Country ... USA
Employment

Mortimer Zuckerman: Those Jobless Numbers Are Even Worse Than They Look ... Still above 8%—and closer to 19% in a truer accounting. Here's a plan for improvement.

Burgess COMMENTARY
Every time a non-Obama supporting op-ed writer talks about the state of the economy they put the blame on Obama and government and Washington. When they are talking policy in the abstract, these same people are totally opposed to the idea that Washington, government and Obama should be engaged in major policy initiatives ... that would be 'big government' which they oppose.

So let us try to be a little more logical. Surely the situation is that major corporate decision makers have decided not to employ Americans in large enough numbers to increase employment and bring the unemployment levels down. There are several reasons for this:

• Companies like Apple decided that it was in Apple invstors best interest, and the exectuive class at Apple as well, including Apple millionaires, that they would be better off by usine non-USA workers in production manufacturing than American labor. This has worked out well for these stakeholders ... but not well for America in a broader way.
• Other major US multinational companies have distributed manufacturing around the world. While total employment for these companies has often increased, the US component has grown sluggishly if at all. Again, this is good for the company and its investor and executive stakeholders but not for US workers, US communities and in the aggregate the US economy.
• At the State level, budget rules have required Governors to reduce state employment to reduce costs. This has depressed total employment significantly, especially in the education sector, and every other sector where state level funding pays for the work.

Burgess UPDATE September 17, 2012
Last week the US Fed took steps that included the implementation of something referred to as QE3 ... essentially further easing of monetary policy to help stimulate the economy and in turn 'generate jobs'.

I have been of the view for a very long time that monetary policy has more power to restrain an economy than it has to stimulate an economy ... you can stop something by pulling on a piece of string, but you cannot push something with the string. Not surprisingly the response of the stock market to this QE3 was for stocks to go up ... not surprising more money chasing the same amount of stocks ... basic supply and demand.

But what exactly is the mechanism that will create jobs. It is four years since the start of the great panic and implosion of the financial sector. Four years ago jobs were being lost in the US economy at the rate of about 750,000 a month ... and now largely forgotten by the media and most political analysts on the Right ... and while the banks have been helped, and the stock market has been helped, ordinary homeowners and ordinary people seeking jobs have not been helped very much. The auto industry 'bail-out' saved a huge amount of jobs ... stopped further catstrophic job loss, but stabilized employment more than it created new employment.

Why does the Right blame Washington ... that is President Obama ... for the weak job situation.

Seems to me it is because fiscal stimulus does work and they oppose this because of their simplistic focus on the liabilities of the Government balance sheet and their unwillingness to have taxpayers pay for what they need. But this is not the core issue. The core issue is that the bankers and the corporate decision makers are not interested in employing American workers when they are able to employ lower cost workers in other parts of the world at a lower cost. In the long run this means that the US will have no economy ... but for short term investors, this really does not matter.

I have called the behavior of bankers and corporate leaders over the past several years the equivalent of economic treason ... and I think this is pretty fair for most of this elite. In the last few days Apple has launched its iPhone5 and had a record demand for first day sales. This most valuable American company does not make any of its products in the USA and the news about the first day sales is good for investors but means absolutely nothing to American workers. In my view, Steve Jobs may have done right by his investors, but he did not do right by his country. This is the executive norm, and very bad for the United States.

Today is the one year anniversary of OccupyWallStreet ... the core questions Occupiers were asking a year ago still have not been answered. The 1% get richer, break laws and don't go to jail ... the others play by the rules, get poorer, can't pay their bills, can't pay the mortgage, lose their homes and end up on the street. The 1% can tell people to 'go get a job' but the fact is that the jobs do not exist ... and big companies in the private sector can do just fine by keeping jobs low in the USA and making their products in low wage overseas locations. This is a foundational problem ... and needs to be a big part of the dialog ... and soon!
Peter Burgess

Mortimer Zuckerman: Those Jobless Numbers Are Even Worse Than They Look ... Still above 8%—and closer to 19% in a truer accounting. Here's a plan for improvement.

Don't be fooled by the headline unemployment number of 8.1% announced on Friday. The reason the number dropped to 8.1% from 8.3% in July was not because more jobs were created, but because more people quit looking for work.

The number for August reflects only people who have actively applied for a job in the past four weeks, either by interview or by filling an application form. But when the average period of unemployment is nearly 40 weeks, it is unrealistic to expect everyone who needs a job to keep seeking work consistently for months on end. You don't have to be lazy to recoil from the heartbreaking futility of knocking, week after week, on closed doors.

