The unequal reality of Friday’s jobs report

By Zachary Karabell
November 2, 2012

Today’s U.S. Labor Department report on jobs confirms what we’ve known for more than a year: We have entered a new normal for jobs, with marginal gains, marginal losses and higher levels of unemployment becoming the unfortunate norm.

It also confirms that where you live, what you do, what race you are and what level of education you’ve attained profoundly shape your employment prospects. In spite of claims of a youth unemployment crisis and ample anecdotes about a punishing job markets for recent college grads, there is – statistically – no job crisis for the college-educated, with their unemployment rate hovering around 4 percent. That contrasts with the national average of 7.9 percent and an average in the mid-teens for those with a high-school degree. For African Americans of any education level, the rate is 14.3 percent; for Hispanics, 10 percent; for Asian Americans, 4.9 percent. If you live in Nebraska or North Dakota, the jobless rate is less than 4 percent, thanks to robust prices for grains and corn and the oil and gas of the shale revolution. If you live in Oklahoma, Iowa, Minnesota or Kansas, the rate is below 6 percent. But in California, Nevada or New Jersey, it is at or above 10 percent.

Above all, the jobs report confirms that the campaign rhetoric about what the next president and Congress will do to “get jobs moving again” is hollow at best. As the numbers starkly demonstrate, the notion of an evenly distributed national jobs crisis is a fiction. Yet all the vague plans touted by Barack Obama and Mitt Romney treat the challenge of employment in 21st century America as a shared national dilemma. Unemployment is a shared affliction the way Hurricane Sandy is a shared affliction. People who live in the Northeast and Northwest may be linked by common citizenship and a shared sense of community (at least in crisis) but not by equivalent pain and suffering. Same goes for unemployment.

A genuine and realistic set of government promises would first acknowledge that any long-term approach to jobs in America should start with identifying the unemployment problem as what it is: a regional one that affects certain industries and skills and workers much more than others. The reason that hasn’t happened is because our national and state politics for the most part avoid discussing issues such as class, education and race, unless it’s in highly coded fashion. The debate about taxing the wealthy is about as close as America comes to discussing class, and that doesn’t even approach a clear-eyed discussion about who is thriving and who is not. Romney’s dismissal of the 47 percent who receive benefits from the government and pay few taxes is another way of talking about the problem, and not the most constructive.

Even more, the notion that the government can “solve” the jobs problem is a classic example of over-promising and under-delivering. The only way an administration can create 12 million jobs in four years, as Romney has promised, is if the millions now receiving unemployment benefits are turned into government employees, in the style of the New Deal-era Works Progress Administration. You could make a persuasive case for that – after all, if people are being paid not to work, why not instead pay them to work, especially given that many of those unemployed are men ‑ yes, gender plays a role, given that male unemployment is higher ‑ who have construction and heavy labor skills that would be perfectly suited to infrastructure projects that America needs. Given that neither party nor candidate has floated that idea, we are left with the hope that higher growth and better government policies will spur employment.

Republicans trumpet the idea that lower taxes, less regulation and end to uncertainty will restore the trajectory of growth and hiring. Democrats place more faith in better programs and spending. Neither is a long-term fix. It’s possible that higher growth will come without much higher employment. As economists have come to realize, the models that correlate growth to employment have broken down largely because of technology and globalization. Manufacturing renaissance? That boosts growth and the gross domestic product, but the same factory that employed thousands in the 1960s employs hundreds today; it produces more because of robotics and inventory software that allows the company to calibrate demand and supply much more tightly. In short, more GDP doesn’t lead to nearly as much labor-force growth.

As for spending and government programs, even Keynes well understood that those work as short-term supports only if they lead to long-term self-sustaining activity. They are training wheels. You cannot endlessly stimulate your way to a sustainable economy and high employment.

An honest approach to jobs would cease to discuss the problems as a ubiquitous crisis. The challenge of tens of millions unemployed, underemployed and employed in jobs that barely pay a subsistence wage is juxtaposed with a larger slice of the population that is thriving, entrepreneurial and moving forward with or without the benefits (or harms) of old and new policies. The U.S. economy is not living up to expectations, but it is providing fertile ground for a significant majority of people to live their lives and attempt to fulfill their dreams. That is less than it was doing in the mid-20th century, but less true is not the same as untrue.

