The Bureau of Labor Statistics recently released the jobs/unemployment report for the month of December, 2011. The report shows an increase in the number of non-farm jobs of an additional 200,000 in December. The number of unemployed persons is 13.1 million, which gives an overall unemployment rate of 8.5 percent. This is a small improvement from the (revised) November unemployment rate, which was 8.7 percent. And that in turn was an improvement over the previous month’s rate of 8.9 percent. So, things are slowly getting better. But, we need to ask at least three questions to make sense of these and related numbers:
First – at this rate, how long will it take to get back to the last relatively low unemployment rate of 2007? The unemployment rate in the fourth quarter of 2007 was 4.8%. As mentioned, the December unemployment rate was 8.5%, so we would need to see a reduction of 3.7 percentage points to reach the 2007 rate. Last January, 2010 – a year ago – the unemployment rate was 9.1%. It took a year – 12 months, to bring it down to last month’s rate of 8.5%. At that rate, of a .6 of a percent reduction per year, it would take over 6 years to reach the 2007 unemployment rate. This past month we saw a two tenths of one percentage-point reduction in the unemployment rate. IF – and this is a very big IF – we maintained that reduction into the future, it would take almost two years for us to reach the 2007 unemployment rate. So, the future hardly looks bright at the current rates of improvement – either two years or 6+ years to get back, unemployment-rate wise, to where we were in 2007. And that 2007 level of unemployment – 4.8% – is hardly acceptable to anyone who has been unemployed, or who has unemployed friends, relatives, or neighbors! In short, we’ve got a long way to go, under these quite optimistic assumptions.
These are optimistic assumptions for at least two reasons. First, we lost 280,000 government jobs over the past year, as states and localities laid off workers to balance their budgets. This is likely to continue this year, as the Republicans in Congress push deficit reduction at the expense of the poor and unemployed. And second, the housing crisis and home foreclosures continue, as people without jobs can’t make their mortgage payments. The result is that virtually no new jobs in this sector have been created over the past three months, which is likely to continue. So, with reduced demand for consumer goods such as homes and other goods and services, there is little reason for most businesses to hire additional workers. This is a classic example of a vicious cycle, and is likely to continue absent strong government intervention.
In short, the American economy is slowly recovering from the debacle created by deregulation of the financial sector. The American Dream for many has turned into the American Nightmare! If that’s happened to you and/or someone you care about, I only hope it helps to know that there are many others in the same boat.
Second question: – Who is disproportionately paying the price, in terms of not just lost income but spoiled careers, lives, and futures, of this extended recession/depression?
Unemployment rates for African-Americans (15.8%), for Hispanics (11.0), and for16-19 year-olds – teen-agers (23.1%) are all well above the national average and virtually unchanged from the previous month. These high levels of unemployment warrant much more media and policy attention than they’ve received. In addition to the unemployment numbers, we need to look at those either marginally or not in the labor force, since if people are unemployed long enough, many get so discouraged they give up and drop out. According to the BLS report, about 2.5 million persons were marginally attached to the labor force in December. These individuals were not in the labor force, wanted and were available for work, and had looked for a job sometime in the prior 12 months. They were not counted as unemployed because they had not searched for work in the 4 weeks preceding the household survey. In addition, there were 945,000 discouraged workers in December. Discouraged workers are persons not currently looking for work because they believe no jobs are available for them.” The remaining 1.5 million persons marginally attached to the labor force didn’t look for work in the past 4 weeks due to school or family reasons. And finally, we need to include those among the most heavily impacted: the long-term unemployed. The 5.6 million workers unemployed for more than 26 weeks remains at almost half – a shocking 42.5% – of the total number of unemployed. And with cuts in unemployment compensation in many Republican-led states, the health and well-being of many of these workers is becoming dire indeed!
To sum up, minorities, the young, the long-term unemployed, and discouraged workers are the major groups who are victims of this current recession. The numbers in the BLS report clearly document the continuing failure of the American economy and current political-economic policies to provide the jobs which we need and deserve to live.
Third question: “What do we need to do to turn this situation around.? I’d suggest three things:
First, we need Congress and the President to pass and implement a serious federal jobs program. One version of such is presented on the CPEG website at http://www.cpegonline.org/reports/jobs.pdf. A legislative/policy version of a federal jobs program is proposed in HR870, the 21st Century Full Employment and Training Act. Everyone concerned about the future of our economy and well-being should call and/or write their elected officials to make passage of HR870 a top priority.
Second, we need Congress and the president to force the banks, the major cause of this economic disaster, to stop foreclosing on people’s homes where layoffs have caused inability to make mortgage payments. This will help not only the families involved, but also their communities and by extension the larger economy.
And finally, we need the Congress and president to extend unemployment compensation beyond the current two months, as well as address the underlying causes of our current economic mess. For we can only improve our economic future by controlling the factors that affect it, and if we fail to do so, we can hardly expect this to be a “Happy New Year”!