On employment

Assistant editorial page editor James Freeman on the August jobs report and how it gels with President Obama's speech last night. Credit: Associated Press

How many people are out of work but not counted as unemployed because they hadn't sought work in the past four weeks? Eight million. This is the sort of distressing number that turns up when you look beyond the headline number.

Here's another one: 96,000—that's how many new jobs were added last month, well short of the anemic 125,000 predicted by analysts, and dramatically less than the (still paltry) 139,000 the economy had been averaging in 2012.

The alarming numbers proliferate the deeper you look: 40.7% of the people counted as unemployed have been out of work for 27 weeks or more—that's 5.2 million 'long-term' unemployed. Fewer Americans are at work today than in April 2000, even though the population since then has grown by 31 million.

We are still almost five million payrolls shy of where we were at the end of 2007, when the recession began. Think about that when you hear the Obama administration's talk of an economic recovery.

The key indicator of our employment health, in all the statistics, is what the government calls U-6. This is the number who have applied for work in the past six months and includes people who are involuntary part-time workers—government-speak for those individuals whose jobs have been cut back to two or three days a week.

They are working part-time only because they've been unable to find full-time work. This involuntary army of what's called 'underutilized labor' has been hovering for months at about 15% of the workforce. Include the eight million who have simply given up looking, and the real unemployment rate is closer to 19%.

In short, the president's ill-designed stimulus program was a failure. For all our other national concerns, and the red herrings that typically swim in electoral waters, American voters refuse to be distracted from the No. 1 issue: the economy. And even many of those who have jobs are hurting, because annual wage increases have dropped to an average of 1.6%, the lowest in the past 30 years. Adjusting for inflation, wages are contracting.

The best single indicator of how confident workers are about their jobs is reflected in how they cling to them. The so-called quit rate has sagged to the lowest in years.

Older Americans can't afford to quit. Ironically, since the recession began, employment in the age group of 55 and older is up 3.9 million, even as total employment is down by five million. These citizens hope to retire with dignity, but they feel the need to bolster savings as a salve for the stomach-churning decline in their net worth, 75% of which has come from the fall in the value of their home equity.

The baby-boomer population postponing its exit from the workforce in a recession creates a huge bottleneck that blocks youth employment. Displaced young workers now face double-digit unemployment and more life at home with their parents.

Many young couples decide that they can't afford to start a family, and as a consequence the birthrate has just hit a 25-year low of 1.87%. Nor are young workers' prospects very good. Layoff announcements have risen from year-ago levels and hiring plans have dropped sharply. People are not going to swallow talk of recovery until hiring is occurring at a pace to bring at least 300,000 more hires per month than the economy has been averaging for the past two years.

Furthermore, the jobs that are available are mostly not good ones. More than 40% of the new private-sector jobs are in low-paying categories such as health care, leisure activities, bars and restaurants.

We are experiencing, in effect, a modern-day depression. Consider two indicators: First, food stamps: More than 45 million Americans are in the program! An almost incredible record. It's 15% of the population compared with the 7.9% participation from 1970-2000. Food-stamp enrollment has been rising at a rate of 400,000 per month over the past four years.

Second, Social Security disability—another record. More than 11 million Americans are collecting federal disability checks. Half of these beneficiaries have signed on since President Obama took office more than three years ago.

These dependent millions are the invisible counterparts of the soup kitchens and bread lines of the 1930s, invisible because they get their checks in the mail. But it doesn't take away from the fact that millions of people who had good private-sector jobs now have to rely on welfare for life support.

This shameful situation, intolerable for a nation as wealthy as the United States, is not going to go away on Nov. 7. No matter who wins, the next president will betray the country if he doesn't swiftly fashion policies to address the specific needs of the unemployed, especially the long-term unemployed.

Five actions are critical:

1. 1. Find the money to spur an expansion of public and private training programs with proven track records.
2. 2. Increase access to financing for small businesses and thus expand entrepreneurial opportunities.
3. 3. Lower government hurdles to the formation of new businesses.
4. 4. Explore special subsidies for private employers who hire the long-term unemployed.
5. 5. Get serious about the long decay in public works and infrastructure, which poses a dramatic national threat. Infrastructure projects should be tolled so that the users ultimately pay for them.

A version of this article appeared September 8, 2012, on page A15 in the U.S. edition of The Wall Street Journal, with the headline: Those Jobless Numbers Are Even Worse Than They Look.