A Joyless Jobless Report
Those dreadful new unemployment numbers are even worse than they look.
Policy scholars and economists often ask two questions related to that so-called jobs gap: Given a certain rate of job growth, how long will it take for employment to return to normal? Or, for employment to return to normal by a certain date, how robust does job growth need to be?
Answering that first question with recent data proves a depressing exercise. At November's rate of job growth, unemployment would hypothetically never come down—with job growth never catching up with labor-force growth. So maybe we should look at October's rate of job growth. Extrapolating from that, unemployment would return to its pre-recession rate of 5 percent in perhaps two decades. (That's 2030, for those of you scoring at home.) So maybe we should take the longer view and assume that the economy adds jobs at the average pace of the last decade. Then the picture improves only slightly: It will take something like 12 years.
Answering the second question doesn't give you the warm and fuzzies, either. The economy would need to add more than 320,000 jobs a month, every month, to bring the rate down to 5 percent in five years. We last saw that kind of growth in the mid- to late 1990s.
4. We could do something about it, but the government won't.
There is no shortage of ways that the federal government, if it wanted to, could juice employment. To name a few: It could tax corporations hoarding cash to encourage them to invest or hire workers. It could slash payroll taxes. It could directly hire workers. It could offer vouchers for state and local governments to rehire the workers they have recently let go or positions they have left unfilled. It could offer cash bonuses for the unemployed who find work. It could implement tax incentives for work-sharing programs, so successful in Germany. It could offer companies cash awards for hiring workers who have been out of a job for more than six months. It could offer very-low-interest loans for proven entrepreneurs. It could offer federal dollars to states that lower regulatory burdens on small businesses. It could do all these things at once.
But such programs cost money, and the federal government seems hardly in the mood to reach into its pockets again. Right now, most stimulus is coming from monetary policy, conducted outside Congress' purview: The Fed is undertaking another round of quantitative easing. On the Hill side, the fiscal stimulus on the table involves keeping the Bush tax breaks—a slight boon for jobs—and reinstating federal extended unemployment benefits—a bigger boon, and a less-sure thing. The latter program would directly aid the 2 million workers scheduled to lose their extended jobless benefits before Christmas, plus 2 million more by spring. But that hardly makes up for the recent sunset of many provisions of the 2009 stimulus bill.
At most, the federal government is looking at changing the calculus by a few hundred thousand jobs. With 15 million unemployed, that is not much.
5. The silver lining.
The best thing that can be said about this jobs report is this: Other measures of our economic health are looking better. Most auspiciously, initial unemployment claims have started dropping, meaning that the unemployment rate should probably head south in December. And one month does not a trend make: The high unemployment rate and crummy job growth could be a blip, influenced by seasonal factors and up for major revisions in the next report.
But looking over the past nine months—or, really, the past three years—the story remains a bleak one. And the economy could sure use some happy surprises this Christmas.
Annie Lowrey, formerly Slate’s Moneybox columnist, is economic policy reporter for the New York Times.
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