As I’ve pointed out repeatedly, the employment situation is incredibly bad for people looking for work. Yet all too frequently you will see media reports saying that the country is heading toward full employment. The only conclusions that I can draw from this is that the media people are either trying to mass gaslight the country, or are so immersed in the NYC/DC/LA media bubble that the real world just doesn’t enter their palace in the clouds.
Here’s a case in point.
How to find out how well the economy is really doing? Just walk down the street.
I wish I could say that this post is an aberration, but the fact is that it’s worse in many areas of the country. For that matter almost nobody that I know is at what could be considered full employment.
Just last Tuesday, Fed Vice Chairman Stanley Fischer made the unequivocal statement that the U.S. job market is “very close to full employment,” so several interest-rate hikes to quell nascent inflation would be in order.
“I don’t think you can say one and done and that’s it,” Fischer told Bloomberg TV. A few days earlier, Fed Chair Janet Yellen had also said that the strong job market and improving U.S. economy had bolstered the case for interest-rate hikes.
But it’s all based on a wrong idea of “full employment.” As we’ve noted before, the 4.9% unemployment figure that Fed officials and others mention may be the most misleading statistic in use today. In fact, it’s downright deceptive.
It doesn’t describe those who have given up looking, such as the 10 million men who have mysteriously abandoned the workforce. In our monthly IBD/TIPP Poll, we routinely ask Americans “how many members of your household are currently unemployed and are looking for employment now.” That’s the basic, functional definition of being unemployed.
And we get an answer starkly at odds with the one the Labor Department gets: In our September poll, 17% said one or more people in their household had no job but were looking for one. We’ll do the math: There are just over 118 million households in the U.S. So, at a minimum, there are at least 20 million people without jobs in the U.S. That compares with Bureau of Labor Statistics data showing only 7.8 million people unemployed — or 4.9% of the workforce.
Based on our data, we get a rather different “unemployment rate” of about 12.6% — give or take a percentage point.
Nor are we alone in having a much higher number. Gallup has been tracking unemployment for years. Its “underemployment” measure, which adds the unemployment rate plus the share of adults who are working part time but want to work full time, now stands at 13.2%.
Gallup CEO Jim Clifton doesn’t mince words, calling the main U.S. unemployment rate “The Big Lie.”
A better measure comes from the Bureau of Labor Statistics’ alternative U6 unemployment gauge. It may sound wonky, but it includes those who are unemployed, underemployed or just marginally attached to the workforce. As of August, it stood at 9.7%.
The labor force participation chart shows the true picture.
There’s also the problem that far too many of the jobs that have been created in the last eight years have been “make work” or service jobs, not jobs involving production or making things. We no have far more people essentially doing little than we have people making things that people value.
Disappointing indeed, but the reality is rich countries have been dealing with this problem for decades. A staggering 96 per cent of America’s net job growth since 1990 has come from sectors known to have low productivity (construction, retail, bars, restaurants, and other low-paying services were responsible for 46 percentage points of total growth) and sectors where low productivity is merely suspected in the absence of competition and proper measurement techniques (healthcare, education, government, and finance explain the remaining 50 percentage points):
It’s tempting to conclude many of these additional workers are doing little to boost real living standards, and that their continued employment is effectively the product of subsidies extracted to provide make-work, rather than the result of competitive market conditions. We are even tempted to blame part of the slowdown in measured productivity to these shifts in the composition of the workforce. (Related.)
These are also the jobs that are the hardest for the hardest hit group in the job market to fit into. Never mind the lower pay, there are reasonable obstacles to somebody with experience chasing a job below their level. Employers really want to fit the employee to the job more or less. Especially when it looks like the prospective employee may want to jump at the earliest opportunity.
I lived through the 1980’s and I know what full employment and a growing economy looks like. This is not what a growing economy looks like. When you have a growing economy companies don’t dither about hiring, they hire as fast as possible. The big problem in a booming economy isn’t the “bad hire” it’s not being able to find ANY hire. The attitude in that climate is, “are you breathing? Here, Joe will train you, get started.” I haven’t seen that sort of attitude since the late 1990’s.
The fact is that far too many people are not in the labor force. Many of those are children and the elderly, but still far too many people who could work, aren’t. To look at a single statistic and claim it good is a mistake. It’s trend that are important, not one number. there’s also the fact that what people are doing is far more important than the fact that they have a job at all. People actually creating value in high productivity industrial or office service job that have high pay are far more important to the economy than waiters and bartenders.
The fact is that the economy just isn’t working for far too many people. The labor force participation rates are far too low and growth has been anemic for the last eight years. those who are working may be working two jobs just to pay the bills.
While the unemployment rate dropped and the economy added another 178,000 jobs, the number of Americans out of the labor force hit a record high last month.
According to the Labor Department, 95,055,000 Americans were out of workforce in November, meaning they were neither employed nor had made an effort to find work over the previous month.
The level of Americans outside of the workforce last month — due to retirement, education, discouragement, or otherwise — represented a substantial 446,000 increase over the month of October.
The Labor Department added that in November there were 1.9 million Americans marginally attached to the labor force or people who looked for work at some point in the last 12 months but were not in the labor force. Among the marginally attached were 591,000 discouraged workers or those who are not looking for a job because they do not think there is a job out there for them.
