hopeless for you, you're no longer counted.
In the winter months -- December, January, and February - hiring had seemed to pick up, averaging over 250,000 new jobs per month. Then the mini-surge stopped. The simplest explanation is that the mild winter across much of the United States gave an unusual boost to hiring then, leading to a correction by the spring.
Most of the job gains in April were in lower-wage industries - retail stores, restaurants, and temporary-help. That means average wages continue to drop, adjusted for inflation - continuing their long-term decline. Most of the new jobs that have been added to the U.S. economy during this recovery have paid less than the jobs that were lost during the downturn.
What does all this mean? Together with other recent data showing slower economic growth during the first quarter of this year, it's safe to say the economy has stalled.
This is bad news for millions of Americans.
It's also bad news for Obama and the Democrats. Voters don't pay much attention to the economy in an election year until after Labor Day, so it's not necessarily a huge help to Romney and the Republicans. But it's a bad political omen nonetheless.
No set of policies between now and Election Day are likely to expand the economy. To the contrary, government at all levels continues to contract, acting as a fiscal drag when government needs to be doing the exact reverse - boosting the economy through additional spending. In 2013, when spending major cuts are scheduled, we'll fall off a fiscal cliff.
Obama needs to push back loudly and clearly, saying he won't support additional spending cuts until the economy is showing clear signs of improvement.
But widening inequality is the underlying culprit here. As long as almost all the gains from economic growth continue to go to the top, the vast middle class doesn't have the purchasing power to boost the economy on its own. And rich Americans spend a much smaller portion of their incomes than does the vast middle class. Their marginal satisfaction from additional spending falls off. The second yacht isn't nearly as much fun as the first.
Get it? We've still got a terrible cyclical problem - we can't get out of the gravitational pull of the Great Recession.
Yet the underlying problem is structural, and it's been growing for decades. The structural problem of stagnant or declining real incomes for most people, and soaring income and wealth at the top, was masked during the boom years when the middle class could turn their homes into piggy banks and extract home-equity loans or refinance. But the mask came off in 2008 as home values plummeted.
There's no way to put the mask back on. We've got to face the truth. Obama and the Democrats have to explain to the American people why inequality isn't just unfair; it's also economically unsustainable.
An Urgent Message From Our Co-Founder
Dear Common Dreams reader, The U.S. is on a fast track to authoritarianism like nothing I've ever seen. Meanwhile, corporate news outlets are utterly capitulating to Trump, twisting their coverage to avoid drawing his ire while lining up to stuff cash in his pockets. That's why I believe that Common Dreams is doing the best and most consequential reporting that we've ever done. Our small but mighty team is a progressive reporting powerhouse, covering the news every day that the corporate media never will. Our mission has always been simple: To inform. To inspire. And to ignite change for the common good. Now here's the key piece that I want all our readers to understand: None of this would be possible without your financial support. That's not just some fundraising cliche. It's the absolute and literal truth. We don't accept corporate advertising and never will. We don't have a paywall because we don't think people should be blocked from critical news based on their ability to pay. Everything we do is funded by the donations of readers like you. Will you donate now to help power the nonprofit, independent reporting of Common Dreams? Thank you for being a vital member of our community. Together, we can keep independent journalism alive when it’s needed most. - Craig Brown, Co-founder |
This work is licensed under a Creative Commons Attribution-Share Alike 3.0 License.
Robert Reich
Robert Reich, is the Chancellor's Professor of Public Policy at the University of California, Berkeley, and a senior fellow at the Blum Center for Developing Economies. He served as secretary of labor in the Clinton administration, for which Time magazine named him one of the 10 most effective cabinet secretaries of the twentieth century. His book include: "Aftershock" (2011), "The Work of Nations" (1992), "Beyond Outrage" (2012) and, "Saving Capitalism" (2016). He is also a founding editor of The American Prospect magazine, former chairman of Common Cause, a member of the American Academy of Arts and Sciences, and co-creator of the award-winning documentary, "Inequality For All." Reich's newest book is "The Common Good" (2019). He's co-creator of the Netflix original documentary "Saving Capitalism," which is streaming now.
The economy has stalled.
Friday's jobs report for April was even more disappointing than March. Employers added only 115,000 new jobs, down from March's number (the Bureau of Labor Statistics revised the March number upward to 154,000, but that's still abysmal relative to what's needed). We need well over 250,000 new jobs per month in order to begin to whittle down the vast number of jobs lost in the Great Recession. At least 125,000 new jobs are necessary each month just to keep up with an expanding population of working-age people.
With only 115,000 jobs in April, the hole is getting even deeper.
Most observers pay attention to the official rate of unemployment, which edged down to 8.1 percent in April from 8.2 percent in March. That may sound like progress, but it's not. The unemployment rate dropped because more people dropped out of the labor force, too discouraged to look for work. The household survey, from which the rate is calculated, counts as "unemployed" only people who are actively looking for work. If you stop looking because the job scene looks hopeless for you, you're no longer counted.
In the winter months -- December, January, and February - hiring had seemed to pick up, averaging over 250,000 new jobs per month. Then the mini-surge stopped. The simplest explanation is that the mild winter across much of the United States gave an unusual boost to hiring then, leading to a correction by the spring.
Most of the job gains in April were in lower-wage industries - retail stores, restaurants, and temporary-help. That means average wages continue to drop, adjusted for inflation - continuing their long-term decline. Most of the new jobs that have been added to the U.S. economy during this recovery have paid less than the jobs that were lost during the downturn.
What does all this mean? Together with other recent data showing slower economic growth during the first quarter of this year, it's safe to say the economy has stalled.
This is bad news for millions of Americans.
