No other word will suffice to describe the September jobs report. A net 95,000 jobs were lost when we need at least 125,000 net new jobs just to keep up with organic growth of the labor force. We would need many hundreds of thousands each month to backfill the losses from the Great Recession. While the “official” unemployment rate remained at 9.6 percent — its longest run at such a high level since the Depression — the real rate is more than 17.1 percent.
As economist Heidi Shierholz of the Economic Policy Institute points out, 15 months after the recession’s official end, the nation is still 11.5 million jobs short. We’re in a jobs recession the likes of which hasn’t been seen since the 1930s. In other words: Disaster.
Free-market ideologues might cheer that most of the job losses have come from government. (Some 58,000 out of 83,000 state and local government job cuts came from education; a nice competitive strategy). Unfortunately, the private sector is barely creating new jobs. Five unemployed persons are chasing every opening. If you’re a major corporation that’s sitting on record cash and doing fine, why would you hire “expensive” American workers? If you’re a smaller business barely hanging on through a recovery that feels like more recession, how can you hire? And many of those firms are hurt by government “belt tightening” as projects and contracts involving private vendors and contractors are eliminated. And just wait until the stimulus runs out.
Yet those wishing for a New New Deal on jobs might be disappointed, too. To be sure, the Obama administration missed a chance to make major investments in infrastructure, including actually building high-speed rail systems nationwide. These would have created jobs, helped an ailing construction industry, re-seeded new sectors that America lost and prepared the country for the future. The investments would have disproportionately helped private-sector companies, by the way. However, they wouldn’t have closed such a huge gap in unemployment.
The reality is that in 1933, FDR had a small federal government with no debt. He had a wide field in which to experiment. Today, thanks to Republicans and Democrats, the federal government and its deficit are very large. It’s running a big jobs program and not only in civilian federal workers. There’s everything from the military and military contracts to farm supports.
That’s not to say nothing can be done. The Fed can ease more. Washington can make investments that create jobs and eventually repay the Treasury. It would be a start. Eventually, we’ll have to address trade and offshoring. The lack of urgency in addressing unemployment, whether from the White House, Fed or many members of Congress, is astounding. And it’s clear that just waiting for the old jobs engine to restart, as more Americans suffer and even slip into poverty, isn’t working.
Maybe the conspiracy theorists are right, about a “capital strike” by big business to bring down Obama and the Democrats. I don’t really buy it. The reasons behind the unemployment crisis are real, deep and complex. The more provocative question is whether we as a society are willing to live with such high unemployment for years and years. It will remake America and not in good ways.
Today’s Econ Haiku:
China’s not cutting
Its education workforce
Sounds like a smart move