Today’s much lower than expected employment report confirms that the jobs depression will continue to hold back any real American recovery. In November, only 39,000 jobs were added, according to the Labor Department. October’s upward revision of 172,000 new jobs failed to create momentum and the unemployment rate rose to 9.8 percent. The rate for people with a college degree, 5.1 percent, is the highest in 40 years.
Economist Heidi Shierholz of the Economic Policy Institute makes the point that the “surprisingly bleak” report meant that for 19 months the jobless rate has not fallen below 9 percent, trying the record set in the crushing recession of the early 1980s. But by this point in 1982, the rate was beginning a fast decline. Now, it will continue above 9 percent at least into 2011. Five unemployed workers are seeking every available job. Wages and hours worked also “flatlined.”
The labor market remains 7.4 million payroll jobs below where it was at the start of the recession in December 2007, and this number understates the size of the gap in the labor market by failing to take into account the fact that, simply to keep up with the growth in the working-age population, the labor market should have added around 3.6 million jobs in the nearly three years since December 2007. This means the labor market is now roughly 11 million jobs below the level needed to restore the pre-recession unemployment rate
The grim news for average workers stands in astounding contrast to the third quarter profits booked by corporations, a record $1.659 trillion, according to the Commerce Department. I’m skeptical of the argument that these companies are refusing to hire because of “uncertainty,” because there’s always uncertainty. They have learned they can make huge profits with much leaner American workforces, and Wall Street rewards profits not new jobs.
How can the economy recover? Jeff Madrick in the New York Review of Books takes up this question through the prisms of three new books. He writes, “…austerity economics could well leave the nation with a lost decade of slow growth and high unemployment. The case for a substantial new stimulus has rarely been stronger. But we are not likely to get it.”
Today’s Econ Haiku:
The Dow fell a bit
But not because we lack jobs
The Dow’s a pink slip