Don’t Be Fooled by the Unemployment Report

The unemployment report came out an hour and a half ago and it’s not good news, though the news reports may be bland.

It probably will be reported that nothing much has changed; but things have changed: no improvement means erosion.

We lost 95,000 jobs last month; remember, we need about 160,000 jobs created each month just to keep up with population and labor force growth. AND the current rate of 9.6 percent is among the highest unemployment rates there have been. AND, the long-term unemployment rate has never been higher. AND, 14.5 million Americans are out of work.

And, mind you, the unemployment rate is high and stubborn a year after the recession is “officially” over. Don’t listen to that official junk, the indicator for recession should be more heavily weighted towards unemployment.

And the IMF estimates that 210 million workers worldwide are officially out of work, up 30 million from several years ago.

Ouch.

Unemployment means permanent loss: family distress (Neuman), labor scarring (Irons), social unrest (Standing) and lost output (Uchitelle).

What is to be done?  In the U.S., southern states are seeing the worst of job losses, most likely the lingering result of real-estate bubbles. Don’t get me wrong; it is bad in those northern political swing states — over 10 percent in Ohio and over 13 percent in Michigan. But the job-loss rate in the south is faster! This trend points to the solution.

According to the International Labour Organization, we are among the nations whose unemployment is caused mainly by a lack of demand.

That’s why you hear the chorus from economists “SPEND BABY SPEND.”

Clearly, it is not only fiscal stimulus we need. Structural unemployment — firms want workers with skills that are in short supply — is solved by creative labor-market institutions — union apprenticeship, community college, and work-sharing programs. Economist Eileen Appelbaum recently argued physical infrastructure investment is nice; but, we also need human capital infrastructure investments.

First, get a trillion-dollar stimulus to create jobs. It is just that simple.