Unemployed still suffering with nowhere to turn

Despite the two-year anniversary of the official end of the latest recession, around 14 million people are still unemployed, and the unemployment rate is at a staggering 9.2 percent. With the last couple of months having been monopolized by the high-stakes debt-ceiling theatre, this particular problem has been completely neglected with the exception of a few dogged commentators.

I am worried that as the unemployment crisis lingers on, many will eventually become tired of the problem altogether. Despite the fact that they did not cause the financial crisis, efforts to implicate the unemployed for their plight have already begun seeping into conversations about the issue. Some individuals refuse to believe that the unemployed cannot find a job, and as time progresses that sentiment will no doubt become more widespread. I can already imagine what the rhetorical line will be: “if you haven’t found a job 3-4 years after the recession, you must be lazy.”

Graph of number of unemployed and job openings

As the above chart indicates, the chances of an unemployed person landing a job still remains dismally low. There are just far too many unemployed persons per job opening. Although it has declined significantly since its peak, the ratio of unemployed persons per open job currently stands at 4.7. Even if every unemployed person was doing absolutely everything they could to fill those jobs, around 79 percent of them would still be out of luck.

With the number of job openings still as low as it is, the unemployed have very few if any places to find employment. Although the total inaction on this problem might seem to indicate otherwise, this level of unemployment is not unavoidable. There are ways that the government could act to decrease unemployment significantly.

For instance, the government could undertake a fiscal stimulus project. Despite the ignorant commentary to the contrary, the first stimulus did help soften the blow of the recession even if it was not big enough to completely turn it around. Allocating hundreds of billions of dollars for infrastructure projects and other enterprises would serve the dual purpose of improving the country while employing those currently languishing without work.

In addition to fiscal stimulus, the government could start a public jobs program. A new Works Projects Administration would serve the same basic function as the fiscal stimulus, but with public jobs instead of private jobs. Like the fiscal stimulus, the number of unemployed people would decline, useful public projects would be completed, and the incomes paid out to those employed by the project would be spent, increasing aggregate demand.

The last idea that I will mention here is the possibility of a work-sharing policy. Although the best time to implement a work-sharing policy has passed, it still could be called upon to provide some relief to the ranks of the unemployed. Under a work-sharing policy, instead of a firm laying off, say, 10 percent of its workforce, it reduces the hours of each of its employees by 10 percent. This kind of policy has been successfully put into use in Germany during the recession. In the German approach to work-sharing, the hours are cut as mentioned above, and the burden of those lost hours are shared among the government, the employer, and the workers. The government replaces some of the income; the firm replaces some of it; and, the worker foregoes the rest.

Of course, implementing any of these policies would require that the government actually care about the high rate of unemployment which does not appear to be the case. The government certainly should be concerned about unemployment if not for moral reasons than for practical ones. High unemployment rates cause the government to spend significant amounts of money on welfare programs like unemployment insurance and food stamps. The amount it might spend employing those people would probably be more, but at least it would lead to the production of useful things, something welfare does not.

Instead of focusing on this however, both the President and the Congress have been almost exclusively trying to work out just how much the elderly, the poor, and the disabled will pay in order to reduce a budget deficit that they did not cause. With the government uninterested in their plight and very few job openings available, the unemployed truly have reached a point where they have nowhere to turn.

Enormous productive potential being wasted as unemployment creeps higher

The Bureau of Labor Statistics released their June employment report today, and almost all of the findings recorded in the report were awful. Unemployment is up to 9.2 percent, more than 0.4 percent higher than it was two months ago. This puts the total number of unemployed people — a term which only includes those who are actually looking for jobs — at 14.1 million. An additional 8.6 million people are underemployed, working part-time because no full-time work can be found.

The reaction to the report — at least in the mainstream outlets — has been predictably narrow. Article after article has been published speculating on the impact it will have for a presidential election which takes place 17 months from now. This speculation, in addition to being totally without merit as Nate Silver explains over at Five Thirty Eight, demonstrates the completely misguided way that political commentators typically handle these kinds of reports. Either out of laziness or a lack of creativity, the slant taken on news of this sort almost always involves discussing its relevance to some forthcoming election, even ones so far out as to make the commentary border on the absurd.

More substantive analysis would ask the questions that really matter. What does long-term unemployment actually mean for those who are made to endure it? What impact does it have on a family when one or both of the parents cannot find a job? In short, how much suffering does this massive amount of unemployment and underemployment impart on the people in the country?

About the only reprieve from the endless horse race analysis — analysis that crops up even when a horse race is not present — is Ezra Klein’s blog over at the Washington Post. Filling in for him today, Dylan Matthews highlights the significance of unemployment, pointing to two studies which show the permanent negative effects of unemployment on a person’s long-term income and health. It suffices to say that unemployment’s actual significance lies not in its effects on polling, but in the ways it wreaks havoc on the country.

