Reports from the Economic Front

a blog by Marty Hart-Landsberg

The Jobs Report

The recently issued December 2011 employment report, coming four years after the official start of the recession in December 2007, included some good news: 200,000 jobs were added and the unemployment rate fell to 8.5%.  Although a hopeful development, there remains strong reason for caution.

Looking first at the job numbers, Doug Henwood, writing at his Left Business Observer blog, noted the following:  

Over a fifth of that gain, 42,000, came from couriers and messengers—meaning all those FedEx and UPS folks delivering holiday packages ordered from the likes of Amazon. Online retailers had a great December. Not so much for brick and mortar retailers, who’d apparently expected otherwise and hired ambitiously, adding another 28,000 to the headline figure. Given the ultimate disappointment of the holiday season, retail-store-wise, and the explicitly temporary nature of the courier jobs, these gains—which together accounted for over a third of the total—are likely to be reversed in January.

Considering the unemployment rate he added: 

[T]he unemployment rate, which is down from its recession peak of 10% in October 2009, has been flattered by what’s known in the trade as labor force withdrawal. That is, you’re not counted as unemployed if you’re not actively looking for work. Many of the unemployed have simply given up on finding work, and they’re not counted as unemployed. So even though the unemployment rate is down a point and a half from that 10% peak, the share of the adult population working for pay, the so-called employment/population ratio, is exactly the same now as it was at that peak.  That is not what we’d see in a normal recovery. We’re still 6 million jobs below the pre-recession peak at the end of 2007. At the growth rate we’ve seen over the last six months, it would take almost four more years to recoup those losses—and that’s not allowing for population growth. We’re still in a very deep hole and emerging only very slowly.

In fact, according to the Economic Policy Institute, “The jobs deficit of the 2008-09 period, defined as the number of jobs lost since the recession started plus the jobs we should have added to keep up with the normal growth in the working-age population, remains well over 10 million, and at December’s growth rate the United States will not recover its pre-recession unemployment rate until 2019.”

Here is an Economic Policy Institute chart illustrating just how far the employment/population ratio has fallen and thus how many people remain marginalized. 

stateofworkingamericaorg.png

To provide a different perspective on how bad labor conditions are in the United States, the Wall Street Journal recently ran an article describing how a number of U.S. multinational companies were pressing Canadian workers to accept sharp pay cuts or face layoffs by citing lower wages elsewhere.  “But instead of pointing to the usual models of cheap and pliant labor, such as China or Mexico,” companies like Caterpillar are “using a more surprising example: the U.S.”

Yes, we are now pulling everyone else down.  According to the Wall Street Journal, U.S. manufacturing unit labor costs fell 13% from 2000 to 2010.  By comparison, unit labor costs rose by 2.3% in Germany, 18% in Canada, and 15% in South Korea over the same period.  The chart below illustrates trends in hourly compensation (as compared to unit labor costs) for workers in manufacturing.  Nothing to be proud of in those figures.

mk-br478_cat_ns_20120105181803.jpg

 

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