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Zuckerman: Unprecedented Jobless Decade

In the rush of events we almost missed this enlightening exegesis on our jobless ‘recovery’ from Mort Zuckerman at US News And World Report:

Unemployment Jeopardizing U.S. Recovery

Dismal jobs numbers continue to threaten the economy.

By Mortimer B. Zuckerman
Posted: May 13, 2011

It’s jobs, stupid. As we celebrate the execution of America’s No. 1 enemy, we are jerked back to the horrible reality of America’s greatest domestic challenge. Unemployment claims in the last week of April surged to their highest level since last summer. The recovery is in peril—and so is the fabric of American society.

The best social program, the best economic program, and the best family program in America has long been a job. Not anymore. The jobs are not there.

Even before the 2008 financial collapse, job creation was waning. From the brief 2001 recession it lagged more than in any expansion since World War II. When the Great Recession came along, it wiped out the equivalent of every job created in the whole previous decade. For the 80 percent of Americans born after World War II, this is their Depression, and it began long before the housing bubble burst and Wall Street melted down.

Forecasters had predicted the economy would create 22 million jobs in the first decade of the 21st century. Some hope. Even at the decade’s economic peak, only 7 million jobs were created, the lowest of any decade recorded by the federal government stretching back to the 1940s.

The decades tell a story that begins with a bang and ends with a whimper:

* The Forties: Jobs up 11.9 million for a 38 percent gain. OK, that was mainly the effect of World War II.
* The Fifties: 10.6 million more jobs, a 24 percent gain.
* The Sixties: 17 million more, a gain of 31 percent.
* The Seventies: 19.5 million more, a gain of 27 percent.
* The Eighties: 18 million more, a 20 percent gain.
* The Nineties: 21.4 million, a 20 percent gain.

Our total payrolls today of 131 million are lower than they were in March 2000. Yet, over this 11-year period of flat employment, the population has risen by nearly 30 million. Twenty-two months after most recessions, the average recovery of nonfarm payrolls is 200 percent of jobs lost from the recession, compared to only 20 percent of jobs losses recouped this time. Payrolls remain 7 million shy today of where they were when the recession began, despite the most stimulative fiscal and monetary policy in our history.

Accompanying the lack of job growth in the past decade, middle-class incomes adjusted for inflation fell from a median of $58,500 in 2000 to $56,500 in 2007—another first. As chief economist David Rosenberg of investment firm Gluskin Sheff notes, with more than six people in the aggregate labor pool vying for every job opening, wage growth is decelerating. Labor costs have declined on a four-quarter trailing basis each and every quarter since the beginning of 2009.

The greatest impact has been on manufacturing, where over 5 million jobs vanished in the first decade. Goods-producing employment, which peaked at 24.6 million in the year 2000, dropped by one fourth to around 18.5 million. On top of that, of the 7.5 million-plus jobs lost during the Great Recession, almost half came from the goods-producing industries. It is referred to as a man-cession because men lost many more jobs than women, who benefited from job growth in healthcare and government rather than the private sector.

Another factor is the slow pace of lost job recovery. The 2001 recession wiped out 2.7 million payroll jobs and it took four years for us to recover the lost jobs. We lost 8.4 million jobs in the Great Recession and only a million and a half have returned, and half the new jobs are in temporary help agencies as firms resist hiring full-time workers. Quite simply, America’s great job-creation machine is sputtering badly. Who knows when all the jobs lost will return. The most recent monthly unemployment claims of 474,000 shocked the financial markets and underline the recovery’s fragility.

Why is this recovery so different? In past recessions, when growth picked up, many employers recalled the workers they had laid off. Not this time. Companies facing less than stellar revenue growth have focused on cost-cutting, so rehiring hasn’t happened much. A key to job growth is new business formation, but start-ups are highly dependent on credit card borrowing, home equity, and local bank loans, and these sources have virtually evaporated.

