Jobs & 'Trade' Data Update Jun10 is now available
Links to sections in this article:
Job Loss Data Summary: National, Colorado, Colorado Springs since their peaks.
Colorado Springs Jobs
Jobs and "Trade" Details (added graphs of
- growth in part-time employment,
- Colorado Springs computer & semiconductor job losses, and
- Colorado Springs losses/gains in major categories)
Trade Deficit Trend
Advanced Technology Products & Green "Trade" Deficits
US Unemployment Rate - Official vs. Actual
US Unemployment Level - Official vs. Actual (now shows U-2 "job losers" graph)
Recent Relevant Articles Here's the list ... excerpts at the link.
- John Williams' DEPRESSION SPECIAL REPORT, 8/1/09
- The demise of the dollar By Robert Fisk, 10/6/09
- Dollar tumbles on report of its demise By Stephen Foley, 10/7/09
- Dollar Hysteria: Is the Sky Really Falling? by Mike Whitney, 10/6/09
Links to sections of my June Jobs & Trade article:
The links below take you to sections of the June update that are unchanged and need not be repeated here. Here's a summary of the points made ... more at the links:
Causes of growing fiscal deficits?
Section contains an analysis based on CBO data of fiscal deficit origins. Summary:
37% of the deficit was caused by what the CBO calls the "economic cycle." [Note: that's actually not from a "cycle", but from "long-term structural changes" that have destroyed the economy thanks to "free trade" & deregulation.]
33% is from new legislation signed by Bush.
20% is from Obamas extension of several Bush policies [those who supported Bush shouldn't complain about the above ... they supported them].
7% "About 7% comes from the stimulus bill that Mr. Obama signed in February.
3% And only 3% comes from Mr. Obamas agenda on health care, education, energy and other areas. If the analysis is extended further into the future, well beyond 2012, the Obama agenda accounts for only a slightly higher share of the projected deficits. ..."
Related: Think Again: History Isnt a Dirty Word By Eric Alterman 11/19/09
Mike Allen and Jim Vandehei at Politico reported that ... Obama has spent more money on new programs in nine months than Bill Clinton did in eight years, pushing the annual deficit to $1.4 trillion. This leaves little room for big spending initiatives. This fact is taken completely out of the context of the recession. The title of the article refers to the White House's spending binge.
The deficits, tax cuts, and spending of the previous administration are ignored entirely. ... The Bush tax cuts: When the Bush tax cuts sunset at the end of 2010, the previous administration will have left the government holding the bag for well over $2 trillion in lost revenue. The extraordinary debt and deficits accrued during Bushs tenure have been compounded by the implosion of the financial system. In addition, the estimated eventual costs of the costly, unnecessary, and counterproductive Iraq war are now in the trillions to say nothing of the costs of more than six years of failure in Afghanistan.
On stimulus, "trade" anti-stimulus, and the GDP equation
I explain why both stimulus and trade policy reform are necessary. The "trade" deficits produced by "free trade" policies are enormous "trade deficit" anti-stimulus that wipes out just about any stimulus that could possibly be applied. This is why Obama's stimulus will fail, not because his spending has been reckless; it has not been (... as described just above).
The undermining of US wages is largely responsible for The 9/22/08 Economic Crisis ... collapsing demand has inevitably led to a collapsing economy. Yes, deregulation, financial fraud, and speculation precipitated the debacle, but the economy has become more and more unstable as U.S. wages have been systematically undermined. The tax cuts of recent years, ostensibly to stimulate the economy by increasing investment and supply, don't work when demand is collapsing because wages have been undermined.
Added 1/10/10 regarding financial fraud fallout:
Hollywoods Brilliant Coda to Americas Dark Year By FRANK RICH 12/12/09. Excerpt (full article included below):
... The private-equity deal makers who bought and sold once-solid companies like trading cards, saddling them with debt, never saw the workers whose jobs were shredded by their cunning games of financial looting. The geniuses in Washington and on Wall Street who invented junk mortgages and then bundled and sold them as securities didnt live in the same neighborhoods as the mortgagees, small investors and retirees left holding the bag once the housing bubble burst.
