Behind the Unemployment Numbers: It’s Worse than You Can Imagine
September 9, 2012 - 4:52 am
Former Obama supporter Mort Zuckerman writing in the Wall Street Journal:
We are still almost five million payrolls shy of where we were at the end of 2007, when the recession began. Think about that when you hear the Obama administration’s talk of an economic recovery.
The key indicator of our employment health, in all the statistics, is what the government calls U-6. This is the number who have applied for work in the past six months and includes people who are involuntary part-time workers-government-speak for those individuals whose jobs have been cut back to two or three days a week.
They are working part-time only because they’ve been unable to find full-time work. This involuntary army of what’s called “underutilized labor” has been hovering for months at about 15% of the workforce. Include the eight million who have simply given up looking, and the real unemployment rate is closer to 19%.
In short, the president’s ill-designed stimulus program was a failure. For all our other national concerns, and the red herrings that typically swim in electoral waters, American voters refuse to be distracted from the No. 1 issue: the economy. And even many of those who have jobs are hurting, because annual wage increases have dropped to an average of 1.6%, the lowest in the past 30 years. Adjusting for inflation, wages are contracting.
The best single indicator of how confident workers are about their jobs is reflected in how they cling to them. The so-called quit rate has sagged to the lowest in years.
Older Americans can’t afford to quit. Ironically, since the recession began, employment in the age group of 55 and older is up 3.9 million, even as total employment is down by five million. These citizens hope to retire with dignity, but they feel the need to bolster savings as a salve for the stomach-churning decline in their net worth, 75% of which has come from the fall in the value of their home equity.
One more number representing the utter failure of Obama’s policies: 8 million Americans have quit looking for work.
We are in uncharted waters as far as jobs are concerned. It’s fair to say we are in a jobs depression given the massive numbers of unemployed, discouraged workers, and involuntary part-time workers.
We are experiencing, in effect, a modern-day depression. Consider two indicators: First, food stamps: More than 45 million Americans are in the program! An almost incredible record. It’s 15% of the population compared with the 7.9% participation from 1970-2000. Food-stamp enrollment has been rising at a rate of 400,000 per month over the past four years.
Second, Social Security disability-another record. More than 11 million Americans are collecting federal disability checks. Half of these beneficiaries have signed on since President Obama took office more than three years ago.
These dependent millions are the invisible counterparts of the soup kitchens and bread lines of the 1930s, invisible because they get their checks in the mail. But it doesn’t take away from the fact that millions of people who had good private-sector jobs now have to rely on welfare for life support.
“Invisible counterparts of the soup kitchens and bread lines,” indeed. Many economists argue that the only reason we don’t have economic deflation — where prices for goods and services fall off a cliff — is the actions of the Federal Reserve, which has pumped trillions of dollars into the economy. We may yet pay for those actions by the Fed with a bout of inflation later. But Chairman Bernanke has said that staving off a real economic depression is the Fed’s top priority.
Zuckerman’s remedies are Keynesian “investments” in infrastructure with deregulation thrown in the mix. But with deficits running above a trillion dollars, how can Congress in good conscience contemplate massive new spending schemes? Targeted spending is more to the point with healthy cuts in tax rates so that businesses are encouraged to begin hiring again.
The great engine of democracy — the American economy — has stalled out. Voting out President Obama in November will be the first step in revving it up again.