Working In These Times
Some Good—But Mostly Bad—Job News
There’s good and bad news in today’s Bureau of Labor Statistics report. The bad news: 216,000 Americans lost jobs in August and the unemployment rate rose to 9.7 percent, its highest level in 26 years.
The good news is short: The rate of job loss is slowing. Without the Recovery Act, another 200,000-250,000 more jobs would likely have been lost last month–and every month since the economic stimulus started working in April, according to Economic Policy Institute economist Heidi Shierholz.
Without the stimulus, the unemployment rate would have been about 10.2 percent. But beyond the obvious–more unemployment is bad—there’s other troubling news.
First, long-term unemployment has increased much faster than in other recessions since World War II, as the overall rate and numbers of jobs lost have also hit record highs. Now 5 million workers out of 14.9 million unemployed have been out of work for six months or more.
And if you add up the unemployed, those involuntarily working part-time, and those who've given up looking for work, one-sixth of all workers–26.4 million–are unemployed.
The problem is that even as economic growth recovers, few new jobs are being created and opening up for the unemployed or new people entering the job market. Partly, as a good New York Times article reported yesterday, many older workers are “are unable, or afraid, to retire,” in contrast to workers in Western Europe with much more generous public pension plans.
But economic recovery and new job creation are also being held back by the downward pressure on wages of those lucky enough to still have jobs–including slow wage growth, outright wage cuts, fewer hours of work, cutback in employer pension contributions, and unpaid furloughs.
As EPI reports, this squeeze comes on the heels of income stagnation or decline during the Bush business cycle. As unemployment climbs, the weak job market will “continue to put downward pressure on wages across all income groups for several years to come.”
As workers try to save more to work down debt, and as even modest inflation erodes any of the tiny gains–cutting real wages, wage slowdowns or cuts will impede recovery even more.
Wages, not adjusted for inflation, grew at a 1.3 percent annual rate for the past six months, EPI reports, only 40 percent of the rate from 2007 to the middle of 2008, with the biggest declines for women, college graduates, and professional workers.
Not surprisingly, Gallup reports Americans are worried–as much as twice the level in 2003–about job, benefit and hours cutbacks.
What to do? EPI president Larry Mishel says extending unemployment benefits is an obvious first step, followed by more stimulus, such as fiscal relief for states, expanded safety nets, tax credits for new jobs, and public service jobs.
But even recovering to where we were before the crisis won’t be good enough.