Jobs Report and Fixing the Crumbling Market
Zachary Karabell says it’ll take years of transition and tons of money to cushion the worst effects of unemployment.
Another month, another sign that the job market remains unchangingly, distressingly stuck. The official unemployment rate according to just-released figures from the Bureau of Labor Statistics is at 9.1%, but that fails to capture the weakness of the overall employment picture. The headline number has been essentially unchanged since April – and indeed there has been almost no net job creation for the past year. Underneath that number, however, there is a more confusing – and troubling – picture.
Over the past year, it’s become ever more clear (or at least it should have become ever more clear) that the United States is ossifying into several different economies. One is the Apple economy of high-tech devices, ample discretionary income, and brave new-world giddiness of social media, interconnectedness and burgeoning global commerce. That economy is best captured by what was, until recently, a different jobs report, the “Steve Jobs” of Apple’s quarterly earnings (which will presumably become the Cook report from now on).
The government employment report, however, aka the official jobs report, exposes other realities. That report shows not just 14 million unemployed, but a permanent underclass of underemployed, underpaid, and marginally attached workers. Four million of those 14 have been out of work for more than six months. An additional 2.6 million are “marginally attached” to the labor force, meaning they have looked for work, but not as assiduously as the statisticians have deemed necessary and hence aren’t statistically part of the work force. If part-time and discouraged workers are added in, the “real” unemployment rate skyrockets to more than 16 percent.
These figures are “official” but that doesn’t make them gospel. They are the product of not just phone surveys and payroll information, but also of myriad revisions and assumptions about the creation and destruction of new business, seasonal factors, and past trends as they apply to present realities. Hence the reason why these numbers are constantly revised in future reports. On the plus side, the surveys do a poor job capturing the cash and underground economies that undoubtedly provide many with sustenance. On the negative side, they fail to account for the fact that many of the 131 million people who are by official definition “employed” have jobs that barely keep them at the poverty line.
These reports also create a blended average that obscures vast differences. Unemployment is a massive problem for younger people and younger men, and especially young black men. It is not much of a problem for college educated white women. These truths may be uncomfortable in a society that shies away from honest discussions of race and class, but they come through loud and clear in these reports.
Unfortunately, the jobs report has become a monthly referendum on not just the health of the American economy but on the political class in Washington. The 2012 election is likely to revolve not around debt or health-care but around employment. In the process, the malaise of the “economy” will be magnified, but the strengths will not. That in turn creates its own negative feedback loop of declining confidence and anxiety, which is that much more of a headwind against moving forward.
And the fiction that we are all in this together is a further impediment. We have a serious employment problem in the United States that is not a product of economic cycles, but changing economies and global commercial system knit together by technology that privileges capital and only rewards labor if you are in the emerging world. There is an underclass (a word not much used in America since the 1960s) of tens of millions of people in the United States who are on the short end of that stick. Unless that is specifically acknowledged and addressed, “jobs creation” is likely to be a will-o’-the-wisp.
At the same time, ignoring the fact that a majority of the country is actually doing fine or thriving doesn’t help us either. Yes, we live in a body politic, and yes, we cannot claim to be healthy if parts are in dire straits. But a body politic isn’t quite an actual body. The ways in which we are economically affluent and strong – and which are indeed reflected in these jobs reports – has to be part of the equation or else we truly will be unable to address the parts that aren’t.
On that score, the affluence of much of the country is a resource. Pleading collective penury – as the Tea Party does – or claiming that the government is broke when interest rates are as low as they’ve ever been and the world is pouring dollars into U.S. Treasuries is to live in an alternate reality. Companies that are growing 20 percent a year in revenues and sitting on cash have the resources to invest, and government has the ability to spend wisely and constructively to assist that process. But you wouldn’t know any of that given how the jobs report is used and analyzed.
Next week, President Obama will deliver a much-anticipated speech on his plans for jobs creation. The speech will almost certainly be lambasted by the right as too much government and by the left as not enough. But even here, government is a factor, but not the alpha and omega factor that politicians and the political season make us believe. There is no silver-bullet solution to the chronic underemployment of early 21st century America. It is a symptom of a morphing economy and a much more competitive global system. It will require years of transition and money spent somewhere by someone to cushion the worst effects of that for the millions who are caught in that inflection, who cannot magically be retrained and who still need food, clothing and shelter.
It will require one other element most missing just now: a full recognition of the strengths of a $15 trillion economy, of the vast resources that the U.S. possesses, and of the fact that we are not even close to using that wisely. Shouting about government as the problem and debt as the cause – that is more than distracting. It is leading us down a rabbit hole; we are already a ways down, but it can go much deeper.