More Job Losses in December. Will Congress Act?

David Moberg

Continued job loss in December could give a boost to Senate passage of a new jobs bill that is much needed economically – and, for the Democrats, politically needed as well.

The loss of another 85,000 jobs in December – bringing the total lost since the recession started in December 2007 to 8.2 million – indicates both recovery (with job losses at the close of 2009 one-tenth the rate earlier that year) and weakness. Because about 125,000 new people typically enter the workforce each month, the Economic Policy Institute calculates the U.S. needs 10.6 million jobs to return to pre-recession unemployment rates. 

And even that achievement would be far from full employment, since the share of population in the workforce had shrunk in the Bush years, a period of no net job growth. (1.5 million private sector jobs were lost during the entire decade, according to Center for Economic and Policy Research Co-Director Dean Baker.)

Indeed, in December the unemployment rate stayed at 10 percent (and rose slightly to 17.3 percent when the underemployed are added) only because another 661,000 people dropped out of the labor force. Baker calculates that with 58.2 percent of the population working, the country is now experiencing the lowest ratio of employment to population in more than 25 years.

With such low levels of employment, consumer demand will be weak, making a strong recovery less likely. And EPI president Larry Mishel predicts that businesses, which in recent decades have slashed workforces and boosted productivity more during recessions than traditionally, will once again re-hire workers slowly even if production picks up.

In December the House very narrowly passed a $174 billion job creation bill, far short of the $400 billion EPI recommended, which included funds for infrastructure, preservation of state and local government jobs, extension of unemployment insurance, and a small number of new public service employees. The Senate bill under preparation would also include weatherization support (“cash for caulkers”) and a tax credit for businesses hiring new workers. It could come up for a vote early next month.

In response to the jobs report, President Obama announced $2.3 billion in tax credits for alternative, clean energy manufacturing firms from his first stimulus package, and there are reports he will travel around the country to talk more about job creation in coming weeks. 

Despite misguided conservative Democrat misgivings about the deficit, promoting job creation – even at the inadequate level of pending legislation – is crucial, and Obama may still be able to mobilize some public support for it.

David Moberg, a senior editor of In These Times, has been on the staff of the magazine since it began publishing in 1976. Before joining In These Times, he completed his work for a Ph.D. in anthropology at the University of Chicago and worked for Newsweek. He has received fellowships from the John D. and Catherine T. MacArthur Foundation and the Nation Institute for research on the new global economy.

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