Good News vs. Bad News About the Economy
By April Mays on 12/06/2011 @ 05:25 PM
Let us start with the good news. In November the private sector, mainly small businesses, created 140,000 jobs and the public sector cut 20,000 for a net gain of 120,000 jobs. Over the last five months 100,000 jobs or more have been generated each month. This job creation has some to do with the unemployment rate dropping to 8.6% which is the lowest it has been in two and a half years. All these numbers sound good but do not scratch the surface on what is the reality.
Right under the good news is the bad news. The unemployment rate fell largely because 315,000 people simply stopped looking for jobs. This number is unusually high for the typical number of people dropping out of the search for work. Labor force participation is only 64%, 0.2 percentage points down from the month before. This does not mean that the economy is doing so much better than last month; it means that people are discouraged about their chances of finding work and thus giving up.
It is also important to consider that job creation does not necessarily mean that the jobs created are good. Many people are taking part-time work when full-time is not available. The underemployment rate, which is not calculated by the Bureau of Labor Statistics, is up from 17.8% in October to 18.1% in November according to a study done by Gallup. This means that 9.6%, about 8.9 million people, are working part time but wish to have full time employment.
Since February 2008 the economy has lost nearly 8.7 million jobs and only regained about 2.5 million, a net loss of 6.2 million jobs since the start of the Great Recession. Many of the jobs that were lost are jobs that people with less formal education and/or job related skills depend on. Based on an article from Brookings, the employment rate for a male high school graduate is 75% today compared to 96% in 1970, with today’s male high school graduate earning only $26,000 annually instead of the $50,000 earned in 1970, adjusted for inflation. According to Brookings, if the economy were to add a little over 200,000 jobs per month it would take over 12 years to close the jobs gap. This says that although the unemployment rate is dropping, the average worker is still hurting.
According to a studying released by the Heldrich Center for Workforce Development, only 7% of people that lost their jobs during the recession have returned to employment that has allowed them to maintain or exceed their previous financial status. Where does this leave the other 93%? The 15% at the bottom say that their loss was drastic and more than likely permanent with major changes to their life style. This also has implications on young graduates entering the work force. Those that once held better paying, upper level jobs are now seeking entry level positions that once were given to new graduates. The unemployment rate for the ages of 20 to 24 is 14.2%, and for the ages of 25 to 34 it is 9.2%.
It seems the greatest focus here in Washington, DC is deficit reduction. Talks of cuts to programs that help low-income people or those that are unemployed are all considered a way to curb the insatiable U.S. spending. But let me ask you, what should be considered more vital to America? Creating jobs, while in the meantime maintaining or increasing help to the Americans who need it the most, or allowing the military to remain overindulged and inefficient, while giving tax breaks to the most fortunate? I believe that job creation and maintaining safety nets for the most vulnerable is what is needed to get the U.S. back on track. This decline in unemployment may be a glimmer of hope, but it is certainly not cause to be considered a job well done. Let us give America back to the once middle class.