The net result over the last two years has been a mass exodus of workers from the labor force. It’s reflected in the so-called labor force participation rate, which refers to the percentage of the civilian, noninstitutional population, age 16 or older, that is either actively employed or actively seeking work. The rate for men ages 25 to 54 is now only about 89 percent, almost 9 percentage points below its peak in the mid-1950s, according to experts at the Federal Reserve Bank of San Francisco, and the overall rate is a meager 64.2 percent. Some 700,000 people have dropped out of the labor force over the past six months alone, and more than a million teenagers have withdrawn since December 2007. On top of that, there are two and a half million workers who want a job but are so discouraged they have stopped looking. Increased recourse to Social Security disability benefits has made that more feasible. Once they qualify for benefits, workers generally don’t return even when the economy improves.

The labor force participation rate may seem arcane but changes in it can make a huge difference in our perception. The higher the participation rate, the greater the number of jobs needed to keep the headline unemployment rate down. If the labor force participation rate were to stay around 64.5 percent in 2012, U.S. employers would need to create 208,000 jobs per month, on average, to reduce the headline unemployment rate to 8 percent. But if it goes to 65.5 percent, as the Bureau of Labor Statistics has predicted, an 8 percent unemployment rate would require the addition of 294,000 jobs per month.

As it is, unemployment statistics are chilling. Some 14 million people are unemployed; 27 million have part-time jobs, 8 million of whom would prefer full-time jobs. Two and a half million people, described as marginally attached to the labor force, have stopped looking. The mean duration of unemployment continues to rise and now approximates 39 weeks, up dramatically from 29.8 weeks in February 2010. Over 5.8 million workers have been unemployed for 27 weeks or longer. If you include as unemployed those people who applied for a job in the last six months rather than just the past four weeks, discouraged workers, and people working part time who wish to work full time, the real unemployment rate is not the headline rate of 9 percent, but almost double that: It approximates 18 percent.

The depressing numbers regarding job creation went undetected for much of the last decade, as the National Journal noted earlier this year, because the national unemployment rate had stayed persistently low, ranging between 4 and 6 percent. Alas, the rate was low not because the economy was adding jobs, but because fewer people were joining the workforce and many had left

Lest we forget, Mr. Zuckerman is a Democrat and at least formerly a major Obama supporter.

Which may be why he doesn’t blame those most responsible for our current economic mess, Mr. Obama and the Democrat Congress.

This article was posted by Steve on Wednesday, May 18th, 2011. Comments are currently closed.

12 Responses to “Zuckerman: Unprecedented Jobless Decade”

  1. proreason says:

    Spike and his fellow marxists are largely responsible, but they aren’t the only factor.

    Pure marxists like Spike actively seek to make people dependent on government, so the incentives in the entire country are designed to discourage people from working. Welfare, unemployment, free health care, food stamps…the list is extensive. Why work when you can afford plasma tv’s, iphones and ho’s on gubamint assistance? You could also throw SS and Medicare on that list, although they are far less perverse than tax credits and the like. And it isn’t just since 2008. The problem goes at least as far back as LBJ, and probably to FDR.

    But aside from that important political factor, there are other factors at work as well. I’m not opposed to globalization, because it’s inevitable and fighting inevitability is useless, but there can’t be any doubt that globalization decreases the viability of manufacturing and other assembly type jobs in the US. You can spin it all you want, but if a guy in india is willing to do something at 1/10th the cost as somebody in the US, then jobs that can be done in India will go there. That’s not a political statement, that’s a fact. Ultimately, living standards in India will increase and labor in the US will become more competitive, but even then, some other poor region will step into the breech. This has been going on for a long time. We had it with Japan until that labor markets leveled out to the US, and to a certain extent, Europe after WWII.

