The June unemployment situation, as depicted by the Bureau of Labor Statistics in its July 5 report, looks like May redux: Unemployment rate stuck at 7.6%; number of persons unemployed stuck at 11.8 million; number of persons unemployed for at least 27 weeks stuck at about 4.3 million or 36.7% of all unemployed persons. Even the increase in the number of persons employed (195,000 vs. 175,000 in May) was far too small to force a change in the long term trajectory of job creation, which has averaged 182,000 per month over the last year.
This Lesser Depression has, indeed, been devastating, especially for the less educated, for African Americans, and for Latinos. After 4 full years of economic “recovery” the number of unemployed persons is still 5 million greater than it would be if the unemployment rate had dropped by now to its eve-of-Lesser Depression low of 4.4% (May, 2007.) And it should be noted that 4.4% unemployment is higher than its historic lows and probably does not represent “full employment.”
Anything close to full recovery is looking less and less likely. Allowing for population growth, which should supply the labor force with about 115,000 new job seekers each month, June’s 195,000 increase in the number of job-holders nets out to about 80,000 more than what is necessary to accommodate the new entrants. At that rate it will take about 5 more years to bring the official unemployment rate down to 4.4%.
Further, the composition of the jobs-added category gives reason for concern. Manufacturing, which pays relatively well, actually lost jobs in June, whereas the largest gains were registered in the leisure and hospitality industries, in the health care and social assistance industries, and in temping. All of these latter are low wage work. Taken together, they account for about 56% of June’s job growth, consistent with the pattern of replacing good jobs with bad jobs that has characterized the recovery. Job growth at the very bottom of the wage scale will do little to build aggregate demand for goods and services to levels that would encourage employment-increasing investment by the private sector.
Dreadful as the Lesser Depression has been, the spread of the financial collapse to the real economy only accelerated trends that had already been undermining large segments of the working population for some years. Job-creation, especially the creation of jobs with decent remuneration packages and working conditions, had withered for years under the neoliberal assault and its obsession with “lean production” and offshoring. Profits in the real economy rose, but largely because labor costs fell.
In fact, there were fewer and fewer opportunities for profitable investment in decent jobs in the real economy. Investment went increasingly into finance where profits and lucrative employment rose dramatically, especially on the housing bubble (which did support construction jobs for a time) but less and less of it went into good, permanent jobs that were accessible to the working class.
Alarmed by these trends, about half a dozen years ago CPEG began to focus on the falling percentage of the working age population that is employed. Because of weak job creation in the private sector, we saw, from 2000 until the downturn of the economy in 2007 the percentage fell by 1.4%, from 64.4 to 63 percent. That 1.4 percent translated into almost 3.25 million workers pushed into unemployment even in supposedly “good” times. Since then, an additional 10.6 million workers have suffered the same fate; employment fell after the financial collapse and has increased during the recovery not even as rapidly as the working age population has grown.
CPEG’s research led us to conclude that it made no sense to expect the private sector to reverse course and create enough good jobs to employ the people whom it had been discarding. We saw, and continue to see, a pressing need for a large, sustained public jobs program. That need was apparent before the onset of the Lesser Depression. It is even more apparent now as the failed recovery drags on.