More Sobering News Coming About Record-Breaking Longterm Unemployment.
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| FDR Memorial, Wash., D.C. |
“There has been an unprecedented rise in the number of persons with very long durations of unemployment during the recent labor market downturn. Nearly 11 percent of unemployed persons had been looking for work for about 2 years or more in the fourth quarter of 2010. . .” Bureau of Labor Statistics, Changes to data collected on unemployment duration [See report here]
Welcome To The Unemployed Lifestyle. . .Two years ago in Welcome to the Part-Time Lifestyle [here] , I wrote about my belief – considered overly downbeat then – that unemployment would rise from its then 7.2% to well above 9%. In that article, though, my primary concern was underemployment, and I felt it too would rise from 13.6% that January to 18-21%. It’s presently hovering around 20%. Accurate measurement of unemployment or underemployment, though, depends upon which variables are measured, and why those variables are chosen at all. And, in government especially, those choices, seemingly only mathematical in nature, are highly political, particularly since data generated by the variables provides critical information to policy makers.
Recall the Reagan era brouhaha over USDA’s suggestion that ketchup and pickle relish be counted as vegetables when reimbursing school districts for their costs in the school lunch program. The purpose? By redefining “vegetable” the USDA could achieve savings. Schools could validly offer ketchup as a portion of the two required servings of veggies required for a reimbursable lunch. They then would reduce costs by limiting purchases of more costly veggies, which, by the way, school children often tossed into the trash before they got from the buffet to their tables. The idea was never implemented due to various “outcriers,” including the Democratic party (back when more ot them knew how to outcry).
The ketchup episode shows how changes in definitions or methods of measurement can go surprisingly political. These days, in the Lesser Depression, a recent change in data collection at Labor’s Bureau of Labor Statistics (BLS) promises to “go political” as well. Due to this change at BLS, people unemployed for between three and five years will be counted in a meaningful way. For the first time in the Lesser Depression we’ll learn that for more than a million long-term unemployed Americans their plight has dragged on for much longer than we believed Here’s BLS’s comment:
Prior to [January 2011], the CPS accepted unemployment durations of up to 2 years; any response of unemployment duration greater than this was entered as 2 years. Starting with data for January 2011, respondents are able to report unemployment durations of up to 5 years. This change affects estimates of average (mean) duration of unemployment . . . [Emphasis added]
Already, in the first month of the Current Population Survey data collection revision, we’ve learned that significantly more out of work Americans have been unemployed for more than two years. [Access BLS data tables here] Average time out of work rose for long-termers in all age groups, ethnic categories, genders, and industries. In addition, note that the BLS revision is being phased in over the first four months of 2011, so all households will not have reported under the new duration upper limit until April.
As a measure of the pain of unemployment in America, the BLS data to come may make it more difficult for the GOP/TP to turn its back on extending unemployment benefits. In particular, they may finally be pushed by public pressure (if not the Democratic party) to provide additional weeks of unemployment benefits for more than a million 99ers, those out of work for more than 99 weeks and thus ineligible for further benefits. Moreover, state and national budgets, both for the rest of this fiscal year and next, will be draconian enough to make Ebenezer Scrooge cry out in sympathy. The outlook for unemployment is grim, as state and national governments cut everything in sight, especially public sector jobs. Hopes for an overall economic recovery from which all Americans share through rising employment is a long shot.
If ever it was needed before, a vocal and combative Democratic party is critical to reviving the hopes and households of all Americans from what’s left of the middle class. The poor, of course, are a primary target of righteous conservatives.
What to do? How do we restart the economy in a way that leads to real job creation, here, in the U.S. (shipping jobs abroad doesn’t count – last year one Fortune 500 company hired some 250p,000 employees, 80% of them overseas . . .). And, it’s true, many jobs lost during this Lesser Depression are gone, perhaps forever – manufacturing occupations most noticeably, as automation increases productivity less humans are required; for heavy non-automated lifting, salaries in Mexico, India, etc. are less on average in dollars. Cheap labor and rising product quality in China and India is cleaning our clock (India is also impacting our service sector as well).
Given our infrastructure needs for maintenance and repair, reviving public works projects, combined with 21st century job training/transition programs would help boost employment in vital industries like construction, where unemployment is presently among the highest. This also would give life to allied service and manufacturing industries. At their best, public works projects would increase demand in the economy as more people got back to work, thus inducing supply deficits that then would induce more hiring , and, in time, revive the private sector labor market.
But, of course, I’m a demand side thinker . . . And we’re not in charge. The GOP/TP and (what’s left of) the Blue Dog Dems are supply siders, and their hammer is tax cuts applied to every budget nail. The GOP so dominates the fiscal and budget debate, and their supply side philosophy is so ingrained in the public mind, that hoping for more fiscal stimulus is pure fantasy. So, draconian budget cuts are the order of the day.
I believe that the fiscal austerity they hammer away at is ill-timed when employment is high, especially underemployment (at nearly 20%). Public sector salary cuts and firings at the federal and state level promise to further dampen demand, and with businesses across the board having learned to operate more productively with fewer employees, we’ll need a miracle to avoid getting hammered with more Americans added to the jobless rolls.
The “recovery” thus far is anemic, largely confined to the financial sector. There can be no true recovery – other than what’s been accomplished in the financial “industry,” largely with taxpayer funds – unless the mass of Americans now unemployed are able to get back to work, or into training programs to prepare them to transition to 21st century occupations. Full recovery, too, will not be like other recoveries. This one requires a mental retooling – a deeper examination of our national and commercial strengths and an alignment with the 21st century. Can we ever expect, for instance, to have a robust steel industry again? In any event, what we do not need now, through ideologically-driven fiscal austerity, is to get hammered with another leg down . . .