It's also bad news for Obama and the Democrats. Voters don't pay much attention to the economy in an election year until after Labor Day, so it's not necessarily a huge help to Romney and the Republicans. But it's a bad political omen nonetheless.
No set of policies between now and Election Day are likely to expand the economy. To the contrary, government at all levels continues to contract, acting as a fiscal drag when government needs to be doing the exact reverse - boosting the economy through additional spending. In 2013, when spending major cuts are scheduled, we'll fall off a fiscal cliff.
Obama needs to push back loudly and clearly, saying he won't support additional spending cuts until the economy is showing clear signs of improvement.
But widening inequality is the underlying culprit here. As long as almost all the gains from economic growth continue to go to the top, the vast middle class doesn't have the purchasing power to boost the economy on its own. And rich Americans spend a much smaller portion of their incomes than does the vast middle class. Their marginal satisfaction from additional spending falls off. The second yacht isn't nearly as much fun as the first.
Get it? We've still got a terrible cyclical problem - we can't get out of the gravitational pull of the Great Recession.
Yet the underlying problem is structural, and it's been growing for decades. The structural problem of stagnant or declining real incomes for most people, and soaring income and wealth at the top, was masked during the boom years when the middle class could turn their homes into piggy banks and extract home-equity loans or refinance. But the mask came off in 2008 as home values plummeted.
There's no way to put the mask back on. We've got to face the truth. Obama and the Democrats have to explain to the American people why inequality isn't just unfair; it's also economically unsustainable.
Robert Reich
Robert Reich, is the Chancellor's Professor of Public Policy at the University of California, Berkeley, and a senior fellow at the Blum Center for Developing Economies. He served as secretary of labor in the Clinton administration, for which Time magazine named him one of the 10 most effective cabinet secretaries of the twentieth century. His book include: "Aftershock" (2011), "The Work of Nations" (1992), "Beyond Outrage" (2012) and, "Saving Capitalism" (2016). He is also a founding editor of The American Prospect magazine, former chairman of Common Cause, a member of the American Academy of Arts and Sciences, and co-creator of the award-winning documentary, "Inequality For All." Reich's newest book is "The Common Good" (2019). He's co-creator of the Netflix original documentary "Saving Capitalism," which is streaming now.
The economy has stalled.
Friday's jobs report for April was even more disappointing than March. Employers added only 115,000 new jobs, down from March's number (the Bureau of Labor Statistics revised the March number upward to 154,000, but that's still abysmal relative to what's needed). We need well over 250,000 new jobs per month in order to begin to whittle down the vast number of jobs lost in the Great Recession. At least 125,000 new jobs are necessary each month just to keep up with an expanding population of working-age people.
With only 115,000 jobs in April, the hole is getting even deeper.
Most observers pay attention to the official rate of unemployment, which edged down to 8.1 percent in April from 8.2 percent in March. That may sound like progress, but it's not. The unemployment rate dropped because more people dropped out of the labor force, too discouraged to look for work. The household survey, from which the rate is calculated, counts as "unemployed" only people who are actively looking for work. If you stop looking because the job scene looks hopeless for you, you're no longer counted.
In the winter months -- December, January, and February - hiring had seemed to pick up, averaging over 250,000 new jobs per month. Then the mini-surge stopped. The simplest explanation is that the mild winter across much of the United States gave an unusual boost to hiring then, leading to a correction by the spring.
Most of the job gains in April were in lower-wage industries - retail stores, restaurants, and temporary-help. That means average wages continue to drop, adjusted for inflation - continuing their long-term decline. Most of the new jobs that have been added to the U.S. economy during this recovery have paid less than the jobs that were lost during the downturn.
What does all this mean? Together with other recent data showing slower economic growth during the first quarter of this year, it's safe to say the economy has stalled.
This is bad news for millions of Americans.
It's also bad news for Obama and the Democrats. Voters don't pay much attention to the economy in an election year until after Labor Day, so it's not necessarily a huge help to Romney and the Republicans. But it's a bad political omen nonetheless.
No set of policies between now and Election Day are likely to expand the economy. To the contrary, government at all levels continues to contract, acting as a fiscal drag when government needs to be doing the exact reverse - boosting the economy through additional spending. In 2013, when spending major cuts are scheduled, we'll fall off a fiscal cliff.
Obama needs to push back loudly and clearly, saying he won't support additional spending cuts until the economy is showing clear signs of improvement.
But widening inequality is the underlying culprit here. As long as almost all the gains from economic growth continue to go to the top, the vast middle class doesn't have the purchasing power to boost the economy on its own. And rich Americans spend a much smaller portion of their incomes than does the vast middle class. Their marginal satisfaction from additional spending falls off. The second yacht isn't nearly as much fun as the first.
Get it? We've still got a terrible cyclical problem - we can't get out of the gravitational pull of the Great Recession.
Yet the underlying problem is structural, and it's been growing for decades. The structural problem of stagnant or declining real incomes for most people, and soaring income and wealth at the top, was masked during the boom years when the middle class could turn their homes into piggy banks and extract home-equity loans or refinance. But the mask came off in 2008 as home values plummeted.
There's no way to put the mask back on. We've got to face the truth. Obama and the Democrats have to explain to the American people why inequality isn't just unfair; it's also economically unsustainable.
We've had enough. The 1% own and operate the corporate media. They are doing everything they can to defend the status quo, squash dissent and protect the wealthy and the powerful. The Common Dreams media model is different. We cover the news that matters to the 99%. Our mission? To inform. To inspire. To ignite change for the common good. How? Nonprofit. Independent. Reader-supported. Free to read. Free to republish. Free to share. With no advertising. No paywalls. No selling of your data. Thousands of small donations fund our newsroom and allow us to continue publishing. Can you chip in? We can't do it without you. Thank you.