In a shocking rebuke to the capitalist triumphalism of the last year or so, the “slow but steady” jobs growth of the last six months veered sharply off course in August, with net new job creation dropping from an expected 220,000-230,000 to only 142,000, according to the Bureau of Labor Statistics. Even the tiny downward tick in the unemployment rate, from 6.2% to 6.1%, was caused not by the paltry increase in the number of employed workers (16,000), but by the now-familiar shrinking of the labor force, this time by 268,000.
The long term decline in the labor force participation rate has been a central concern of CPEG since before the onset of the Lesser Depression. Then, as now, it speaks directly to the exorbitant human cost of inadequate job creation that dooms millions of people to precarious lives in a world of little or no work in the formal economy. The CPEG paper “A Permanent Jobs Program for the U.S.” was drafted as a response to that long term decline and its consequences.
Labor force participation fell from a high of 67.1% in 2000 to 66.1% in 2007, a seemingly small change that actually corresponded to a shortage of roughly 4 million jobs even before the fiscal crash. The Lesser Depression, with its massive job destruction, drove the labor force participation rate down much further. Initially it fell slightly, to 65.7%, at the depth of the recession (when most of the recently unemployed were still looking for work and had not dropped out of the labor force in large numbers.) Since then, however, the rate has fallen steadily during the 5+ years of “recovery” to 62.8% this August, implying a job shortage of approximately 15 million associated just with those potential workers who are not in the labor force but who would be if the rates that prevailed in the year 2000 prevailed now. (A more complete discussion can be found in the CPEG analysis of the July Jobs Report.)
The inadequacy of job creation is widely acknowledged. Some cling to the idea that we continue to experience a slow recovery, others see simple lack of demand or a longer term failure to invest in the real economy perhaps because of “secular stagnation,” perhaps because of the long term exhaustion of good investment opportunities, perhaps because of rise of rentiership, and still others see a debt overhang that will cripple investment until it is eliminated by a large destruction of capital.
Despite the diversity of explanations for inadequate job creation, there is one straightforward remedy: a government program of direct job creation like that proposed by CPEG more than five years ago. Although it would almost certainly lead to secondary job creation, even if it did not it would employ many workers who will lack employment opportunities without it or some similar policy intervention that alters the current trajectory.
U.S. Representative John Conyers has introduced a bill that constitutes just such an intervention. CPEG strongly supports, HR 1000, The 21st Century Humphrey-Hawkins Full Employment and Training Act. It would create and fund jobs and would also help to train some of the workers who would fill them.