A relentless focus on problems is only constructive if it’s balanced by a reasonable recognition of underlying strengths. The United States has a structural unemployment issue that is new and unfamiliar, and constructive responses are being delayed because of a collective inability to acknowledge the nature of the challenge. There is zero evidence that the current situation is simply a cyclical response to a difficult time that will magically dissipate if government does things differently or stops doing things at all. Nor is there any evidence other than blind faith in past patterns that the business cycle will heal itself in the form of widespread and well-paid jobs. The U.S. and the global economic systems of the early 21st century are remarkably fluid, uncharted and daunting. Those systems are also truly brave new worlds of remarkable wealth creation and opportunities. Whoever wins the election next week will have to grapple with that. It will be in our collective interest if it is faced realistically.

PHOTO: Applicants fill out forms during a job fair at the Southeast LA-Crenshaw WorkSource Center in Los Angeles November 20, 2009.  REUTERS/Mario Anzuoni

12 comments

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Great article. I hope to see more of opinions on Reuters.

Posted by tmc | Report as abusive

What an original piece? Bash everything that govt might try to do yet offer NO solutions in its stead. I’d LOVE to hear someone with real ideas rather than just poo-pooing anyone elses. It’s pretty sad that this is front-page opinion on Reuters website.

Hey Reuters, why not ask all those economists you have on staff to put forward concrete plans instead of this blather. Salmon does sometimes (at least in bringing to light other great/terrible ideas).

Posted by CDN_Rebel | Report as abusive

Since 2000, America has lost roughly 2.8 million jobs and 50,000 businesses to China. This is largely because China’s dictators manipulate their currency to achieve an unfair advantage in world trade, and thereby retain their grip on power.

If we want those manufacturing jobs back, we’ll have to persuade China to allow the yuan to float freely, so that it will trade at a higher price, more in line with its true value. This would make American goods more price-competitive, thereby stimulating the US manufacturing sector.

Romney has promised to “get tough on China”, but he would cause even more harm by favoring the ultra wealthy at the expense of the middle class, widening the gap between rich and poor. Consider that “the six children of Walmart’s founders … had the same net worth in 2007 as the entire bottom 30 percent of American earners”. And “the top 10 percent of U.S. earners control two-thirds of the country’s wealth and the richest 400 Americans control as much wealth as the bottom 50 percent of Americans.” Thank you George Bush.

The solution? Persuade Obama to designate China a currency manipulator, much as Romney has already promised to. Obama is the man to do the job, because he is not beholden to ultra-wealthy donors and extremist right-wing Republicans, such as Paul Ryan.

References:
http://blogs.reuters.com/david-cay-johns ton/2012/06/20/americas-long-slope-down
huffingtonpost.com/2011/12/08/walmart-he irs_n_1137492.html

Posted by DifferentOne | Report as abusive

I keep hearing the comment that there is no recession for those with college degrees. While this is statistically correct in the aggregate it leads one to the false conclusion that getting a college degree- any college degree- in the present will assure a good career in the future. I received my college degree in liberal arts in the 1970′s and was able to establish and keep a job in industry like millions of my contemporaries. During this recession the average rate of unemployment or underemployment for kids with generic college degrees in between 40-50%. Temporary? I don’t think so. Industry no longer needs legions of middle managers and data crunchers like they did in the post war era. The future belongs to kids with degrees in science, math, engineering and technology. It also belongs to skilled mechanics, craftsman and repair technicians far more so than graduates in political science, gender studies and liberal arts.

Posted by jkk1943 | Report as abusive

I keep hearing the comment that there is no recession for those with college degrees. While this is statistically correct in the aggregate it leads one to the false conclusion that getting a college degree- any college degree- in the present will assure a good career in the future. I received my college degree in liberal arts in the 1970′s and was able to establish and keep a job in industry like millions of my contemporaries. During this recession the average rate of unemployment or underemployment for kids with generic college degrees in between 40-50%. Temporary? I don’t think so. Industry no longer needs legions of middle managers and data crunchers like they did in the post war era. The future belongs to kids with degrees in science, math, engineering and technology. It also belongs to skilled mechanics, craftsman and repair technicians far more so than graduates in political science, gender studies and liberal arts.

Posted by jkk1943 | Report as abusive

“You could make a persuasive case for that – after all, if people are being paid not to work, why not instead pay them to work,” Whoa, your progressive faction has a melt down with this excellent logic. Witness President Clinton who now disowns his effective 90′s policies that took people off the dole and into work.

“An honest approach to jobs would cease to discuss the problems as a ubiquitous crisis.” Whoa again, you dare to propose treating people differently because they are unequal . . . heresy to the progressive world view!

