June Jobs, Part 2

July 8th, 2011 at 9:19 am

Almost everything in today’s jobs report suggests recession-like conditions in the labor market.  You don’t want to read too much into any one report, but considering the last two reports together, the American jobs machine has stalled.

–Payrolls not only went nowhere in June—up only 18,000—but May’s lousy 54K was revised down to 25K;

–Unemployment is now on a rising trend, up steadily from 8.8% in March to 9.2% in June;

–Both average weekly hours for people who have jobs, and their average hourly wages, fell slightly, meaning smaller paychecks and less buying power;

–The employment rate—the share of the working-age population employed, and a key measure reflecting employers’ demand for labor—was 58.2% in June, the lowest in almost 30 years;

–Underemployment, including the 8.6 million “involuntary part-timers” (meaning they want, but can’t find, full-time work), was 16.2%, up from 15.7% in March;

–The average unemployment spell is now just under 40 weeks, about 5 weeks longer than it was a year ago.

–The government sector continues to shed jobs, down 39,000 last month.  Due to fiscal tightening, state and local governments, down 25,000 in June, have been shedding jobs since mid-2008 and are now down 577,000 since August 2008.

–Manufacturing, which was a bright spot a few months ago, has added almost no jobs over the past two months.

Look, I’m not trying to be unduly negative here.  Obviously, a stall is better than the massive job losses that characterized the Great Recession.  But if policy makers fail to recognize that our most pressing problem right now is job creation, they are a big part of the problem.  We need them to be part of the solution.

What should they do?  That’s for part 3.

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7 comments in reply to "June Jobs, Part 2"

  1. Sandwichman says:

    Jared,

    In your part 3 I would be very interested to hear your thoughts on Dean Baker’s report that came out about a week and a half ago, “Work Sharing: The Quick Road Back to Full Employment.”

    http://www.cepr.net/documents/publications/work-sharing-2011-06.pdf

    Here is the press release for it:

    New Report Suggests Work Sharing as Best Means of Preventing Layoffs and Lowering the Unemployment Rate

    For Immediate Release: June 23, 2011
    Contact: Alan Barber, (202) 293-5380 x115

    Washington D.C. – With the unemployment rate at a painfully high 9.1 percent, the majority of Americans list jobs as their number one economic concern. A new report from the Center from Economic and Policy Research (CEPR) suggests that in the current economic climate work sharing may be the most effective way to avoid many layoffs and quickly return the economy to full employment with little additional spending.

    “The labor market in the United States is still suffering the effects of the last recession,” said Dean Baker, co-director of CEPR and author of the report. “With the economy operating well below its full capacity, work sharing could be a significant factor in preventing layoffs and lowering the unemployment rate.”

    The report, “Work Sharing: the Quick Route Back to Full Employment,” describes a system of work sharing that would give employers an incentive to keep workers on their payrolls with shorter hours as an alternative to laying them off. This would be attached to the current unemployment insurance system with short-time compensation as an alternative to unemployment compensation.

    “We have already seen that work sharing works in the example of Germany,” Baker continued. “While most countries saw their unemployment levels spike during the recession, Germany, which already had a work-sharing system in place, saw its unemployment rate fall 0.4 percentage points below the rate at the start of the downturn.”

    Work sharing is a practical, but underutilized, policy option here in the United States. Senator Jack Reed (D-RI) plans to soon reintroduce legislation along these lines to incentivize work sharing domestically.

    In addition to most nations in the Organization for Economic Cooperation and Development (OECD) having some experience with work sharing, 21 states in the United States already have work sharing programs in place. While recognizing some implementation issues could be addressed to make it more attractive, the report presents hypothetical take-up rates and the likely impact of work sharing on productivity in the United States.

    Perhaps due to a misplaced focus on deficits rather than jobs, the U.S. economy remains weak and growth is tepid at best. With threats of a possible double-dip recession and more rounds of layoffs looming, work sharing may very well be the most economically and politically viable means of lowering the unemployment rate.