Those at the top are separated from the consequences of their actions. They are exemplified by Robert Rubin, formerly of Citigroup and a mentor to both Obamas Treasury secretary and chief economic adviser. He looked the other way when his bank made ruinous high-risk bets, and then cashed out and split, leaving taxpayers to pay for the wreckage while he escaped any accountability. Such economic wise men peer down at the country from a hermetically sealed bubble of privilege and self-interest ... [a]nd they tend to think, as Lloyd Blankfein of Goldman Sachs notoriously put it, that they are doing Gods work to sustain our free-market system. ...
"God's work" indeed.
The Other Plot to Wreck America By FRANK RICH 1/9/10. Excerpt (full article included below):
... in the 16 months since that other calamity in downtown New York -- the crash precipitated by the 9/15 failure of Lehman Brothers -- most of us are still ignorant about what Warren Buffett called the financial weapons of mass destruction that wrecked our economy. Fluent as we are in Al Qaeda and body scanners, when it comes to synthetic C.D.O.s and credit-default swaps, not so much.
What we dont know will hurt us, and quite possibly on a more devastating scale than any Qaeda attack. Americans must be told the full story of how Wall Street gamed and inflated the housing bubble, made out like bandits, and then left millions of households in ruin. Without that reckoning, there will be no public clamor for serious reform of a financial system that was as cunningly breached as airline security at the Amsterdam airport. And without reform, another massive attack on our economic security is guaranteed. Now that it can count on government bailouts, Wall Street has more incentive than ever to pump up its risks -- secure that it can keep the bonanzas while we get stuck with the losses. ...
Last week, a Republican congressman, Darrell Issa of California, released e-mail showing that officials at the New York Fed, then led by Timothy Geithner, pressured A.I.G. to delay disclosing to the S.E.C. and the public the details on the billions of bailout dollars it was funneling to its trading partners. In this backdoor rescue, taxpayers unknowingly awarded banks like Goldman 100 cents on the dollar for their bets on mortgage-backed securities.
Why was our money used to make these high-flying gamblers whole while ordinary Americans received no such beneficence? ...
This is outright criminal behavior. Geithner (and Summers, too) must go if Obama is to retain a shred of credibility on financial reform.
What to do about the 'trade deficit'?
In short, what's necessary is to create balance. Balance. What a radical concept! Those who say doing that is "protectionism" are unbalanced because what's going on now is "reverse protectionism." If we were to be protectionist, we'd have a "trade" surplus, not a deficit!
Manufacturing Jobs & Trade Agreement History
Shows that the leveling off, and later decline, of manufacturing jobs began in the 80s with the onslaught of "conservative" economic policies.
Trade Deficit & Trade Agreement History
Shows that the build up of "trade" debt also began in the 80s with the onslaught of "conservative" economic policies.
Data Sources ... see where I get my data.
Irrational belief in the infallibility of the "free market" and "free trade" has led to devastating offshoring of good-paying manufacturing and IT jobs. This has undermined the US economy, leading to its collapse. Nationally, policies continue to be a disaster for Mfg Jobs, IT Jobs, and Advanced Technology Products "trade". Summary of what's shown in the graphs:
- National Mfg & IT: Through Oct09, the U.S. lost 33.8% of manufacturing jobs and 23.8% of IT jobs since their peaks.
- National Jobs: Jobs haven't kept up with population growth ... Gap: 14.9 million jobs in Oct09. Job loss Jul09 - Oct09: 1.92M jobs (compared to 2.91M jobs lost Nov08 - Feb09).
- National Job Losers: U-2 rose to 6.9% of the labor force. The U.S. has lost 8.4M jobs since Nov07 (compare to the losses since Nov07 through Feb09: 4.9M jobs).
- Colorado jobs also haven't kept up with population growth ... Gap: 399K jobs in Sep09 (K= 1000). There are 11.1K fewer jobs in Sep09 than at the peak in Dec00.
