So, there’s been a certain amount of crowing about the falling American jobless rate (U3 went from 9.0 to 8.6 per cent) and there does seem to be a slight pickup in hiring. The scariest graph I have ever seen in my adult life, c/o Calculated Risk, continues to be scary (see below) but all sorts of commentators and the idiot markets seem to think at least the trend line is positive so maybe we’re catching a break on the jobs front. Employers did add 120,000 workers to the workforce and the jobless rate is the lowest it has been since March of 2009.
On the other hand (and these days there’s always another hand), government jobs are still declining and much of the decline in the jobless rate is due to people dropping out of the labor market. Let’s let the establishment New York Times speak to that point,
Even so, part of the reason the jobless rate fell so low was that 315,000 unemployed workers simply stopped applying for jobs.
Yowza! So, if we continue to lose three times as many workers from the workforce as we produce new hires we should have that jobless rate under 8 per cent in no time! This is why the “headline unemployment rate” is so useless to garner insight–in fact the real news from yesterday was the declining employment participation rate. From the same New York Times article, though suitably buried deep in the story:
The share of workers who were unemployed fell in November partly because some people found jobs and partly because some discouraged workers dropped out of the labor force altogether. That left the share of Americans participating in the work force at a historically depressed 64 percent, down from 64.2 percent in October
“Historically depressed!” Why the headlines are not reacting to the fact that less Americans are working than in decades is a mystery to me. In fact, Krugthullu has it right when he titles his blog post, “Meh. And I say That with Feeling.” He’s got a pretty good graph (see below) that explains the on-going catastraphe that is the US employment market. I should note that Krugman uses a slightly different statistic, labor force participation of 25 to 54 years olds to try to smooth out the effects of blips in education and retirement. In other words, this, is how many of the usual working population is actually working:
This graph, obviously, will get much less publicity–since it presents a devastating picture of “deleveraging” of American employment (a decline of nearly eight points over the lost decade of 2000-2010). In fact, the labor force participation of 25-54 year olds has not been this low since the aftermath of the 1981-1982 Reagan Recession. If Reagan could claim some sort of “Morning in America” based on the improving employment picture, Obama’s motto should be “Twilight of the Republic.” A whole generation of hard-fought employment gains wiped out!
To be fair to Obama, at least he has gotten the memo that premature “deficit-cutting” was a disaster and neo-Hooverite policies are going to lead to his own job loss; at least at the rhetorical level he now emphasizes his new, very modest, jobs program. Meanwhile, the GOP continues its kamikaze attempt to sabotage the economy for its partisan ends and the fantasies of its paymasters. What, am I being a little harsh? Well, the GOP is violently opposed to continuing a tax cut, mostly because that tax cut would benefit working people and would have a powerful stimulative effect. Which basically unmasks the Republicans for anybody too stupid to have figured this out already–they are all for hiking taxes, as long as those tax hikes are on you, Mr. and Mrs. 99%! Since the decline in the percentage of GDP devoted to wages since the start of the recession, about 5 per cent, is almost exactly equal to the unprecedented increase in the share of GDP going to business profits (from 5 percent [the average over 70 years!] to 10 percent [not seen since the late 1920s–and nothing went wrong then, right?), it is not hard to connect the dots. The latest efforts of the neo-Hooverites in the GOP are to strip even more consumption from the economy by ending social security payments for millions under the misnomer “entitlement reform.” Actually, in a brazen bit of rebranding, these sub-geniuses have started referring to social security insurance as welfare. So, granny is really a welfare queen loading up on T-bone steaks in her new Cadillac. To be quite clear on the Republican plan, you pay into the system your entire life and whenever you are finally allowed by our lords and masters (ladies and mistresses too!) to stop slaving for the wo/man (68 or maybe 70 or hell, why not 90?) you don’t get your pension. Well, gee, that should at least stimulate cat food sales!
It is hard not to see this collapse in employment as part of the plan. Certainly, for the GOP they have pressed to get the social contract back to where it was in the ’50s–the 1850s–so it is hard not to listen to their reactionary viciousness on child labor or doing away with medicare or ending the minimum wage without thinking they love these trends. After all, after two terms, George W. Bush had not come close to achieving the population to employment ratio of the late Clinton years. For the Democrats, this is more of a head-scratcher. It may have to do with a general cluelessness on how to handle the jobs crisis, but the inadequate stimulus of ’09-’10 was successful in providing some employment. Moreover they didn’t oppose a raft of bogus “free-trade” treaties that represented huge giveaways to corporate interests under the Bush Administration just from spite–they knew these agreements would bleed jobs. They also knew deficit-cutting based on spending cuts would mire the economy, yet they did that too. Hard to avoid the conclusion that the Dems are just pandering to the donor class and have no damn plan at all–except the ruthless sacrifice of their voting constituencies. What a world–as Alan Grayson puts it, one party is the wholly owned subsidiary of corporate interests and the other panders shamelessly to those same interests.
Everybody notes the potential fragility of the employment “recovery” but as is evident in Krugman’s big-time “meh!” there is, in fact, no recovery but quite the opposite. And the political and economic elites seem to like it that way (hey, why not–keeps real wages low thanks to what Karl Marx called the “reserve army of unemployed”). As bad as the “scary graph” is with its long, long U-shaped recovery, Krugman’s graph is far more terrifying in its L-shape. Fact is, on the jobs front the country fell off a cliff in 2007-8 and still hasn’t bottomed out.