    What probably masked this trend for so many years is another edge that the United States had for about 50 years after WWII…call it intellectual / management / entreprenurial skill. I think that a few thousand Americans created so much wealth between 1946 and about 2005 that our country could fund the creation of enough service jobs to offset the loss of manufacturing jobs. By service jobs, I mean restaurants, dry cleaners, child care, landscapers, fast food, repairmen/mechanics, etc. In countries without money, people do that stuff themselves. Service jobs are only possible in countries that are wealthy. The examples of the real wealth creators are pretty obvious when you think about it…in fields like computers, telecom, medical devices, pharmaceuticals, etc. And the wealth was not created by Americans who assembled the parts; it was created by a few thousand geniuses, epitomized by Steve Jobs, but including people like Sam Walton, the Netscape guy, the Oracle guy, and the people who invent medical drugs. The products they created were so valuable (i.e., desired by people around the world) that trillions of dollars were pulled into the US, much of which ended up in the hands of auto mechanics, small business owners and all of the purveyors of the service economy. And no, very few people in the service economy create much wealth, unless they create a new kind of service or vastly more efficient service like Home Depot or Walmart. The guy who makes a good living running your favorite restaurant is enjoying the benefits of being American and his hard work, not reaping the vastly greater benefits that accrue to the organizations that produce the products that truly innovative genius creates.

    I’m not convinced that the days of innovative genius are as passe in the US as are the days of manufacturing jobs, but you have to worry about it. Some people with that kind of genius are driven to their creations by internal forces, but a much bigger part of it is the desire for fame and fortune. That desire is inevitably squashed in socialist societies, the more socialist, the more squashed. If you don’t believe it, review what you know about Cuba, the Soviet Union, pre-capitalist China and communist East Europe. Other than a handful of military innovations, they created nothing that the modern world wants.

    That’s where we are headed…amazingly, on purpose and with full knowledge of what is happening.

    That’s why I say that Obamy is the most dangerous person to appear on earth for the last 80 years.

    • Right of the People says:

      We still have the entrepreneurial skills and drive in this country but Barry and his goons are doing their best to squash it with all of their stupid laws and regulations and the killing of credit. Manufacturing is well past it’s heyday here in the US. There will always be some but countries like India and Vietnam have tons of people who will do it for less and frankly if I were a business owner who made goods, I’d have to seriously consider using them too.

      Japan is a prime example of what happens when you get too good at manufacturing a particular product. Your workers who were happy to have a job gradually want more as time goes on and your company is successful, it’s human nature. Once you give them more then you have to charge more for your items until you get a situation like we have in Detroit with the auto companies.

      Japan is approaching where Detroit was twenty years ago and now the Koreans are doing to the Japanese what they did to the big three. If you’ve looked at a Kia or Hyundai recently you know what I mean. Their cars are surpassing Honda, Toyota, Mazda and Nissan in quality and value and at a much lower price partly because their labor costs are so low compared to the others.

      As long as we can innovate and create we will stay on top but if the government does its best to slow or stop that creation and innovation, we’ll become just another third world sh**hole. Of course that is exactly what Spike and his cronies want. I say we shave his head to look for the 666, it’s got to be there somewhere.

    • Petronius says:

      Sadly Mr Zuckerman’s report ignores the obvious fact that we live under the most hostile anti-business regime in American history.

      The American worker was always able to compete with foreign labor, say, an Indonesian who lived on a bowl of rice a day. And the American was able to compete at an advantage, and not only to succeed, but to prosper with full employment. He was able to do this because he was far more productive than the Indonesian.

      Productivity is partly hard work, but it is mostly a function of capital — the investment in and application of the best equipment, machinery, and technology.

      An economy is healthy when investors can invest their capital in a business or productive assets and get a good return. That is no longer true in Nerobama’s America.

      Thus American entrepreneurship –– new business start-ups –– is at an all-time low.

      Manufacturing is slowing to a crawl.

      Business equipment production (i.e., capital goods for capital investment) is in steep decline. It has fallen off a cliff and hit rock bottom. Kaboom.

      The investor class has adjusted away from entrepreneurship and into tax shelters. Or into nonproductive monetary assets such as gold and silver.

      Companies that have cash are not plowing it back into their US businesses. Instead they are hunkered down, playing it safe, and using cash for share buybacks, dividends, or to pay down debt. Or they are investing capital overseas, where the business climate is friendlier.

      These conditions are not going to improve as long as the US government is in the hands of Marxist ideologues who are actively hostile to business and to capital.