- Colorado Springs has been a major disaster for manufacturing and information technology, worse than the state or nation. As of Sep09, the Springs has lost 50.2% of manufacturing jobs and 50.3% of IT jobs since their peaks. That's 20.7K high-paying mfg & IT jobs lost. Is there any wonder the Springs is in fiscal trouble?
- How are those "conservative" economic policies working out for you?
Looking at the data & graphs in this article, is there any wonder that the U.S. economy is in shambles thanks to "free trade" offshoring? Examples of what "trade" policy has produced: Tent Cities in LA 3/16/09, Cities Deal With a Surge in Shantytowns 3/25/09, Tent city becomes home in tough times, CNN on Seattle 4/13/09, Tent Cities: An American Tradition 3/19/09, Economic casualties pile into tent cities - USATODAY.com, 5/6/09.
Job Loss Data Summary: National, Colorado, Colorado Springs since their peaks
|Job Loss Summary: Nat'l, CO, Cos for Mfg & IT|
Yea! Colorado Springs has now lost over 50% of its Mfg & IT jobs!!!
Comparison of Percentage of Manufacturing Jobs Lost
|Mfg Job Loss Comparison by Region|
Comparison of Percentage of IT Jobs Lost
|IT Job Loss Comparison by Region|
Woe is Colorado Springs ... see also the graphs and table below showing job losses.
The graph at right from Business Week, Can the Future Be Built in America? 9/10/08, shows a contrast. While manufacturing and information technology have collapsed, bank consolidation, deregulation, and speculation have allowed financial industry profits to quadruple since 1980 when Reagan began the "conservative" revolution. See Manufacturing Jobs & Trade Agreement History for how the growth of manufacturing jobs stopped about the same time. Along with "trade" policies undermining wages, what are called "conservative" tax policies did the same (see Data on Income & Tax Distributions).
|Financial profits soar as manufacturing & IT collapse|
These "conservative" economic policies replaced the real economy with an imaginary economy built on bubbles: dot-com, housing, "trade", deregulation, financial fraud, and speculation. As the bubbles have burst, the economy has collapsed.
Jobs and "Trade" Details
US Job Growth has nowhere near kept up with Population Growth ... especially as jobs have been lost. The gap is 14.9 million jobs. There are now 8.4 million fewer jobs than in Nov 07.
During the Jul09 - Oct09 four-month period, the Seasonal Adjusted Employment Level (LNS12000000) declined by 1.92M jobs (compared to 2.91M jobs lost in the four-month period, Nov08 - Feb09).
In Oct09 there were about 7M persons who were Multiple Jobholders, that's down from 7.75M in Apr09. That's 5.1% of employment.
The average for the first 6 months of 2009 is 7.5M jobs. There were 8M who held multiple jobs in Aug 2008. There aren't as many jobs anymore to allow persons to have multiples.
The number of jobs shrinks and at the same time the number of part-time jobs increases. From around Jan 01 to Jan 05, the number of part-time jobs increased by about 2 million. There was relative stability for the next ~3 years. Then, from Jan 08 through Oct 09 the increase has been over 2.5 million.
|The Rise in Part-time jobs|
Population increasing can leave a huge jobs gap, 14.9M jobs, when jobs don't increase; the gap increases rapidly when the number of jobs declines.
|US Job "Growth" and the Gap between Jobs Needed and Official Employment|
National Manufacturing Job Trend ... a continuing bloodbath.
|National Mfg Jobs Trend ... onward & downward|
National IT Job Trend. Bummer, people who lost their manufacturing jobs retrained for these jobs. But somehow the US needs 65,000 H-1B visas to import workers because there's a shortage?
Many of those who lost their jobs in manufacturing retrained in IT, but those jobs are going, too. For what jobs will retrain for now? Note that Advanced Technology Products jobs are being lost, too? (... see below ...) The truth is they'll be expected to get jobs at WalMart.
|National IT Jobs Trend ... onward & downward|
Some articles related to IT employment:
But U.S. Employed Foreign Guest Workers Outnumber Unemployed Techies 5/28/09
It is no secret that the H-1B visa program is rife with fraud and abuse. The program allows American companies to exploit foreign IT workers at the expense of Americans, drives down the wages of all those in the field and costs the U.S. countless tax dollars.
