Politics

01.06.12

Unemployment Rate Drops, But Numbers Don’t Tell the Whole Story

The fall in unemployment has caused Americans to breathe a sigh of relief—and helps Team Obama move closer to reelection. But don’t be fooled by the easy-to-read numbers, they hide the real problems, writes Zachary Karabell.

Today’s monthly jobs report from the federal government is undoubtedly good news for the White House, the Obama administration and for the Democrats in general this election year. It may also good news for American financial markets, which have for now reversed last year’s late trend and are clinging to whatever good news they can. But whether the report represents good news for tens of millions struggling workers is more open to question.

The headline is what matters in politics and in media, and it was one of the stronger ones in the past three years. Two hundred thousand more jobs added, the unemployment rate down to 8.5 percent—and that with government shedding almost 300,000 jobs over the year. Joblessness remains persistent and chronically high for African-Americans (15.8 percent) and Hispanics (11 percent), though increasing for the latter and stagnant for the former. In all other categories, the situation is improving.

Or so it seems statistically. In fact, what has crystallized over the past year is a bifurcated job picture in the United States that defies the political and media desire for one simple, neat picture. First, each monthly jobs snapshot is a statistical picture of a large country with 300 million people and at least 140 million workers. No one individually counts jobs, and definitions are sometimes questionable. As many have noted, being so discouraged that you have ceased looking for a job doesn’t make you any less unemployed, but it statistically makes you invisible. The Bureau of Labor Statistics just eliminates you as a worker. There are defensible reasons—for example, how are they to know who is discouraged versus living contently on their parents’ largesse or years of savings? Still, it points to the larger fact that these numbers are constructs and often loose ones.

More vitally, there is no one employment reality in the United States. It is neither true to say that Americans are struggling with joblessness or that they are not. It is only true to say that there are multiple realities depending on who you are, what your level of education is, where you live, what your skills are, and yes, what your own personal aptitude and abilities are relative to what jobs exist or can be created.

It is an American strength to attempt to weave a common story for such a disparate nation, but it does us no good to pretend that “employment” is a simple equation.

There is and has been a severe crisis of unemployment and underemployment of men, especially minority men and men who have only a high-school degree or less and whose skills tend toward the physical. There is no crisis of employment for those with college degrees or for woman in service industries such as health care. There is a crisis in states such as Michigan and Ohio, which are going through yet another wrenching rust-belt phase of declining need for manufacturing and heavy unionization that maintains wages at levels that are challenging to maintain relative to technology and a less expensive global labor force (that isn’t pro- or anti-union; it is a reality). There is also a crisis in housing bubble states such as Arizona, Nevada, and parts of Florida and California; but no real crisis in energy, natural gas and agriculture states such as North Dakota, Texas, and Nebraska.

It is an American strength to attempt to weave a common story for such a disparate nation, but it does us no good to pretend that “employment” is a simple equation. The United States now has a long-term structural issue of higher unemployment and underemployment than anyone alive can recall, with at least 10 million people continually without jobs and significantly more earning wages insufficient to keep them from hand-to-mouth living. With a maturing economic system saddled with inefficiency and political sclerosis, there is little that government is capable of doing to improve the situation, which makes the employment conundrum that much more intractable.

High chronic unemployment, however, can coexist with a stable and even vibrant economic system. Put another way, many can struggle in a country of 300 million while many, many also thrive. Both realities—and many shades of gray in—can exist simultaneously. And in spite of some brief halcyon moments (the 1950s, the 1990s), there has never been a sustained period in American history where that has not been true. It may be considered a strength to strive for ideals (full employment, 40 acres and a mule …); it is no help to hold up our real world and descend into despair because it falls short of those ideals.

But what can’t so easily continue is the massive gap between the very few thriving immensely—the 1 percent—and the rest in a system that has ceased growing significantly. That gap in a stagnant economy is more harmful than a similar or even greater gap in an expanding economy—or put another way, it’s less of a problem if there are Brazilian and Chinese gazillionaires because the overall pie in those societies is expanding so robustly.

Fortunately, the U.S. economy is much more stable than most currently believe. Unfortunately, it falls short of meeting needs and expectations, and in a competitive world where the poor are getting richer, maintaining living standards in America which itself be a challenge, let alone improving them. The focus on unemployment speaks to that larger concern, but is also a way of not dealing with those larger issues. And in this election year, the attraction of that simple headline number, the beauty of “the unemployment rate” as a thumbs up or thumbs down, is powerful. We’d do ourselves a service by addressing the larger issues and treating the unemployment numbers as just one aspect of them.