    • proreason says:

      I disagree with one element of what you say, Petronius. China, India and other countries now have the same access to productivity enhancing technology as the US (and have had it for the last decade). It’s not just a factor of Spike’s marxism. In addition, the workforces in those countries are becoming more educated. American workers, if you remove tariffs and other governmental interventions, are probably still more productive than other countries, but not by the factor necessary to overcome the labor cost differential.

      Now, if all of the disincentives on capital that you discuss were removed, it would be more likely that innovation could overcome that labor cost differential, but I doubt it even then. We shouldn’t expect that jobs that require mostly physical dexterity will return to the US for a long time, other than service jobs that have to be done locally (i.e., you aren’t going to ship your car to China to have the transmission repaired).

      If the US economy is to expand as it did for the last 150 years, it will be because of innovation and technologies that have not been invented yet or are in the early stages of exploitation, not because we work harder or “smarter”. At least, imho.

    • tranquil.night says:

      Very engaging discussion.

      “If the US economy is to expand as it did for the last 150 years, it will be because of innovation and technologies that have not been invented yet or are in the early stages of exploitation, not because we work harder or ‘smarter'”

      Yes, and I do think we are in the early stages of exploiting our newly actualized technologies. What 4G Tablets/Mobile Hotspot Smartphones and the Apple/Android network are doing for the capabilities of small businesses is truly revolutionary, and you could couple that with any number of breakthroughs or imminent ones happening in robotics for manufacturing or nanotech in Medicine and Electronics. Not to mention private space industry. To me, whether we can get there doesn’t worry me now as much as who’s going to be in control of it: the people or the politicians. Our future lies in the restored vision of a decentralized economy excelling in a highly networked, nuanced, and global market: where untapped potential can reach the marketplace quickly, effectively, and with the fewest impediments to profit. “Unleash us.”

      Global markets are constantly evolving, but the accelerated pace at which it’s occured in the past two decades of the Information Age has been well noted. Ever since the 2008 crash, economists have defined the current era as Globalism 3.0, which thus far has been dominated by the gradual and increasingly frantic realization of those with actualized wealth that just about every national government is paired with their central bank, inflating their currencies to support social or economic programs they sooner than later are not going to be able to afford. As the crisis has worsened, the wealth is fleeing centralized organizations. Even though the equities bubble is staying near its (volatile) highs, our big busineseses have long since realized how much trouble they’re in and are looking into foreign investment. The Chi-Coms are buying up assets here like nuts now. Real assets, not Treasuries.

      So this all brushes up against the paradox we’re facing in the nation politically as well. You’re both right, in my opinion. We’re looking at a situation where we need a strong level of liquid capital flowing through veins of the economy unclogged by unnecessary regulation, and we need a strategy for reintroducing SO much unemployed labor back into a market that isn’t going to be as rooted in big industry and manufacturing – and a good chunk of that labor force being previously dependent on government for employment or existence, therefore low-skilled and in need of accessible, but more importantly, effective, training for high-tech production.

      But if there’s one upside to our current state, everything’s so effed up that while it’s impossible and impractical to solve everything about our unemployment problem, we can literally pick a sector or an issue, research it, and likely come up with a list of reforms that would show demonstrable if not immediate improvement. Drill, baby, drill.

    • proreason says:

      couple of responses to tn’s point.

      I’ve read a few times recently that the impact, if not the pace, of technical innovation is slowing, and at a glance, the case sounds compelling. Mobile computing, gene engineering, nano-tech are certainly interesting and promising, but the 20th century delivered automobiles, television, birth control, life-saving medicines, flight, massive improvements in agriculture and much more. It’s hard to stack up what has happened since 1995 against that. (and it isn’t really a competition, EXCEPT that improving the lifestyle of a noation does depend on wealth creation and wealth creation depends on building things that LOTS OF PEOPLE want to pay for. Example: cars created huge wealth. The average person spends about 15% of income on auto-related products and services. The average person probably spends about 3% of income on cell-phone related products and services. In terms of wealth creation, that a 5 to 1 ratio. Or in other words, to be as valuable as a car, we need 5 devices as valuable as a cell phone. Throw in broadband, cable tv, 4G services, other mobile services…you still haven’t created a product set as valuable to humanity as a car, which is just one of the mega innovations of the 1/2 of the 20th century.)