Posted by Noirswann | Report as abusive

While its true the globalization of the world work force and the introduction of robotics have changed the work environment. But its also intellectually dishonest to say this is why our unemployment rate is as high as it is. We haven’t seen a sudden change in either globalization or robotics. This has been a long term trend. We were at 4.7% unemployment nationally on January 1, 2007. To make matters much much worse is our participation rate was 66% back in 2007. If we had the same participation rate today as we had in 2007 we’d be at 10.5% unemployment today due to our growing work force.

Posted by DrDuude | Report as abusive

Why aren’t people talking about the elephant in the room?

The US has pursued since 1965 a policy of high-volume, low-skill immigration. What do we have to show for it?

50 million hispanics, who underperform consistently, even after several generations, in education, in taxes paid, and even in English. Asians do way better. Naturally, it has nothing to do with racism and everything to do with ethnicity and culture.

We need to move away from this and to low-volume, high-skill immigration. If America wants to remain the economic engine of the world, we must lure to our shores the best talent and best educated workers in the world.

On the same token, we MUST end illegal immigration. We must revoke Visas and work-permits, Green-cards and so on for the millions of low-skill laborers here in the US until low-skilled Americans have unemployment levels down to 2 percent. That means Blacks especially. Because then their wages will increase.

This means no US citizenship for the children of illegals, this means deporting illegals, and sending immigrants home. If you are not willing to push for this, you are not serious about restoring American prosperty for ALL Americans, not just those at the top of the food chain.

Bring the hispanic share of the population down from 17 to 10 percent, and I guarantee we will end unemployment as an issue, save hundreds of billions of dollars annually, and ensure sound management of our economy for decades to come as Democrats will be forced to be more fiscally responsible and pander less to those who would take from others what they themselves are unwilling to do or work for. It would benefit most of all our nations blacks, to whom we have our first and most important responsibility, as they are as American as the rest of us, and deserving of preferential treatment over waves and waves of immigrants.

This is the only sustainable solution. Get on it.

Posted by Paideia | Report as abusive

Here’s the seldom stated fixed barriers to sustainable employment in the USA.

1)Labor law parity. Exactly how does anyone think that importing goods from low labor standard countries while requiring high labor standards in the US is anything but treason against US Citizens?

2)Business law parity. Exactly how does anyone think that importing goods from low tax, industrial subsidizing countries while requiring US companies to follow punishing tax rules is anything but treason against US companies employing US Citizens?

[Note to stupid economists, politicians and traitors; "Free Trade" has nothing to do with case 1) or 2) above.]

The US must first stop the lawyers and politicians who craft(ed) defective trade treaties that do not address the reality of case 1&2, and secondly reverse, abrogate or otherwise correct the high treason that continues to be perpetrated upon the citizens of these United States.

A couple of examples: The US is the only western nation with punitive Depreciation laws on capital investment by US companies operating in the US. This alone is enough to ruin employment in the US.

More than half the products that could be exported from the US cannot since our trading “partners” make them illegal for import to their countries. While the US stands by and allows anything to come in such as, tainted food from China, defective steel from any nation, counterfeit pharmaceuticals from China, etc.

Every jack ass economist, lawyer, politician, voter and US Citizen has only themselves to blame for allowing a completely skewed labor, legal and business framework to devolve to the point that the US will cease to exist due to the pure and simple traitorous acts of the US Government, with and without the approval of the US tax slaves.

Talk ’till you’re blue or red, nothing will get better until both item 1 and 2 above are fully symmetrical between the US and its’ “trading partners.”

Posted by JP007 | Report as abusive

I am so hurt that 14% of blacks are unemployed during a time when blacks have more power than ever. It is a testament to the Democrat plantation failure.

Posted by BenGazhee | Report as abusive

Hey JP007, I think they are trying to create markets. American industry has been doing this since Nixon. Trying to “open up” the Asian markets. You see, our current capitalistic model requires continuous growth to succeed. Haven’t you heard the management term “If you’re not growing, you’re dying”. It was obvious as far back as the 70s that new markets would have to be created in Asia as the American and European markets were quickly becoming saturated. Monopoly laws were changed, financial and other regulations removed, all to keep the “engine” going. Finally the cold war ended and the real economic “chilled” wars begin. Until the inevitable formation of real global organizations occur and a single world currency and financial system adopted, these “Chilled war” skirmishes over exchange rates, labor laws, and environmental laws will continue.

And why not? In the last 30 years hundreds of millions of people have been lifted out of poverty due to globalization. At what cost? A 10-15 % unemployment rate in the wealthy countries. If “getting our jobs back” means that several hundred million people have to go back to abject poverty, I say no, keep the jobs, no one is starving in economic countries.

Posted by tmc | Report as abusive

Excellent, thank you.

Posted by matthewslyman | Report as abusive