With the outbreak of spring-like weather across much of the country this week, there’s hope that a “spring effect” will take place across our economy. As if on cue with the milder temperatures, recent headlines in the mainstream business media trumpet possible green economic shoots that appear to be emerging. Bloomberg, The Wall Street Journal and CNBC point to the fact that small businesses are confident enough to begin borrowing again, home prices are on the rise increasing the wealth of those still in them, and credit card companies are ramping up credit lines to consumers to levels not seen since before the crash. But hold the champagne.
One area that seems immune to this burst of optimism is the jobs market. That’s why the reality of your economic life may not match the weather outside, nor the sunny predictions in the media. The disconnect over what people are saying about our economy and the jobs market versus what most people are going through can be one can be frustrating, confusing and possibly even enraging.
That’s why in a Wall Street Journal poll released this week President Obama’s approval rating fell to 41 percent–a new low–with most people citing the economy as a leading reason for their lack of confidence. In a worrying development for the president, more Democrats disapprove of his performance than approve, with support eroding for him amongst people of color whose communities remain in economic crisis. An electorate which has been in an economic deep freeze for six years is growing impatient.
So why exactly do things still feel stuck? The unemployment rate is the lowest its been in four years and our economy is adding jobs each month.
Federal Reserve Chair Janet Yellen provided the answer last month in testimony before the Senate Banking Committee. The head of the nation’s blank put it bluntly saying that, “of course, the unemployment rate is not a sufficient statistic to measure the health of the labor market.” The truth is that despite what we learned in high school about the unemployment rate as a key indicator of the economy’s health, it’s actually only one piece of a complicated jobs puzzle. To learn what’s really going on we have to dig deeper.
With this in mind, here are five pivotal reasons why the jobs market remains in a ditch while the economy moves sideways and Americans increasingly find it difficult to figure out where it’s all going.
1. There still aren’t enough jobs.
Even though the economy has created 8 million new jobs since the recession officially ended five years ago, we actually need twice that amount to feel the turnaround. As The Wall Street Journal reports, a total of 16 million new jobs is required to to get back to pre-recession levels of unemployment. The problem is that each month, due to population growth, 150,000 new people come into the work force. Consequently, between 250,000 to 300,000 new positions need to come on line every four weeks before the economic recovery can feel real rather than imaginary. Last week’s jobs data underscores the point. Just 175,000 new jobs turned up last month.
2. Young people are in an economic depression.
More than one out six people between the ages of 16 and 24 who want a job can’t find work. One out five without employment is what economists classify as an outright economic depression. In fact those under 34 are living in totally different economy all together with higher debt, lower wages, and less savings than at anytime since their grandparents or even great-grandparents.
3. The same is true for black and Latino communities.
With unemployment at up to twice the rate of whites and the lowest level of wealth on record, blacks and Latinos are being pushed even further to the economic margins. In urban areas across America half of all young men of color are out of work making this unemployment crisis the worst in America with the exception of hard-hit Native areas where the problem is on a similar scale.
4. Millions have given up looking for work.
One problem with the unemployment rate is that it doesn’t pick up the number people who want work but who’ve given up looking due to the lack of jobs. These discouraged workers are captured by something called the “labor force participation rate.” That number tells us something very different about where we are right now. The labor force participation rate is the lowest in three decades. The Economic Policy Institute, using data from the Labor Department, estimates that this means that close to 6 million people want a job but have abandoned the search for one. If they were included, the official unemployment rate would be 50 percent higher than it is now and increase back up to the double digits.
5. Millions more are waiting in the wings.
More than four million people have been unemployed for six months or more. This means that any jobs recovery has to be even stronger than normal to absorb those who’ve been looking for years in many cases. The fact that Congress failed to renew longterm unemployment insurance late last years withdrew $40 billion amount in economic stimulus this year and will cost our economy thousands more jobs that we can’t afford to loose.
The bottom line is that there are real reasons why what you’re hearing about the economy and jobs might not match what you’re experiencing. The good news is that things can turn around if these green shoots grow and bloom over the summer. But we all need to be honest about the fact that there’s a ways to go before we can celebrate.