      The other point is one I many have mentioned before. Working on an automobile assemply line wasn’t too great a leap from working on a farm. Almost everyone, if they wanted to, could work in a factory successfully. But I’m worried that only a small percentage of our population is going to be able to do important work created by the new technogies. As an example, not that many peole can learn how to develop and maintain software applications; and some people can’t even get close. It seems like the new technologies will require more brain than brawn. I don’t want to slam human adapatability, but I wonder about this one. And I don’t think it’s an education issue either. No amount of education for your average Walmart shopper is enough. The gap between the ability and the need is to great. Maybe I’m wrong about that. I hope so.

    • tranquil.night says:

      I hear you, Pro. I’m young so trust me, no bigger question perplexes and intrigues me more than how we’re going to employ so many people in a new time unlike others where efficiency has outsourced the labor of so much of our ever-increasing population. I don’t have a better answer than yours, which is to try and fix the conditions to let the markets attempt to address the problems better and hope that we’re not just living through a lost generation or two that can’t be helped to adapt. Even if so, I certainly believe we’ll fare better than turning it over to central planners.

      I also think power of commercialism and consumerism to drive innovation and generate unthought of revenue and opportunities are underestimated. Reagan’s tax cuts alone fuelled growth no one could’ve predicted, yet of course labor, technological and social circumstances were different even then compared to now. Still, we Americans overall (or at least a solid base of producers) will always have one unique quality that works as an asset – we’re pioneers and practical survivors at heart. I also believe we’re compassionate, which helps us develop ideas that are truly marketable and enhance societyy. It all drives our innovative leadership, and it may yet break open if not one huge miracle market – then one million smaller new markets if it has to.

    • proreason says:

      We need new heroes.

      I don’t agree with Steve Jobs politics, but he should be held up as one of the greatest heroes in the country’s history. Edison, Bell, Ford, Jobs, Sam Walton…those rare people should be held in the same esteem as Eisenhauer, Petraeus, MLK, Reagan. Instead, they are denigrated as exploiters of humanity. All they did was make our lifestyles possible, and not just because they invented a product, either. They created the WEALTH OF THE COUNTRY.

      Secondly, Joe the Plumber also needs to be a hero. Genius is rare, but millions of people need to man the trenches. Work should be prideful. Unplugging toilets, repairing cars, waiting on tables, stacking the shelves at Target, processing the paperwork. Ordinary people are heroes if they are toting their load, whatever their capabilities allow. Instead, they are denigrated as work slaves. Not fly enough. Better to write songs that nobody will ever listen to. It’s crazy.

      We celebrate exactly the opposite of what should be celebrated. And not just in the realm of work either. It’s perverse.

    • tranquil.night says:

      Exactly, it takes enormous determination and confidence in yourself, your vision, and your country to accomplish what each of those men have. They are reflective the real power and capabilities of a free individual in a free society, and you’re right: those qualities are being systematically impugned and stomped out in our country vis-a-vis collectivist humanism, political correctness for the peasant and political class, etc. The enemy holds nothing sacred, they know what they’re out to conquer.

    • Liberals Demise says:

      Great perspectives on all counts.
      Good reading and thought provoking.
      Thanks to all!

  2. Right of the People says:

    I blame Bushitler for this. (extreme sarc)

  3. DoctorRock says:

    You’ve nearly got it! The financial and regulatory repression we’re experiencing is a good part of the problem, as is China’s
    refusal to float their currency. But I’d like to point out that 21st
    Century America America is the last place I’d look to find a promising, creative, think-outside-the-box sort of Maverick who’d be the innovative sort that would innovate THE NEXT BIG THING. Look back at Henry Ford, or William Schockley for that matter – anti-Semitic, racist, homophobic, misogynistic misanthropes I’m sure. We wouldn’t let their kind graduate high school today. We probably wouldn’t let them join the Army for chrissakes. This has all gone much to far, and it’s time something was done about. And no, I really don’t think Mitt Romney is the guy to do something about it.

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