In addition to the long-term health and income losses it imposes on individuals, large-scale unemployment and underemployment results in an enormous waste of productive potential. Imagine what 14.1 million people working every day could produce, and what 8.6 million people working full-time instead of part-time could produce. With that labor, we could be building high-speed rail lines, wind turbines, and repairing existing infrastructure. That of course is just to name a few possibilities. However, instead of utilizing this massive labor force, the present economy is preventing it from being tapped at all, at least in the private sector.

With unemployment increasing, the highest levels of income and wealth inequality on record, and decades of total wage stagnation for the bottom 90 percent, it becomes harder and harder to take seriously efforts to preserve American-style capitalism. When large swaths of the population are forced to remain idle because the private sector cannot conceive of ways to make them profitable, we need some other way to put them to work. Perhaps a public jobs program like the Works Project Administration — an approach Paul Krugman has endorsed — is something that should be seriously considered.

Whether it is a new WPA or something else, inaction on the issue of unemployment should be totally out of the question. But instead of working overtime to address the unemployment problem, the political apparatus of this country has been hooked into a months long bit of political theatre centering around the debt ceiling. Once that theatre concludes in early August, even worse theatre will start to kick into high gear surrounding the upcoming presidential election.

These misplaced political priorities are fairly normal for the circus that is the federal government, and in some cases the theatre they generate is harmless and amusing. The lack of action on unemployment is not such a case. In a more level-headed political atmosphere, Obama and the national Republicans would be completely embarrassed about the productive potential high unemployment is leaving untapped. But in this political climate, almost no one seems to care.

Good labor news for once: Connecticut mandates paid sick days

Connecticut Governor Dannel Malloy announced Tuesday that he had signed into law a bill which requires employers to provide paid sick days to their workers. The bill is the first of its kind in the country. Under the new rules, firms with 50 or more employees are required to provide their workers one hour of paid sick time for every 40 hours worked, up to 40 paid sick hours a year.

Along with Vermont’s single payer healthcare bill, this bill is one of the few bright spots in what has otherwise been a brutal year for poor and working people. Providing paid sick days to all workers has so many far reaching benefits that at least 21 nations already legally require it.

In addition to being fundamentally humane and moral, paid sick days decrease the spread of contagious illnesses. Workers who cannot afford to take time off when they are sick end up going into work despite being ill, potentially infecting those whom they interact with at their jobs. As the Economic Policy Institute points out, highly paid workers are typically already provided paid sick days, and so this bill will have more significant impacts for low-income employees. Ellen Bravo of Family Values @ Work makes the point that it is precisely these kinds of low-income workers — restaurant workers, service workers, and child-care providers — who interact with the public the most, making paid sick days a universal benefit for all of us who can now avoid catching whatever they might have.

As with all worker-friendly improvements — even those as seemingly uncontroversial as this one — business groups claim it will spell doom and gloom for the economy. According to Bridgeport News, the Connecticut Business and Industry Association lobbied against the bill, saying that it would “further hurt the economy and drive away business.” Joe Brennan, a lobbyist for the group, is quoted in the Associated Press story forecasting a coming dystopian world of mandated vacation time and work breaks.

Indeed, what a horror that would be. If Brennan is right, Connecticut’s support for paid sick days may have put it on the precipice of a slippery slope to the humane working conditions already standard across Western Europe.

In addition to Brennan’s unintentionally self-parodying comments, the familiar, less humorous set of business objections were also raised. As mentioned above, the threat of businesses fleeing from the state to escape the burden of providing minimally humane working conditions has been floated out. The bogeyman of higher prices to accommodate the paid sick days was highlighted in the MarketWatch article about the change. The article also featured Heritage Foundation talking points saying that ultimately workers would be forced to pay for the sick days in lost future raises — you know, those raises that fast food workers are always getting.

These lines of rhetoric of course are predictable. The race to the bottom logic so pervades our present political discourse that anyone paying close attention could probably tell you what the business opposition to any given set of worker-friendly initiatives is. But this is nothing new. The history of labor in the United States has been saturated with industry objections to positive worker treatment from the very beginning. As Philip Dray records in his book There is Power in a Union, identical objections about economic destruction were made against the now-celebrated movements to shorten the workday, improve workplace safety, and provide minimal wages.

Initiatives tagged as business-destroying and burdensome share a history with all the great workplace improvements of the last two centuries. Connecticut’s mandatory sick pay initiative is the newest member of that club, and hopefully many more like it — perhaps with identical bills in other states — will soon follow.