A shuttered DMV office in California (David McNew/Getty Images -- from The Bay Citizen)
Is the American jobs crisis really over? Or is the country about to enter a new phase of rampant underemployment? These are the questions being raised following Friday’s release of the latest government jobs report.
Politicians from both sides dialed up their standard reactions to news on the jobs front — Democrats and the White House say the economy is great, Republicans tout gloom and doom, and say they won’t applaud until every last person that wants a job has one. The knee-jerk response from many in the media was to unflinchingly cheer the news that 120,000 net jobs were added in November and the national unemployment rate dipped to a 2 1/2-year-low of 8.6 percent.
Representative of the conventional wisdom is a story from The New York Times that insists the jobs report is proof that the economy is “getting better.”
Somehow the American economy appears to be getting better, even as the rest of the world is looking worse.
In the midst of the European debt crisis, lingering instability in the oil-rich Middle East and concerns about a Chinese economic slowdown, the American unemployment rate unexpectedly dropped last month to 8.6 percent, its lowest level in two and a half years.
The Labor Department also said that the nation’s employers added 120,000 jobs in November and that job growth for the previous two months was better than initially reported. That looks like good news for President Obama as he heads into the 2012 presidential election — especially since just a few months ago the picture looked bleak.
“If you go back to August, all sorts of people were telling us that the economy was headed straight into recession,” said Paul Ashworth, senior United States economist at Capital Economics. “Since that point, we’ve become more and more worried about the euro zone and other areas of the global economy, but somehow, at least for the moment, the U.S. economy seems to be shrugging all that off.”
The November jobs data is seen as generally good news for President Obama, too, with the media implying that the “economic hope” displayed in the unexpected drop in unemployment could be enough to raise his reelection prospects.
Not surprisingly, the real story is much more nuanced than what the press and those in power would have the public believe. While new jobs and a drop in the unemployment rate are all good things in the abstract, they are less than encouraging when taken together with more details from tat ostensibly rosy November jobs report.
Most distressingly, much of the drop in the national unemployment rate is constituted by 315,000 jobless Americans dropping out of the statistical workforce last month. That is, over 300,000 people have been without a job for so long that they have simply stopped looking. They are now part of the rapidly increasing number of long-term jobless in America, a group that faces the loss of their unemployment benefits thanks to Congress.
Despite a stark drop in the national unemployment rate reported Friday, economists warned it will take decades for the labor market to return to pre-recession employment levels if the economy’s achingly slow growth continues.
The U.S. economy added 120,000 jobs in November — falling short of economists’ expectations — while the unemployment rate dipped from 9.0 to 8.6 percent, the Bureau of Labor Statistics reported Friday morning. But roughly half of the decline in the unemployment rate came from the 315,000 Americans who dropped out of the labor market last month, in part a reflection of the slow pace of the recovery, economists said.
“When unemployment is this high for this long, it’s very likely that most of the people dropping out are doing so because they can’t find work,” said Heidi Shierholz, an economist at the Economic Policy Institute, who has studied the shrinking labor force during the years since the recession began. “There is some movement here, that’s true. But it’s just so slow.”
The unnerving number of jobless giving up the search for new work is not he only warning light flashing in the midst of this economic “good news.” A myriad of other indicators are also pointing to a virtually stagnant economic recovery, or even that the country is on the cusp of another recession.
In the Christian Science Monitor, former labor secretary Robert Reich points out a few key signals that the dip in unemployment and boost in hiring may not be sustainable and is likely not the end to the nationwide jobs crisis. A combination of declining wages and huge masses dropping out of the workforce could lead to a new problem; underemployment. And most of the jobs added last month are low-paying holiday jobs that either pay far less than jobs lost in the recession or are just temporary, and will be long gone by next year.
First, this rate of job growth is barely enough to keep up with the growth in the working-age population. So we’re not making progress on the backlog of more than 13 million jobless Americans, and another 11 million working part-time who’d rather have full-time jobs.
Second, retail jobs constituted a third of new private-sector employment in November. Retail jobs tend to be unstable, temporary, and low-paying. Although the BLS is supposed to adjust for seasonal employment (i.e. Christmas), it doesn’t take account of the fact that more and more Americans have been pushing up their Christmas buying to before Thanksgiving. So some of these jobs may not be around very long.
Third, the jobless rate fell partly because around 315,000 people who had been looking for jobs dropped out of the job market in November. Remember: If you’re not actively looking, you’re not counted as unemployed on the household survey.
Fourth, hourly earnings are down, as are real wages. So to some extent Americans have been substituting lower wages for lost jobs – either by accepting lower wages at their current place of employment, or getting the boot and settling for lower wages elsewhere. A job is better than no job, of course, but a job with a lower wage isn’t nearly as good as a job with at the same or better wage.
