Let’s take a look at the employment situation and prospects for jobs starting with the cold hard numbers as they exist today. Please consider the following grim unemployment statistics.
- 14.8 million unemployed
- 3.8 million want a job but are not considered unemployed because they have not looked in the past four weeks
- 8.3 million have a part-time job, but want a full time job
Total that up and you will see there are 26.9 million people who are unemployed or underemployed.
Bear in mind the above numbers do not count self-employed real estate agents without a sale for months, salesmen on commission only, those selling trinkets on Ebay and many other ventures where income has precipitously plunged, sometimes to zero.
Also note that part-time job workers for even a few hours a week, are still considered employed.
Of the unemployed, 6.3 million have been out of work 27 weeks or longer. The average duration of unemployment is 30.2 weeks.
Those mind-numbing statistics are straight from the BLS Employment Situation Report For January 2010.
Bernanke is only fooling himself if he thinks this situation will turn around soon.I believe we are going to see the unemployment rate above 9% all the way out to 2015 even if there is no double-dip recession.
I made those projections in Mish Unemployment Projections Through 2020 and covered it again in Mapping Unemployment – You Make The Call – Downloadable Spreadsheet.
The Fed has given new unemployment projections that I believe are from Mars, and when I get a chance I will try and map them to show just what it will take to reach the Fed’s targets.
Millions of Unemployed Face Years Without Jobs
26.9 million is such a huge number that it is hard to equate to. Yet those are real people, many whose lives are permanently destroyed. Moreover, If my projections are correct, many of those jobs are not coming back for years, and most likely ever.
The New York Times puts some names and faces of the “New Poor” in an gut-wrenching four page article Millions of Unemployed Face Years Without Jobs.
Even as the American economy shows tentative signs of a rebound, the human toll of the recession continues to mount, with millions of Americans remaining out of work, out of savings and nearing the end of their unemployment benefits.
Call them the new poor: people long accustomed to the comforts of middle-class life who are now relying on public assistance for the first time in their lives — potentially for years to come.
Yet the social safety net is already showing severe strains. Roughly 2.7 million jobless people will lose their unemployment check before the end of April unless Congress approves the Obama administration’s proposal to extend the payments, according to the Labor Department.
“American business is about maximizing shareholder value,” said Allen Sinai, chief global economist at the research firm Decision Economics. “You basically don’t want workers. You hire less, and you try to find capital equipment to replace them.”
During periods of American economic expansion in the 1950s, ’60s and ’70s, the number of private-sector jobs increased about 3.5 percent a year, according to an analysis of Labor Department data by Lakshman Achuthan, managing director of the Economic Cycle Research Institute, a research firm. During expansions in the 1980s and ’90s, jobs grew just 2.4 percent annually. And during the last decade, job growth fell to 0.9 percent annually.
“The pace of job growth has been getting weaker in each expansion,” Mr. Achuthan said. “There is no indication that this pattern is about to change.”
On average, only two-thirds of unemployed people received state-provided unemployment checks last year, according to the Labor Department. The rest either exhausted their benefits, fell short of requirements or did not apply.
“You have very large sets of people who have no social protections,” said Randy Albelda, an economist at the University of Massachusetts in Boston. “They are landing in this netherworld.”
“We have a work-based safety net without any work,” said Timothy M. Smeeding, director of the Institute for Research on Poverty at the University of Wisconsin, Madison. “People with more education and skills will probably figure something out once the economy picks up. It’s the ones with less education and skills: that’s the new poor.”
Until she was laid off two years ago, Janine Booth, 41, brought home roughly $10,000 a month in commissions from her job selling electronics to retailers. A single mother of three, she has been living lately on $2,000 a month in child support and about $450 a week in unemployment insurance — a stream of checks that ran out last week.
She sends out dozens of résumés a week and rarely hears back. She responds to online ads, only to learn they are seeking operators for telephone sex lines or people willing to send mysterious packages from their homes.
On a recent weekend, she was running errands with her 18-year-old son when they stopped at an A.T.M. and he saw her checking account balance: $50.
“He says, ‘Is that all you have?’ ” she recalled. “ ‘Are we going to be O.K.?’ ”
Last week, she made up fliers advertising her eagerness to clean houses — the same activity that provided her with spending money in high school, and now the only way she sees fit to provide for her kids. She plans to place the fliers on porches in some other neighborhood.
“I don’t want to clean my neighbors’ houses,” she said. “I know I’m going to come out of this. There’s no way I’m going to be homeless and poverty-stricken. But I am scared. I have a lot of sleepless nights.”
There are many more stories like that in the article. Please take a look. More importantly, play that story out 20 million times because that is what is happening in the real world.
Here is a key snip about job growth from the article “During expansion in the 1950s, ’60s and ’70s, the number of private-sector jobs increased about 3.5 percent a year. During expansions in the 1980s and ’90s, jobs grew just 2.4 percent annually. And during the last decade, job growth fell to 0.9 percent annually.”
There are 138 million employed. If the economy added 1% a year, that would be 1.38 million workers a year. Yet, it takes 100,000 to 125,000 jobs a month to keep up with birth rate plus immigration.
Thus it takes 1.2 million to 1.5 million jobs a year just to hold the unemployment rate steady!
Questions For Pollyannas
- Think the unemployment rate is going to drop rapidly?
- Is another housing boom coming?
- Is commercial real estate going to be the savior?
- Think we can sustainably create 200,000 jobs a month?
- Is this a faith based economy where wishes are fishes?
Wishes Aren’t Fishes
I do not think the economy will create 200,000 jobs a month given the sorry backdrop of debt, deleveraging, and poor housing fundamentals, but even if wishes were fishes and that many jobs magically appeared, the unemployment rate would only drop by 1% or so a year.
That backdrop should help put union whining over not getting an 8% raise into perspective.
In case you missed it, please consider San Francisco Infested with Union Parasites and Pestilence; Outrage Over Transit Worker Pay.
It is hard to have anything but contempt for transit workers moaning about not getting an 8% raise when there are 26.9 million unemployed or underemployed people who would gladly do anything on the premise “Any job is a good job”.
Mike “Mish” Shedlock
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