    • John says:

      First, Dr. Bernstein, I apologize for having given you a new nickname… 8^( No one calls me Dr. ; my lifelong nickname has been “Johnny” and I still can’t shake it. So when I get called “JB”, I consider it a compliment; you might not feel the same.

      I was thinking of you when I saw Dean Baker’s report, Sandwichman, and was hoping you’d react to it somewhere.

      Thanks. 8^)

      I have what might seem like a strange suggestion about what might be done, for Republicans, if any are reading this. John Nichols’ new book, “The S-Word,” has some excellent historical context on the origins of the Republican party. Chapter titles just as a teaser:

      Chapter 2 – “A Broader Patriotism”: Thomas Paine and the Promise of Red Republicanism

      Chapter 3 – Reading Marx with Abraham Lincoln: Utopian Socialists, German Communists and Other Republicans

      Chapter 4 – A Legal and Peaceable Revolution of the Mind: The Socialism that DID Happen Here.

      I’ve said before that the US is a great country as much because of socialism as in spite of it, and in spite of capitalism as because of it; Nichols’ book supports my assertion.

      As I’m inclined to do, I’m gonna state another obvious: the programs that are the battle line in the current debate – Social Security, Medicare, and Medicaid – are clearly socialist programs. No one, I don’t think, would dispute that. Thus, we’re arguing over whether we keep or abandon our socialism, but so few are saying so directly, and so few other than the likes of myself are advocating much expansion of what’s worked in the past. So what wrong with more of the same? Nichols’ Chapter 4 speaks directly to that question, and I think, to Dr. Bernstein’s question about what might now be done.

      Reading’s Nichols’ book might also help some see how purely Orwellian the current debate really is. I certainly hope as much. And I would hope Republicans would be embarassed by what they’ve done with the legacy of their party.

      I’ve honestly didn’t grow up as a student of history. (I came to my commitment to socialism purely through my faith.) Hopefully it’s not too late, for me, or for the rest of the country.


    • WASanford says:

      I think that our economic problem derives from a lack of purchasing power in our economy. Without customers who are empowered to spend, business fails; it’s that simple. I don’t see how “job sharing” addresses that problem. Job sharing puts no additional money into the hands of potential customers. All it will accomplish is to spread the poverty over a larger portion of our population and further destroy jobs.

      I have serious doubts that Dean Baker would point that out!

      Supply side economics has been tried all around the world by those who have been convinced by Milton Freedman’s theory known as “The Chicago School of Economics.” It has only resulted in increased poverty, dictatorship, and death on a wholesale scale, wherever it has been applied. As a theory, it has totally failed! We’d be better served to avoid exposing ourselves to that!


  2. fausto412 says:

    Actually JB, the question is what can Democrats do that will help and that they can get the gop votes to pass?

    answer: shutdown government and reduce taxes to 1% for everyone…especially the rich.


    • WASanford says:

      Actually I don’t think that the American people would want that, and what they want should count! I hope your suggestion was made in sarcasm!


  3. John says:

    Hopefully this is not off-topic, but I’d recommend this article:

    http://www.newdeal20.org/2011/07/07/how-maximizing-value-for-shareholders-robs-workers-and-taxpayers-50824/

    I frankly don’t think it goes far enough, in that it only hints at the option of public ownership without much detail in that direction. But its relevance to this debate is that it addresses the vague assertion by Republicans about the effect of tax rates on corporations.

    Indeed, businesses have created jobs, at least in the past, but they’ve all but stopped doing so now, and it’s important to try to understand why in some detail, past all the platitudes. I think this article suggests, at least to me, that low tax rates coupled with productivity-improving technology and this MSV ideology go a long way towards answering the question, “Where are the jobs?”

    The change I envision here isn’t practically a big one (although a huge one politically): instead of shareholders being private investors with deep pockets, shareholders should be employees and communities (local, state, and federal). Record profits could then become record public revenues, possibly even without taxes.


  4. Will says:

    But what to do when the GOP sees this job report and thinks, “Hmmm, if only we layed off more gov’t employees, this unemployment problem would solve itself!”


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