Where are the jobs? There is no doubt that the lack of full employment is holding the economy back more than anything else. Money in the hands of working people tends to turn over very quickly, since so many people live paycheck to paycheck, so when the poorest are pinched the effects are much bigger than their comparatively low wealth might suggest. Given the system we have, nothing will change that quicker than a lot more work for quickening hearts, strong arms, and active minds. Work is always the source of all wealth.
The last two employment reports from the Bureau of Labor Statistics (BLS) were dismal, showing a net gain of 187k jobs in those two months against expectations of 330-400k. But what happened? And why can’t we gain more jobs? The answers may be cloaked in the numbers dutifully reported every month and deeper still in the system we have come to rely on.
Why didn’t we gain more jobs in December and January? The short answer is that the official BLS reports are full of an awful lot of fudge. Every January there is a small recession in the economy as seasonal retail workers lose their gig and construction workers are sent home until the weather turns decent. About 2.6M people lose their jobs in January 2014, very similar to the numbers every January.
A solid 2% of the workforce has this happen at the turn of every year, forcing them to bank up money when the jobs are plentiful in the Autumn. The pressure on them has to be enormous. They are living something like squirrels, although a loafing winter (possibly spent in a warmer clime) doesn’t sound like a bad idea. It’s a regular feature of our economy.
So why isn’t this reported more often? The people who watch and report these numbers aren’t necessarily interested in the harsh reality of people – they are looking for trends. So the whole thing is smoothed out by “seasonal adjustment” and the numbers are supposed to look even from one month to the next.
But they didn’t. Why is 2014 so lousy after all the fudge? Bad weather explains some of it, but a change in their formula for the adjustment explains even more. The ADP numbers, reported here more often, came in with a net gain of 413k over the same period, which beats expectations. Which number is right? You pick.
But there is a lot more to the debate on jobs than just the numbers from one month to the next. Many people continue to fret over the ongoing decline in workforce participation, or the percent of people over 16 years old that are working.
It has been Barataria’s position that in the last two years this is due to retirement and it will continue to accelerate. At some point, freeing up of jobs for young people makes the decline in worker participation a good thing. That doesn’t mean that a lot of people weren’t kicked out of the labor force before 2012 who are not coming back to look for jobs. There may be good reasons for them to do so, such as raising kids or going to school, or they may be part of a tragedy such as a forced early retirement.
Where are the jobs for everyone? There may never be. A quick look at developed economies and the rapidly developing ones shows that only a few have worker participation rates above 60%, and those tend to have even worse problems with income inequality than we do. Keep in mind that before 1968 the worker participation rate was significantly less than 60%.
This might be a feature of a modern economy, too, in that there is only so much work to go around. High productivity by machines might logically mean that people should spend more time loafing, as some do in January (whether they like it or not). The long term solution is probably a 32 hour workweek, if we insist on full employment. Another solution would be to put people to work fixing social problems on the public payroll. Either way, a large social change is necessary if there is a real cap of around 60% of all able people working before everything starts to get Dickensian.
The nature of work is certainly changing, however, and our systems are not capable of digesting the real problems. In one important case the numbers we use to gauge how we are doing deliberately mask one of the important features of work in the US today.
Having good policies in place that encourage people to be productive while still having time to raise the kids and do good things in the world – and perhaps have a generally happier life – demands a lot more honesty than we have right now in both public debate and the data that feeds into it.
After all the noise and numbers, what’s the state of work in the US today? I’ll bet most people aren’t happy with it. Let’s set the numbers aside for a moment and start there. One thing we can be sure of, however, is that the economy would take care of itself if working people had a little more going for them.
This article relies on a lot of research I gathered for two pieces in Mint Press News, which are linked here. If you aren’t familiar with Mint Press, please check them out. No one covers social justice with solid, in depth articles like they do! I am very proud to be a part of the team!