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Jobs Numbers: Bad to the Bone

Last Friday’s jobs report from the Labor Department was worse than expected.

The headlines focused on the 263,000 jobs lost in September and that the official unemployment rate increased, yet again, to 9.8%.

But no matter where you drill down in the report, it’s bad news. That’s no surprise to those on the economic front lines, Americans working at precarious jobs, working part-time jobs, often two or more, or not working at all. Since the start of Bush’s second recession in December, 2007, the number of people officially unemployed has more than doubled to 15.1 million. More Americans are unemployed right now than at the depth of the Great Depression in 1933.

There’s nothing in the latest jobs report to indicate that a real recovery is in the offing.

The number of unemployed persons increased by 214,000 in September.
The number of persons in the labor force declined by 571,000 in September.
The number of employed persons declined by 785,000 in September, which is exactly the sum of the newly unemployed and those no longer counted in the labor force.

And despite the relatively stabilizing effects on public sector jobs of the Obama administration’s stimulus program, government employment still declined by 53,000 in September, its biggest drop since November of 2000. Former Labor Secretary Robert Reich reports that 15,600 teachers didn’t return to work in September. Without the fiscal aid to states and municipalities flowing from the stimulus program, we can be sure that public sector job losses would be much, much worse.

Right now the unemployed, underemployed and too-discouraged to look for work total 26.5 million Americans. That’s 17.2% of America’s workers.

And the number of long-term unemployed continues to rise. The New York Times reports:

For those out of work, the job market looks harsher now than at any point in the recession. The number of people who have been jobless for more than six months increased in September by 450,000, reaching 5.4 million.

Of all unemployed, 36% are now long-term unemployed, or unemployed for more than six months, the highest percent on record.

“We have a truly massive crisis of long-term unemployment,” said Christine L. Owens, executive director of the National Employment Law Project in a statement, adding that nearly 400,000 jobless people had exhausted their unemployment benefits by the end of September. “Today’s employment report is a marching order for Congress to pass unemployment benefit extensions to all states, quickly.”

And now we learn, at the conclusion of the latest jobs report that the Bureau of Labor Statistics says its revised figures show another 824,000 jobs were lost in the 12 months ending March, 2009 than previously reported.

The Times notes:

“The endurance of hard times seems likely to increase pressure on the Obama administration and Congress to consider another dose of spending aimed at stimulating the economy, even as the economy grapples with deficits projected by some economists to exceed $10 trillion over the next decade.”

Congress is already moving on plans to extend unemployment benefits.

The House on Friday approved legislation that would provide 13 more weeks of benefits to states with unemployment rates of 8.5 percent or higher. Democratic leaders in the Senate are pushing a measure that would also provide aid to states that do not meet the threshold.

Senator Harry Reid of Nevada, the majority leader, is promoting legislation that would provide four more weeks of unemployment coverage to all states, while states over the 8.5 percent threshold would get 12 more weeks.

On the morning before the latest jobs report was issued, economist Paul Krugman wrote in a column titled “Mission Not Accomplished”:

Stocks are up. Ben Bernanke says that the recession is over. And I sense a growing willingness among movers and shakers to declare “Mission Accomplished” when it comes to fighting the slump. It’s time, I keep hearing, to shift our focus from economic stimulus to the budget deficit.

No, it isn’t. And the complacency now setting in over the state of the economy is both foolish and dangerous.

Yes, the Federal Reserve and the Obama administration have pulled us “back from the brink” — the title of a new paper by Christina Romer, who leads the Council of Economic Advisers. She argues convincingly that expansionary policy saved us from a possible replay of the Great Depression.

But while not having another depression is a good thing, all indications are that unless the government does much more than is currently planned to help the economy recover, the job market — a market in which there are currently six times as many people seeking work as there are jobs on offer — will remain terrible for years to come.

After citing reports from the Economic Policy Institute, the Congressional Budget Office and the International Monetary Fund, professor Krugman writes:

So we should be doing much more than we are to promote economic recovery, not just because it would reduce our current pain, but also because it would improve our long-run prospects.

But can we afford to do more — to provide more aid to beleaguered state governments and the unemployed, to spend more on infrastructure, to provide tax credits to employers who create jobs? Yes, we can.

At the same time Bob Reich writes, and I doubt it could be stated more clearly:

Let me say this as clearly and forcefully as I can: The federal government should be spending even more than it already is on roads and bridges and schools and parks and everything else we need. It should make up for cutbacks at the state level, and then some. This is the only way to put Americans back to work. We did it during the Depression. It was called the WPA.

Yes, I know. Our government is already deep in debt. But let me tell you something: When one out of six Americans is unemployed or underemployed, this is no time to worry about the debt.

Professor Reich goes on to explain how the 1950s economic growth, predicated as it was on the deficits created to counter the Depression and to fight World War II, was in turn what allowed us to pay down those deficits.

People who now obsess about government debt have it backwards. The problem isn’t the debt. The problem is just the opposite. It’s that at a time like this, when consumers and businesses and exports can’t do it, government has to spend more to get Americans back to work and recharge the economy. Then – after people are working and the economy is growing – we can pay down that debt.

But if government doesn’t spend more right now and get Americans back to work, we could be out of work for years. And the debt will be with us even longer. And politics could get much uglier.

Tags: Jobs, recovery, unemployment