Today’s May unemployment report shows what many Americans already know: the economy remains firmly in the disaster zone and jobs are a key component of the collateral damage. Stock markets plunged on the news. After promises of an employment dawn earlier this year–the third recovery prognostication since 2009–the goal of putting America back to work continues to recede. Meanwhile, 70,000 more people are set to lose unemployment benefits in the next four weeks: a number larger than the the 69,000 jobs generated by the economy in May.
The shocking report lays bare what many have feared: the United States lacks a credible plan to jumpstart and maintain job growth at sufficient levels to end the crisis.
Washington’s “Wall Street first” economic policy has left the economy rudderless. The jobless benefit reduction only adds to the wider perception that, when it comes to formulating a coherent economic blueprint, the political class is AWOL. Without a plan, there is no way that the U.S. can emerge from the devastation of unemployment that’s crushing a generation and promises enduring hardship for millions of families.
69,000. That’s the number of jobs created last month. It’s a dismal data point–21,000 below what’s even needed to keep up with population growth, let alone to kick start a real rather than relative decline in joblessness.
Due to the pallid increase in jobs, the overall unemployment rate inched upward to 8.2 percent.
For blacks and Latinos, however, the rates were 13.6 percent and 11 percent, respectively. And underemployment, which is the unemployment rate plus those in jobs at wages below their skills level, remained stubbornly high at 18 percent.
As 2012 began, forecasters on Wall Street and in Washington predicted that the economy was set to move from strength-to-strength. “I do think that we’re in a self-sustaining positive reinforcing picture,” Wall Street economist, Stuart G. Hoffman, told The New York Times in January. In February, the White House predicted that the economy would crank out two million new jobs this year.
Wall Street’s and Washington’s optimism was due to an uptick in the number of jobs created in December, January and February. But both the predictions and the job gains were suspect. The underlying economic growth was never strong enough to sustain either the ebullient mood or the sudden job burst.
In fact, just yesterday, the government revised first-quarter economic growth downward. From January to March of 2012, GDP inched up an anemic 1.9 percent and suggests that the economy could be at stall speed. That growth rate is two-and-a half times lower than the 5 percent rate economists say is required to bring real unemployment down by 1 percent.
The need for a 5 percent growth rate to create jobs might be confusing because unemployment has in fact fallen from its 2010 high. But that’s because labor force participation, the number of people actively looking for work, is at its lowest level in 30 years. Simply put, there are less people job hunting than five years ago.
With fewer people looking for work, the unemployment rate–which measures only those who are seeking jobs but cannot find them–looks better than it actually is. If labor force participation was at pre-recession levels, the official unemployment rate would be 30 percent higher than it is today.
This morning’s snapshot shows that the job market remains in shambles. Yet the broader facts point to a greater catastrophe.
During the recession, the economy lost eight million jobs. More than 12 million people remain unemployed. Over five million people have just disappeared from the labor force. A majority of those out of work have been looking for more than six months. Youth unemployment remains at levels not seen since the 1940s. Half of 2012’s college graduates are underemployed, according to an analysis by the Associated Press. The stark reality of this moment led Paul Krugman to declare flatly that the country is in depression.
We arrived at this point not by an act of God, but as the result of economic choices championed by the political class. Since the 1980s, at the urging of the business lobby and Wall Street, the U.S. government has enacted laws and rules that concentrated wealth in fewer and fewer hands. This radical departure in economic policy was championed by Ronald Reagan, whose budget director, David Stockman, called it “trickle down (economic) theory.”
Trickle down’s recklessness broke faith with America’s past and threw out the notion of broad-based prosperity: the very thing that transformed the U.S. into the world’s richest nation ever. Trickle down gave the super-wealthy more with the belief that, by doing so, even more wealth would flow to all. Instead, the opposite happened and over the next three decades “trickle down” unleashed a dangerous wealth imbalance that–in 2008–tipped the economy into disaster.
Seemingly recognizing the damage that these policies had done, Barack Obama promised to put his administration back on the side of an economy that works for everyone. Upon accepting the Democratic nomination, then-Sen. Obama said that Washington had to “ensure opportunity, not just for those with the most money … but for every American who’s willing to work.”
Unfortunately that hasn’t happened. In fact a strong argument can be made that the administration has consistently put Wall Street’s interests above those of Main Street, and has sought to prune, rather than rollback, Reagan’s policies.
But however tepid the Administration’s job proposals have been, the Republican Congress’ work on the topic constitutes a collective dereliction of duty. Not only have they opposed mainstream, routine, employment-generating proposals, such as money for roads and bridges, but they have yet to put forth a comprehensive and credible jobs plan. The congressional GOP seems more animated by contraception than the employment crisis. And the party’s presumptive nominee, Mitt Romney, is no better. He promises only that unemployment will be at 6 percent, by the end of a potential first term, in 2016. But that’s exactly where current forecasts predict it will be, regardless of who’s in the Oval Office. In other words, on jobs, Romney promises nothing.
Today’s numbers show that it’s time for the U.S. political, business and financial leadership needs to ask itself some fundamental questions such as: How many people do we want to employ? In what time frame do we want to do so? And, What do we need to do at the national, state and local level to make it happen?
Basically, what we need is a plan with a clear jobs growth target.
If the U.S. were to set a modest, reasonable GDP expansion goal of 4 percent, that of the Clinton years, then we would generate 308,000 jobs a year; well above today’s number and large enough to help save a potential lost generation from unemployment and its devastating, lifelong consequences.
Regardless of what the U.S. plans to do, it needs to do it fast. That’s because whatever the government has been up to on the jobs front isn’t working. Rather, it’s an abject failure.
Imara Jones writes about economic justice for Colorlines.com.