Stunning Job Losses

The U.S. has to focus on job growth. Last Friday, some good news. The unemployment rate dropped below 9%, down to 8.9% (graph from Bureau of Labor Statistics):

Since the Great Recession ended in July 2009 (did you forget it’s over?), the unemployment rate has fallen. Of course, that’s mostly because so many have dropped out of the workforce. They’ve just given up on finding a job.

That’s why the following graph (from Jay Cost) is more meaningful than the BLS chart:

The graph shows how the number of employed as a share of the total population is back down to levels not seen since the early 1980’s, when under Reagan we were fighting through the deep recession needed to kill Carter-era inflation that peaked at 13.5% in 1980. After 1982, job numbers shot up under Reagan/Bush 41, hit an all-time high under Clinton and the GOP Congress in 2000, then rose again under Bush 43. Are those 1983-2007 high-employment days now permanently in America’s rear-view mirror?

Mort Zuckerman, writing in the Financial Times (U.K.), provides a pretty grim outlook on the current job situation:

More jobs were lost in the recession of 2007 to 2009 than in the previous four recessions combined, and this time it is an agonisingly slow business to replace them. Of the 8.8m jobs lost during the downturn, roughly 900,000 were recovered in 2010, and many of these were temporary census positions. . . But the people who have dropped out of the job market have not dropped out of life. They represent a major loss of spending power in the economy. Add in the 8.4m involuntary part-time employed workers whose hours have been cut back and you get a “household” unemployment rate of slightly under 17%. The result is that some 25m Americans are now either jobless or underemployed.

Long-term trends are depressing job growth. There is more outsourcing abroad, more automation, more conversion of full-time jobs to temps and contracts, and a stagnant median wage. Information technologies are advancing dramatically and increasingly being employed to eliminate jobs of all types, especially those that are fundamentally routine and repetitive in nature. . . we face the risk that high unemployment may become chronic.

And the Wall Street Journal’s Sudeep Reddy and Sara Murray not only point to the same high structural unemployment, but also have found that many unemployed have shifted from job searches to going after social security disability money:

If [the] labor force participation today were at the same level as [it was] before the recession, the jobless rate would have been 11.5% [not 8.9%] in February.

A growing number of workers with health problems are applying for Social Security Disability Insurance benefits. The disability rolls, where many beneficiaries remain for life, have surged more than 14% since the recession began, to nearly 10.2 million in December 2010. . . Lawrence Katz, a Harvard University economist, said the rising number of people on disability is a “permanent hit to the labor force participation rate [t]hat's both costly to them—they're going to be less happy—and costly to us to lose someone who could be a productive worker."

Jobs gone. Never to return. This is America’s most serious problem.