In sort of a reverse of the way things usually work it’s the men who are stuck at home. the job market has become a dysfunctional trauma for all too many of them, as they deal with a system that is opaque and sometimes impossible to understand while being demeaning and oppressive. Is any wonder that so many drop Out?
In many ways the last eight years has been the invisible depression because with food stamps and other government benefits the consequences have been kept out of sight of the media. Still 18% or so of the male workforce out of work is not something that can be sustained for very long.
“Today’s soup lines are electronic, as the government downloads the “soup” onto EBT cards….”
Apologists for the status quo contend the last eight years couldn’t possibly be classified as a depression.
The narrative of economic recovery has been peddled by corporate media mouthpieces, feckless politicians, Too Big To Trust Wall Street bankers, Federal Reserve puppets, and government apparatchiks flogging manipulated data as proof of economic advancement. They point to the lack of soup lines as proof we couldn’t be experiencing a depression.
First of all, if there were soup lines, the corporate media would just ignore them.
If they don’t report it, then it isn’t happening. Secondly, the soup lines are electronic, as the government downloads the “soup” onto EBT cards so JP Morgan can reap billions in fees to run the SNAP program. Just because there are no pictures of starving downtrodden Americans in shabby clothes waiting in soup lines, doesn’t mean the majority of Americans aren’t experiencing a depression. The Greater Depression – Part 1
The fact is that the last eight years looked like an economic collapse. at least it did to far too many people. In any case, full employment is a delusion. Full employment requires growth and that was the last thing the Democrats in charge wanted. If the people in charge had wanted growth they would have acted to enact policies to encourage growth rather than stifle it through high taxes, regulatory enstranglement and crony deals. What we got instead was one big mess.
Of course, the people who live in the clouds do not see the impact that they have on the people who live in the real world. The world that they fly over. But it’s the people in flyover country who actually create the economy and if they aren’t working eventually even the cloud people are going to feel the sting.
Do you see grocery stores closing? Do you see other retailers, like clothing stores and department stores, going out of business?
Are there shuttered storefronts along your Main Street shopping district, where you bought a tool from the hardware store or dropped off your dry cleaning or bought fruits and vegetables?
Are you making as much money annually as you did 10 years ago?
Do you see homes in neighborhoods becoming run down as the residents either were foreclosed upon, or the owner lost his or her job so he or she can’t afford to cut the grass or paint the house?
Did that same house where the Joneses once lived now become a rental property, where new people come to live every few months?
Do you know one or two people who are looking for work? Maybe professionals, who you thought were safe in their jobs? Friday’s anemic jobs numbers tell that tale.
Did your high school buddy take a job at the local convenience store because he could not find work in sales?
Is the pothole on your street getting larger instead of getting repaired? Is there more than one street light out in your town?
Don’t be fooled into thinking that the stock market is any indication of the health of an economy.
Is the town pool closed this summer much more than usual?
Have you seen a situation — any situation — and said, “Jeez, it wouldn’t take much money to fix that” — but it hasn’t been fixed?
You may have witnessed many of these situations, but you tell yourself it can’t be an economic collapse because the stock market is at an all-time high.
Does that mean all is well? No, this is what a 21st-century economic collapse looks like in the beginning.
The divide between the haves and the have-nots is growing exponentially. If the 99 percent can’t contribute to the economy because of the dire financial situations they find themselves in, then you see gross domestic product growth reports of 1 percent, such as we have seen lately.
Don’t be fooled into thinking that the stock market is any indication of the health of an economy.
It’s a rigged market to placate the masses — most of whom do not have much skin in the game — and convince them that all is well, when in fact the opposite is true.
We are entering the problem months for the markets. September and October are historically times of greater market volatility to the downside.
There was a time when this was very explainable. In the last two centuries, huge amounts of cash would move from the Eastern money markets over the mid- to late summer to the Midwest and Western states to buy crops, leaving the equity and bond markets in a liquidity squeeze come late summer/early fall.
Now it’s down to the returning traders from the Hamptons or the Cape realizing that their trading book looks a little sick. Their bonus will depend on them making the right moves in the next three months, and they need to sell those dog stocks soon.
Perhaps Ms. Schlesinger should talk to the people at her own network before talking about full employment. Just because the BLS comes up with a number, does not mean that because that number represented full employment at one time that the same number represents full employment now. Especially with a number that gets jiggered as much as the employment numbers seem to. The fact is that the economy is a shambles. It’s been a shambles for some time now and it’s only been things like the maker movement, the cosplay economy and most especially the fact that the US has gone from energy dependence to energy independence for the first time in my adult life that the economy has any life to it at all.
A boom economy and full employment is not what we have. To believe that this is not the case is only a deep kind of denial. As a prominent Democrat who is married to the last Democrat candidate once said, “It’s the economy, stupid.” The strange part of that is that the Democrat candidate forgot that simple fact and apparently never grasped the reality of the level of suckage that the current economy represents. The harsh and cold fact is that the economy is dysfunctional. The economy has reached the point where the traditional “solutions” from the “experts” will no longer have the impact that they once had. No matter what the credentials from whatever Ivy Covered Snob Factory the experts may have attended, they will not be able to understand, let alone rectify what’s really going on. Unless they expand the economic tool kit with low taxes and more economic liberty, it’s not going to end well.