The U.S. job market is showing signs of a sustained recovery. But the country’s prolonged struggle with unemployment will leave scars that are likely to remain for years, if not generations.
The latest labor-market snapshot, out Friday, gave cause for continued, if tepid, optimism. U.S. employers added 200,000 jobs in December, and the unemployment rate ticked down to 8.5%, its lowest level since early 2009.
But economists gathered here [in Chicago] for the American Economic Association’s annual convention took a longer and generally dimmer view. Even if recent progress continues, the recession already has had a lasting effect on a generation of workers. Worse, the crisis has laid bare problems in the U.S. labor market that won’t quickly recover when the economy eventually rebounds. And the longer that unemployment remains high, the greater the risk that it will create structural problems that will endure.
The 8.5% number is profoundly misleading because it is a distorted result of people simply giving up on ever finding a job again. Refusing to include people out of work so long they’ve given up … hope … is like changing from Farenheit to Celsius so you can tell people it’s not really so hot outside. Using (instead) 2008 labor force participation as the baseline (because it had remained nearly constant for many years) the current unemployment rate is just under 11%. And that’s without including people presently working under 15 hours who actually [i]want[/i] full-time work and would take it if they could find it.
There were far more jobs lost in the 200-’02 recession than in this one, but unemployment rates never went anywhere near as high as they are now because small and medium businesses continued to be started and expanded. Current unemployment problems are the direct result of an unwillingness of people to start or expand businesses, a phenomenon directly traceable to the most anti-entrepreneurial administration in American history.
Not mention, an Administration that has now pushed total government participation (Federal, State, Local) to something just under 50% of GNP. Since Government produces nothing and does not create wealth, nearly half of our economy is dead weight.
I contend the meager growth we are seeing is a product of companies figuring out how to survive and grow a little DESPITE the deadweight of Government. As long as Government sucks up half the economy of the country, we are doomed to experience sub-par results.
Time was when the media said there would have to be sustained production of at least 400,000 jobs per month to have any appreciable impact on unemployment. So touting the present uptick is largely political packaging of a dismal situation. The real problem is millions have dropped out of the labor force entirely, and if that were taken into account, the actual unemployment rate would be much, much higher. The lowering of “unemployment” is just people falling off into the abyss of permanent joblessness, not any real increase in jobs. For example, my cousin has been out of a job for two years now (he was a teller in a financial institution that went under). He’s given up looking for work, lost his unemployment benefits, and he just lives with his Mom and they live off her government retiree’s pension.