Sunday, June 13, 2010

Another "Jobless Recovery"

We keep being told that we are recovering, but that “unemployment will remain high for a prolonged period.” How does recovery not include jobs? How, why is recovery not defined by jobs? How does 400,000 temporary jobs, working for the government and ending in three months, represent “progress toward recovery” as Obama claimed last week?

Unemployment rolls dropped last month, but looking at jobs data reveals that it did so only because people stopped looking for work, or because their long term unemployment benefits ran out after 99 weeks. When your benefits run out you are no longer defined as unemployed.

Our government is playing games with us, and that is becoming so apparent that we are increasingly unable to continue ignoring it. We could, for instance, reduce unemployment to somewhere around 1% pretty much overnight be simply redefining the word again, as our government has done so many times to this date. Define it as people older that 18 but younger than 19 who have formally applied for at least five jobs per week for the past year, and I guarantee you unemployment would be below 1% in a heartbeat.

Is there any reason to define it in that manner? Of course not. But is there any reason to exclude from the count people whose benefits have expired? Other than to make the count smaller and reduce pressure on the politicians who take heat when unemployment is high, there is not. That didn’t prevent the politicians from creating the exclusions to lower the unemployment number and reduce the pressure on themselves.

Unemployment is 9.7% now, but if we defined it as, “everyone who wants to have a full-time job but is unable to obtain one,” unemployment would be very close to 20% and we would have to be calling this a depression. That’s how unemployment was defined in 1930, and using that definition unemployment was between 17% and 20% and they not only called it a depression, they called it the “Great Depression.” We avoid calling current times a depression because more than half of the actual unemployed are not defined as unemployed.

It’s hard to solve a problem while not admitting that you have a problem.

2 comments:

Bartender Cabbie said...

Very good commentary. Right on the money.

Arthur said...

It has been something like 30 years since I took economics, and I don't remember the exact distinction between a "depression" and a very bad "recession". But as I recall, it had to do with with deflation of the currency, and (maybe "or") a certain number of successive quarters of "negative growth". (Now there is an oxymoron for you! In plain language, the economy gets smaller.) I noticed about a year ago that both of these criteria had been met -- that we were in an depression, but nobody would admit it! Actually, I did hear one person admit in a television interview that we really were in a depression, but that we couldn't call it that, because it would frighten people if we did.
Bah!

By the way, does your 20% include those who are working full-time, but have to have three jobs to do it? And those who are working 40+ hours a week, but still can't make enough to keep food in their kid's bellies and a roof over their heads at the same time?

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