Almost none of the job creation currently driving the unemployment rate lower consists of what could be called “good” jobs, or jobs that pay a living wage and are sustainable for growing the middle-class. In fact, the current trend in hiring has had the opposite effect, pushing wages lower and eroding at the incomes and wealth of ordinary Americans.
The November report found that wage growth declined by 0.1 percent last month, proving that supposedly “lazy” jobseekers are willing to sacrifice income for any level of employment.
The jobless rate dropped from 9% to 8.6% last month, the Labor Department said this morning, with 120,000 new jobs added. To the unemployed, any job may be better than no job, but the new hires might be poorly-paid, and may only be temporary, experts say. In fact, wage growth fell in November — the average hourly earnings in November slipped 0.1%, following an upwardly revised 0.3% gain in October, the new numbers show. “If a vice-president takes a job as a dishwasher, it’s a job, but it’s not the same,” says Mason Gaffney, professor of economics at the University of California.. “It might be that working people are willing to accept jobs at lower pay or else there is a real demand for labor. We still don’t know.”
Many of the new jobs are likely seasonal hires for the holidays, experts say. Mark Grant, managing director at Southwest Securities in Dallas, Tx., says there’s not enough detail available to assess for sure whether these jobs will last. “Certainly, a portion of the 120,000 without any question are related to Christmas,” he says. “That’s why I don’t take the number at face value. One would also have to assume that some of them are lower-paid jobs in retail. Every year at this time, the government job numbers get somewhat fuzzy about seasonal hiring.”
Clouding any hope of a sustained jobs recovery is the lingering impacts of austerity. While private-sector industries are consistently adding jobs, federal, state and local governments continue to slash tens of thousands of jobs each month, victims to aggressive budget cuts that force mass layoffs and the reduction in government workforces through attrition.
Government jobs fell by 20,000 in November, and government payrolls have shrunk by nearly 700,000 since April 2009. As many people are employed in government now as they were over 5 years ago, even as the population increases and jobless rates skyrocketed since then.
The epidemic of job cuts among government employees, especially in states and localities, continues to threaten broader economic stability. If private-sector gains are repeatedly offset by more layoffs among government workers, the economy will forever be facing an uphill climb on the path to recovery.
Conservative Republicans have long clamored for government downsizing. They’re starting to get it — by default.
Crippled by plunging tax revenues, state and local governments have shed over a half million jobs since the recession began in December 2007. And, after adding jobs early in the downturn, the federal government is now cutting them as well.
States cut 49,000 jobs over the past year and localities 210,000, according to an analysis of Labor Department statistics. There are 30,000 fewer federal workers now than a year ago — including 5,300 Postal Service jobs canceled last month.
By contrast, private-sector jobs have increased by 1.6 million over the past 12 months. But the state, local and federal job losses have become a drag on efforts to nudge the nation’s unemployment rate down from its painfully high 9.1 percent.
The economy has been expanding, at least modestly, since the middle of 2009. And state and local governments are usually engines of job growth during recoveries. But not now, said economist Heidi Shierholz of the labor-aligned Economic Policy Institute.
“The public sector didn’t start to lose jobs right away. But then it did as the budget crunch really hit. State governments are not allowed to run deficits. So the private sector is expanding while the public sector is shedding jobs — to the tune of 35,000 jobs a month,” she said.
Just another sign that there are two economies at work: one for the rich and one for the rest of us. For rich folks, this economy is GREAT! Look at the NYSE numbers: during the boom time of the 1990s, the DOW usually sat at around 8000-9000. Now it stays between 10,000-12,000. Auto sales are up; Black Friday sales were a record. Rich folks are making more money now than ever.
Not sure why they’re still called “job creators” though; one of the ways they’re making more money is by not hiring people.
I thought a drop in unemployment was a good thing, doesn’t that mean that there was an increase in jobs? I know some anti-Obama haters will downplay this as insignificant, but I am positive that if unemployment increased .4%, they would be howling for Obama’s head. Say I’m wrong.
This news is supported by what I am seeing at my own place of employment. In the past 6 months, we have added almost 15 employees to a workforce of 230…almost a 7% increase, AND we have over 20 listings waiting to be filled.
If the ‘unemployment rate’ falls not because people are getting jobs, but simply because the official bean counting method decides they’re no longer worth counting, that’s not really a ‘good thing’. It means they’ve been abandoned, to live or die on the charity of friends and relatives.
Unemployment was around 4% when Bush got into office and almost 8% when he left. This is the Bush depression continued lets not mistake or mix that up.