... in January of 2009, the total number of workers employed in the information technology occupation under the H-1B program substantially exceeded the 241,000 unemployed U.S. citizen workers within the same occupation."
... a recent study conducted jointly by researchers at New York University's and the University of Pennsylvania's business schools ... found that the use of H-1B visa workers by U.S. companies drives down the wages of American IT workers by as much as six percent.
"We simply sought to dispel the myth that globalization generates no losers," the researchers wrote.
Seriously now, this would be laughable if it weren't so sick and despicable. Why is it U.S. policy to systematically undermine the educational investment of its citizens by causing them to lose their jobs and depressing the pay of those who still manage to have a job? Answer: to depress wages and increase profits ... to increase return-to-capital and reduce return-to-labor.
Despite the mfg & IT job losses, they want even more imported high-tech workers. Incredible!
Task Force to Recommend Overhaul of U.S. Immigration System By Spencer S. Hsu, Washington Post Staff Writer, July 8, 2009.
A bipartisan task force will recommend today that the United States overhaul its immigration system in response to national security concerns, saying that the country should end strict quotas on work-based immigrant visas to maintain its scientific, technological and military edge.
"The continued failure to devise and implement a sound and sustainable immigration policy threatens to weaken America's economy, to jeopardize its diplomacy, and to imperil its national security," concluded an independent Council on Foreign Relations panel, co-chaired by former Florida governor Jeb Bush (R) and former Clinton White House chief of staff Thomas V. "Mack" McLarty III.
The report comes as President Obama and Congressional Democrats say they expect to begin debate on a comprehensive immigration plan within a year. But key Republicans -- including Sen. John McCain (R-Ariz.), the 2008 Republican presidential nominee and co-sponsor of previous overhaul legislation -- have said a plan must include expanding temporary-worker programs. ...
Edward Alden, the task force's director and a CFR fellow, said the involvement of Bush, a prominent national Republican and the brother of former president George W. Bush, and McLarty, a Democrat and senior international fellow at the U.S. Chamber of Commerce, was intended to create political space for centrists in both parties.
The Council on Foreign Relations, Republicans, DLC Democrats, the U.S. Chamber of Commerce ... the usual suspects ... supporters of "free trade" and undermining wages. Excellent!
Colorado Manufacturing Job Trend ... also accelerating downward. Sure enough, this graph required a new Y-axis minimum value this month.
|Colorado Mfg Jobs Trend ... in June update minimum of Y-axis was 130,000 ... now below that level|
Colorado IT Job Trend ...
|Colorado IT Jobs Trend|
Colorado Non-Farm Jobs Trend. In Sep09, Colorado would need another 399,000 jobs to have kept up with population growth. There are 11,100 fewer jobs than in Dec00! ... Over 9 years that's negative progress. Colorado has lost 120,000 jobs since Aug 08 ... see the chart below for jobs lost by month.
|Colorado Non-Farm Jobs Trend .. Gap increasing|
Colorado Springs Jobs
Colorado Springs Manufacturing Job Trend ... also accelerating downward ...
|Colorado Springs Mfg Jobs Trend ... in June update minimum of Y-axis was 14,000 ... now below that level ... losses OVER 50%!!!|
Colorado Springs IT Job Trend.
|Colorado Springs IT Jobs Trend ... losses OVER 50%!!!|
Think about this: Over 50% of Mfg & IT jobs lost from Colorado Springs. Read about this in the corporate media that promotes "free trade"? Colorado Springs has lost a total 20,700 of these jobs since their respective peaks.
While other jobs have come into Colorado Springs, there have not been enough to offset the losses. The chart below shows that as of Oct, Colorado Springs has lost 14,600 jobs since Nov07.
