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Millions of Jobs Between Now and November. Or Else.

January 10th, 2010, 04:01 am admin Leave a comment Go to comments

One of the chief responses to the continuing disaster that is America’s unemployment situation runs along the lines of: It’s a lot better than it was last year at this time. That depends on how you look at it.

In terms of the number of jobs the Bureau of Labor Statistics reported lost in the Decembers of 2008 and 2009, the situation is a lot better. Jobs aren’t being slashed in anywhere near the same numbers they were a year ago, 681,000 vs. 85,000. Layoffs are way down and, on average, people who still have jobs are more secure that they’ll keep them than they were just a few months ago. Various indicators of a slowly improving economy can be seen everywhere. No doubt, thanks to government intervention, however imperfect, there have been innumerable sighs of relief.

Click here for larger image.

But looked at from the standpoint of accumulated job losses, with no real hiring in sight, the situation looks far worse than it did a year ago. Back then, “only” 3.1 million jobs had been lost since the recession began in December 2007. Today, 5.0 million more Americans are officially out of work. And 6.1 million of them have been out of work for at least six months. Altogether, those counted as jobless number 15.3 million. That, says the BLS, is 10% of the work force, the “U3″ number. Add in the part-timers who want full time work and people too discouraged to keep looking for a job and this “U6″ measurement rises to 26.5 million and 17.3%.

The numbers, however, are actually worse than they first appear. Because, as BLS statistics show, 661,000 people left the labor force last month. We don’t know where they all went. Retired, enrolled in school, left the job market to raise a child, took time off to write a book, sank into despair. What we do know is that if they had stayed in the labor force and kept looking for one of those jobs that isn’t yet available, today we’d be looking at a 10.4% unemployment rate, with 16 million officially out of work. Maybe 27 million when the underemployed and discouraged get tallied.

Click here for larger image

What these terrible numbers represent are persons with rent to pay, kids to feed, tuition to cover, loans to repay. Not abstractions. People. Which is why everyone – except for Republicans hoping to make political gains off of misery – eagerly hopes each new job report will announce that the numbers have begun to be reversed.

However, given the BLS’s tweaky application of seasonal adjustment formulas and calculations about new businesses arising and old ones folding (called the birth-death model), this focus on when positive job numbers will finally be announced is really a perverse waste of time.

I don’t say this with any malice toward anyone. I’ve watched for that crossover from negative to positive, too. Nor am I saying there’s anything wrong with following the job trends that appear over a period of a few or many months. It’s just that when the day the numbers finally appear to go positive for more than a one-month blip, it will be a maybe-yes, maybe-no affair.

And, more importantly, that breakthrough, such as it is, will only mark the beginning of what must be obvious to everyone by now will be a long, long trek back to the employment levels of December 2007 when there were 8.1 million more people working than there are now and millions more had full-time instead of part-time jobs.

Click for a larger version of this Calculated Risk chart.

Our attention instead ought to be focused on the problem of how long it’s going to take to return to the number of jobs there were when the recession started two years ago.

As many others and I have pointed out for months, and Robert Reich noted Friday, it normally takes the creation of about 100,000 jobs each month just to keep up with added new job seekers entering the labor market. So, add to that 8.1 million jobs we’ve lost another 2.5 million “never entereds.” That’s 10.6 million jobs that have to be made up.

To achieve that by the summer of 2012, in time to have a favorable effect on the presidential election, would mean, Reich says, 400,000 jobs created each month. During the Clinton boom, the best rate was 280,000 a month. If that could be matched, it would still take until early 2013 to cover those 10.6 million jobs. And, it should be remembered, each month going forward we will need yet another 100,000 jobs to handle people entering the market for the first time. So the actual number of needed jobs over the next three years is more like 13-14 million. A formidable task.

If there were at least program in place that was showing marked improvement in the unemployment situation, even if the jobless numbers were still high, it would be harder for Republicans to spin things in their direction for the election. But what kind of program?

The imperfect stimulus has helped stop the bleeding. But the only way for the administration to do a timely job of putting Americans back to work is with a dynamic and massive federally run jobs program, one that employs millions as quickly as possible. That means more government spending. Not only should it be done right away for all the obvious human reasons, but also because the already somewhat dicey political situation for Democrats in November is going to be far dicier if more jobs aren’t generated soon. Excuses won’t go over well.

It would be the toughest imaginable sell on Capitol Hill. Fought against tooth and nail by obstructionist Republicans, Democratic deficit hawks and assorted worry warts. It might very well go down to defeat. The only alternative then would be diverting some TARP repayments and unspent stimulus dollars. That’s legally problematic and, at any rate, wouldn’t produce enough money.

But the possibility of defeat should not be a deterrent to trying. The White House should bite the bullet on this, go all out, take the issue to the American people and fight like hell in Congress to make this happen. The next few months will offer the only chance, however slim, of accomplishing it. Marching into November with massive numbers of Americans still unemployed and no program for effectively reducing those numbers could make it a painful year at the polls.  

There is, as pointed out many times before, far more to do than merely try to get more Americans back to work. We need a frontal assault on deregulation, deunionization, privatization, unfettered globalization, wage stagnation and the outrageous transfer of wealth to the upper 20%, especially the top 1%. Fixing, even ameliorating, structural unemployment will require rejiggering out trade policy and establishing a progressive industrial policy.

Atrios makes an excellent point in that regard:

One of my longstanding pet peeves is that everyone in the US pretends we don’t have an “industrial policy” because that implies naughty state intervention in certain sectors. But of course we have lots of naughty state intervention in certain sectors, we just don’t do it even notionally for any good reason. We prop up the single family homebuilding industry and the automobile industry (even before the bailouts). We prop up certain agricultural sectors. We favor big business over small. Now we’re massively propping up one skimmer industry – the financial industry – and are about to prop up another skimmer industry – health insurance.

So, yes, by design or accident we have industry policy. We should recognize that and then decide what we should be doing instead of pretending we don’t have any.

Whatever we do in that regard, however, will have to wait until we solve the immediate crisis. For one thing, there aren’t anywhere near enough fighting progressives in Congress to deal effectively with these deeper problems with the economy. For now, Band-Aids will have to do.

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