Labor Day and the Dismal Labor Market

by Matthew Payne on September 8, 2013Comments Off on Labor Day and the Dismal Labor Market


Proles off to Work in Fritz Lang’s “Metropolis”–At Least They’ve Got a Job.

So, Labor Day has come and gone in the States and the only thing to say about American labor is that it is flat on its back.  The most recent, and ballyhooed, jobs report indicates continuing stagnation in the US labor market despite the high-fives all around from an Obama economics team that seems thrilled it is the proud owner of the lowest civilian employment participation rate since 1978!  As CNN reports, the headline U3 jobless number may have fallen to a still eye-popping 7.3% (nearly a year after Obama was re-elected so, so much for all those populist speeches on jobs), which is being hailed as a victory despite the downward revision of jobs’ growth in June and July.  The reason the unemployment number has declined, however, is because folks dropped out of the labor market:

Meanwhile, the unemployment rate fell to 7.3%, but the decline came for the wrong reasons, as 312,000 people dropped out of the labor force. Only 63.2% of Americans now participate in the labor force — meaning they have a job or are looking for one. That’s the lowest rate since August 1978.

CNN provides a handy graph:


US Civilian Labor Force Participation

The numbers among the “prime age” Americans (25 to 54, i.e., out of college and not yet retired) working or searching for jobs is a miserable 81 percent–the lowest number since Reagan’s first term.  The percentage of those with actual jobs has stagnated at 76%, which is much lower than the 79 percent averaged during the last “recovery” of 2003-2007.  Makes you long for the “malaise” of 35 years ago, doesn’t it?  (And please note, Jimmy Carter was a great president for jobs created–he added far more people to the rolls of the employed in his first term than Reagan did, while beating out even Clinton’s two terms in the pace of job creation.  Of course, Bush I presided over stagnation and Bush II and Obama have been disasters.  The Obama team would be thrilled if they were as effective in delivering jobs as Jimmy Carter, but their 1.2 million jobs added to the civilian workforce is dwarfed by the allegedly economic incompetent Carter’s more than 10 million). Paul Krugman is right to call this a catastrophe.

Very few of the “Very Serious People” seem to acknowledge this economic reality except the Vandals on the right, who note it only to demand the implementation of nihilistic austerity policies that have burned down the economies of Britain, France and, especially, Spain, Italy, Portugal, Greece, and Ireland.  Their prescription for this mess is to put masses more people out of work (and Obama has been quite accommodating–the jobs he has control over, government employees–have declined substantially. Under W the public sector added 1.7 million jobs, under Obama it has declined by 718,000.  Now many of these jobs are at the local and state level but the failure of Obama to procure a larger or second stimulus clearly has impacted this number, so he’s not off the hook).  Why are our alleged leaders so indifferent or hostile to improving the employment ratio?  Mostly, because they’re cruel.  Oh, is this harsh?  Isn’t their real concerns deficits? (Despite the fact that they cared about deficits not at all during the bubble, seem uninterested that the deficit is falling at its sharpest rate since the immediate post-war years and, somehow, are clamoring for another budget-busting war in the Middle East.)  Krugthullu has caught the clan of the VSPs out here in his report that Olli Rehn (what a Dickensian name!), the EU Commissar for the Euro, is mad at the French for implementing an austerity program.  Say what?!  Well, you see it is the wrong austerity program which involves not the dismantling of the French welfare state but raising taxes.  Harumph!  That’s not the neo-liberal playbook at all!  Back in the states, the Republicans are threatening to blow-up the full faith and credit of the US government so they can stop poor people from getting medical care.  No, I’m not making that up.  On second thought, cruel is not too harsh a word.  How about “evil pricks”?

So, what’s the point of all this?  To “deleverage” western workers’ wages so that they are lower in real terms.  And guess what?  The “plan” is working.  “Reshoring” is now a growing possibility as American workers’ wages are again competitive with those of the poorest people on the planet.  And just what goodies are being worked out for American workers in the conspiratorially-designed Trans-Pacific Pact?  They must be loathsome if the national legislatures are being kept in the dark while GE, Goldman Sachs and Pfizer sit at the table. (By the way, for those who pooh-pooh conspiracies–this is a classic conspiracy: covert meetings by powerful interests to do an end-around the democratic process.  No tin foil hats required.  Why let the actual people decide on the shape of their economy, eh?).  The shadowy European-North American “Free Trade” talks (in scare quotes because these deals are not about trade being “free” and rarely about trade at all so much as property and labor regimes, as well as capital flows).  It might be a blessing that Ed Snowden has the German, Mexican and Brazilian government mightily suspicious of the US and Britain–I doubt they will believe the snoops’ protestations that eavesdropping on the Presidents of these countries has anything to do with the “terrorists.”  Much of the snooping is, of course, likely to obtain advantage in precisely these sorts of negotiations.

And by the way, deleveraging is working.  Real average weekly wages are at the same rate they were thirty years ago, in 1981.  Stop worrying about the children having a lower standard of living–you already have a lower standard of living than your parents and your children have been fitted for the proles’ coveralls.  Another useful graph, c/o of the San Francisco Examiner:


US Real Weekly Wages (c/o San Francisco Examiner)

Yeah, smell the prosperity!!  Of course, the way households historically dealt with this collapse in earnings was to increase labor force participation of wives, with a massive number of women entering the workforce (this was the real driving force behind the end of the housewife, not feminism).  But now, Mr. Obama and his friends in the Republican Party have made that option untenable.  So, the US poverty rate is now higher than it has been since the late 1960s (hey, it’s only a quarter (!!) of the nation’s children), millions rely on food stamps or are facing “food insecurity” (i.e., hunger) despite being employed and social mobility has fallen to ne0-feudal levels.  So, what is the answer of our political so-called “leaders” to such problems?  To cut the meager government aid people get.  No reason not to slash food stamps with millions of kids going hungry while funding millionaire farmers, amirite?  You really do suspect they want the entire world to look like Greece.  Whoever these politicians are working for, it ain’t the American people.

Little wonder minimum-wage workers are striking across the country and calls for a “living wage” (well, at least the miserable minimum wage of 1969, which looks princely at this late date) are resounding.  Labor is flat on its back.  And squabbling.  The state of labor is so pathetic in this country that foreign unions are now intervening to try to save the American working class from its predatory elites (and, it must be said, uncaring and indifferent middle classes).  My guess is something will have to be done about that.  As Greece and Spain has shown, the present Western political elites are willing to not only endure but instigate social and political instability by impoverishing their own people.  Perhaps this is even the plan, as such instability allows for the growth of police powers to suppress such instability and the rise of authoritarian and xenophobic political forces.  All across the West, with the exception of Japan’s surprisingly successful Abenomics, the goal is to serve the rentier class with low wages, high profits, a strong money policy and disinflation.  Gee, Marx is actually not looking like such a silly bugger anymore.

I’ll end on the same despairing note I end with on every post about the American labor market–by showing the scariest graph in the world.  It represents so much suffering, so much elite apathy and so much governmental cruelty that it is a standing reproach to all the Panglosses, many of them professional democrats, and their rosy interpretations of shitty economic stats (c/o Calculated Risk):


Jobless, August 2013, c/o Calculated Risk