America’s Unemployment Crisis: A Survey of the Issues and Statistics

 The extraordinary impact of unemployment levels unprecedented since the Great Depression is arguably the most dire domestic crisis facing the American people. In this  edition, we begin a multi-week examination of a dilemma that has eluded all attempts at resolution by the current administration. We begin with a recitation of the statistics that reveal the extraordinary extent of the problem. 

   The current  unemployment rate is 8.1%. Factcheck.org notes that when public sector jobs are included in the total, America has experienced a net decrease of 316,000 jobs since President Obama’s inauguration.

   At the start of the Obama administration, unemployment was 7.8%.  Despite vast sums spent on President’s stimulus package, it has never been below 8% during his administration. This year, the rate reached 8.1% in April, but rose again to 8.3 before returning to 8.1 in August. Most analysts believe the only reason it dipped back to 8.1 from almost 8.3 was because the unemployed gave up looking.

  The percentage of Americans working or actively looking for work has descended to 63.5%, the worst number since 1981.

  According to the Washington Post, there are about 3.7 job seekers for every opening.

  The number of Americans working part time because they couldn’t find full time positions rose to 9.3 million from 8.8 million. This means the total underemployment rate, including both the unemployed, the forced part timers, and those who have given up, is to 16.5, an increase from 16.2% the prior month, according to a USA Today study.

  Most worrisome, the number of long term unemployed (those jobless for 27 weeks or more) is 5 million, or 40% of the unemployed.  Both the civilian labor force (154.6 million) and the labor force participation rate (63.9%) declined in August. the employment-population ratio is 58.3%.  There are 844,000 “discouraged workers”– those who have given up looking.

 Job growth has gotten worse in 2012, averaging 139,000 per month compared to  153,000 in 2011. Much of the very limited growth was in low paying jobs such as leisure and food.  Manufacturing edged down in August.  Average hourly earnings went down 0.1%, and “real average hourly earnings” fell 0.7% in August, according to the Bureau of Labor Statistics.   12.5 million workers remain idled, according to the National Conference of State Legislators.

  As this report went to press, the number of jobless claims held near two month highs and the 4 week moving average for new claims rose by 2,000 to 377,750, according to a CNBC study.  It was the fifth consecutive weekly increase.  The rate of growth in jobs went down in the latest report.  Altogether, numbers this bad haven’t been seen since the Great Depression.

 Well-paid manufacturing jobs declined 15,000, the first decline since September of last year, according to a Yahoo!finance report.

  Average weeks unemployed rose to 39.2 from 38.8.  The meager reduction in the unemployment rate “is not so much in jobs created, but instead people dropping out of the labor force” according to Hamilton Place Strategies.

  Writing in the Wall Street journal, Mortimer Zuckerman notes that average wage increases have dropped to 1.6%, the lowest in the past 30 years.  He also expressed concerns that of the paltry number of private sector jobs available, 40% are in low paying categories. Zuckerman believes that we are experiencing a modern-day depression. California’s Democrat Rep. Henry Waxman, as quoted in Beltway Confidential, also calls the current economic climate a depression.  Josh Mitchell, also writing in WSJ, notes that the median annual household income fell in 18 states in 2011 from a year earlier after adjusting for inflation.

  The economy is not growing fast enough to produce adequate number of jobs.  From April-June, job creation rose only 1.7%, down from 2% in Jan.-March and way down from 4.1 in the final quarter of last year, according toHuffingtonpost.

   According to Sentier Reserch, the median household income in August fell 1.1% to $50,678.  “The August decline in real median annual household income is indicative of a struggling economy. Even though we are technically in an economic recovery, real median annual household income is having a difficult time maintaining its present level, much less “recovering.”

   While real income may have declined, costs went up. The CPI rose 0.6% in August, gas index rises 9.0%, according to the Bureau of Labor Statistics.

   The Associated Press reports that, home ownership has dropped to 64.6%, the worst level in over ten years. 14.9 million, or 13% of all American households, received food stamps-the highest level ever.  The official poverty rate is a record 15%, 46.2 million people.

  Despite an extraordinary $787 billion spent in “stimulus” spending, the economy has not only stagnated but actually gotten worse in many areas.

   According to William C. Dudley, President and Chief Executive Officer of the Federal reserve Bank of New York:

 “The performance of the U.S. economy since the end of the recession in 2009 has been disappointing.  Real GDP has grown at an annual rate of just over 2 % over this period, and it was even slower in the first half of 2012.  As a result…unemployment remains above 8 percent-an unacceptably high level-and participation in the jobs market remains depressed.  Moreover, about 5 million workers have been unemployed for six months or more.  This is important because long term unemployment can cause job skills to atrophy making it more difficult for such people to find jobs in the future.  While the good news is that the job-finding rates of the long-term unemployed have not deteriorated as many feared, we ought not to take this for granted going forward.”

   Over three years after the technical end of the recession, the share of Americans working continues at near-depression levels.

   The US Commerce Department reports that:

   New orders for manufactured durable goods in August 2012 decreased 13.2 percent to $198.5 billion.

   Excluding transportation, new orders fell 1.6 percent. Overall shipments fell 3.0 percent. Capital goods shipments declined 1.7 percent. Unfilled orders fell 1.7 percent. And inventories grew 0.6 percent in August. This is the largest decrease since January 2009.

   Excluding transportation, new orders decreased 1.6 percent.  Excluding defense, new orders decreased 12.4 percent.

    Shipments of manufactured durable goods in August, down two of the last three months, decreased $6.8 billion or 3.0 percent to $222.5 billion.  This was also the largest decrease since January 2009 and followed a 1.9 percent July increase.

  Transportation equipment, down two of the last three months, had the largest decrease, $5.5 billion or 7.9 percent to $63.9 billion. Unfilled orders for manufactured durable goods in August  decreased $16.9 billion or 1.7 percent to $978.7 billion.  This was the largest decrease since December 2009. Transportation equipment had the largest decrease, $12.0 billion or 2.1 percent to $568.6 billion.

  Non-defense new orders for capital goods in August decreased $18.5 billion or 24.3 percent to $57.7 billion.  Shipments decreased $1.2 billion or 1.7 percent to $69.5 billion.  Unfilled orders decreased $11.9 billion or 2.0 percent to $580.5 billion.  Inventories increased $1.5 billion or 0.9 percent to $171.9 billion.

  Defense new orders for capital goods in August decreased $4.1 billion or 40.1 percent to $6.1 billion.  Shipments decreased $0.1 billion or 1.7 percent to $8.1 billion.

   The indications are clear.  The current state of the economy is too weak to support real job growth. Issues such as the failed stimulus program, uncontrolled deficit spending, excess regulations, the highest corporate taxes in the developed world, uncertainty over personal taxes, excess regulations, a partisan NLRB, international trade practices and defense spending reductions are all taking a serious toll on the American economy. We’ll review those issues as this series continues.