Feeling the Grinch
(December 2, 2011) – From Robert Reich, Professor of Public Policy at the University of California at Berkeley:
“If Congress refuses to extend the payroll tax cut and/or unemployment benefits by December 30, it will create another drag on the economy. When people ask me what Congress is likely to do I always say the same thing: The odds are in favor of nothing. So while today’s jobs report is in the right direction, it’s way too early to break out the champagne.
“In brief: The Bureau of Labor Statistics’ household survey shows unemployment at 8.6 percent, and the payroll survey shows 120,000 new jobs in November (140,000 from the private sector, and a loss of 20,000 in the public sector). BLS also revised upward its job numbers for September and October.
“What does it mean? We’re not out of the woods but we might be seeing some daylight.
“Maybe. Here’s what you need to worry about:
“First, this rate of job growth is barely enough to keep up with the growth of the working-age population. So we’re not making progress on the backlog of more than 13 million jobless Americans, and another 11 million working part-time who’d rather have full-time jobs.
“Second, retail jobs constituted a third of new private-sector employment in November. Retail jobs tend to be unstable, temporary, and low-paying. Although the BLS is supposed to adjust for seasonal employment (i.e. Christmas), it doesn’t take account of the fact more and more Americans have been pushing up their Christmas buying to before Thanksgiving. So some of these jobs may not be around very long.
“Third, the jobless rate partly because around 115,000 who had been looking for jobs dropped out of the job market in November. Remember: If you’re not actively looking, you’re not counted as unemployed on the household survey.
“Fourth, hourly earnings are down, as are real wages. So to some extent Americans have been substituting lower wages for lost jobs – either by accepting lower wages at their current place of employment, or by getting the boot and settling for lower wages elsewhere. A job is better than no job, of course, but a job with a lower wage isn’t nearly as good as a job with at the same or better wage.
“Fifth, another reason for November’s job growth is that American consumers – whose spending accounts for about 70 percent of the economy – increased their spending. But this can’t continue because, as noted, wages are dropping. They spent more by cutting into their meager savings. Don’t expect this to last.
“Finally, there’s the wild card of the rest of the global economy – the European debt crisis and the high likelihood of recession in Europe, the slowdown in China and India, slower growth in developing nations. Some of our jobs depend on exports, which will drop. Others are keyed to the financial sector, which is being hit directly.
“Two final wild cards closer to home: the Fed and Congress. The Fed meets in two weeks to decide on further monetary easing. With today’s report, the odds of easing are down, unfortunately. Believe it or not, several Fed members are worried about inflation.
“And if Congress refuses to extend the payroll tax and/or unemployment benefits by December 30, it will create another drag on the economy. When people ask me what is Congress likely to do I always say the same thing: The odds are in favor of nothing.
“So while today’s jobs report is in the right direction, it’s way too early to break out the champagne.” –
(December 3, 2011) – From Simon Mann, theage.com:
“Americans fall through safety net as slump lingers”
“The US economic slump has lasted so long that more than half of the 14 million Americans without a job can no longer claim unemployment benefits. Only 48 per cent of the US jobless are receiving checques, while 75 per cent were receiving benefits early last year.
“The dramatic fall is despite the unemployment rate remaining stuck above 9 per cent and emergency measures put in place by Washington to stretch payments further than at any time since World War II. As Americans have lost their benefits, the number claiming emergency food stamps has surged to a postwar high of 45 million, compared to 26 million at the peak of the 1990s recession.
“Unlike in Australia, the jobless cannot remain on dole queues indefinitely. Only workers in the US who have been laid off qualify. College graduates and school leavers unable to find work are ineligible to find assistance. In the current downturn, retrenched employees receive payments … for a maximum of 99 weeks …
“But Congress will soon have to decide whether to continue funding Washington’s share of the 99-week benefits program. Should it fail to extend the program, a further 2 million unemployed stand to lose their benefits come February.” –
The dumbed-down majority of Americans will swallow those numbers – hook, line and sinker. Come December 30th, Congress will lie to us again, and so will the mathematicians in the BLS. Another half million will lose their jobs, but they’ll be hidden in the smoke and mirrors.
Joblessness isn’t at 8.6 percent – it’s closer to 30 percent. And we don’t have 14 million jobless – we have nearly 50 million. But we’re “recovering” from a recession, remember. And besides, we should only believe what we read in the local newspaper. Will Rogers wouldn’t lie, would he?