Can there be any wonder Colorado Springs is in so much financial trouble? Also responsible for Cos fiscal woes are "conservative" growth policies; see Taxes: 2C or Not 2C?, 10/27/09. For an analysis of what to do about this, see Economic Development: What to do locally?
|Colorado Springs Nonfarm Job Trend|
Jobs in what areas have been gained and lost? You can do your own research on the BLS site. Here are some examples of what's happened. Note this local data is not seasonally adjusted, so some of the sectors show considerable seasonal variation. Below is a bar chart showing the percentage losses Sep09(prelim) - Mar07.
|Colorado Springs Job Gains & Losses ... mostly losses!|
Look at the drastic decline in Computer jobs in Colorado Springs since the Apr 01 peak ... 62.2%! Just Amazing.
|Colorado Springs Computer & Electronics Products Jobs Trend|
Look at the even faster decline of Semiconductor jobs in Colorado Springs ... 72.0% lost!!! Semiconductor and Other Electronic Component Mfg is a subcategory of (included in) the category above.
|Colorado Springs Semiconductor Jobs Trend (a subset of Comp & Elect Prod Mfg)|
Trade Deficit Trend
The "trade" deficit trend is a classic case of overshoot & collapse as the U.S. economy has collapsed thanks to "free trade" undermining wages thereby collapsing consumer demand. Of course, the illogic goes, we have to have even more "free trade", cheap products because wages have been stagnant and people can't afford higher prices.
To make up for the undermining of wages causing a collapse of demand, "conservative" economic policies replaced the real economy with an imaginary economy built on bubbles: dot-com, housing, "trade", deregulation, financial fraud, and speculation. As the bubbles have burst, the economy has collapsed.
|US Trade Deficit ... a classic case of Overshoot & Collapse|
Advanced Technology Products & Green "Trade" Deficits
This should be one of the most frightening trends of all. The U.S. is so proud of its technological prowess. However, most people are unaware of the rate at which we're losing it.
The U.S. had a $38.4B surplus in 1991. The ATP "trade" balance in 2008 was -$55.6B, a deficit much larger than the surplus in 1991. Even with our collapsing economy, the 2009 number, based on rate for the first 3 quarters, will be about -$50M. Even as the overall "trade" deficit is halved, the ATP deficit is pretty much unaffected.
This is the "progress" the U.S. has made thanks to the "free traders" that have undermined the U.S. economy?
We've been told that the US is going to let others (e.g., China) do the low-tech manufacturing and the US is going to retain high-tech manufacturing. So much for that; it's not true. It should be no surprise that students aren't attracted to high-tech education. It's difficult subject matter ... and high-tech jobs are disappearing as shown (just above) by what's happened to Computer & Electronic Product Manufacturing.
|Advanced Technology Products "Trade" Balance Trend - Annual ... a downhill slide losing HIGH-TECH as well as low-tech|
Here's the monthly ATP trade balance trend since 2006 with a linear least-square fit showing the overall downward trend. July, August, & September were again below the trend line.
|Advanced Technology Products "Trade" Balance Trend - Monthly ... onward & downward|
There's not just an advanced technology problem; it's a green technology problem, too! With a "green" trade balance of -$8.9 billion in 2008, it's "green" technology, too. "Green jobs" won't develop if we continue to offshore the work.
Green Trade Balance By Samuel Sherraden, New America Foundation, 6/22/09
... the United States ran an overall green trade deficit of -$8.9 billion in 2008, including a deficit of -$6.4 billion in the critical category of renewable energy, one of the main targets of the Obama administration's green agenda. The U.S. economy also suffered a significant deficit in the pollution management category. ...
If current trends continue, the green trade deficit can be expected to widen further as the administration's agenda increases domestic demand but without sufficient measures to increase domestic production. If the deficit continues to grow, the United States will forego the creation of millions of high-wage, high-skill green manufacturing jobs and lose its potential to be a global producer as well as a consumer of green technologies.
It's really important to read What to do about the 'trade deficit'? Cutting taxes and increasing incentives for companies, as recommended in a recent article in Business Week, Can the Future Be Built in America? 9/10/08, will not do it. There are just too many issues to take into account.
Here's a list taken from How the U.S. Subsidizes Offshoring of Jobs where you'll find more detailed explanations. Companies
- locate in countries that engage in currency manipulation (China)
- locate in countries that provide capital subsidies
- can indefinitely defer paying taxes on income from foreign subsidiaries
- use tax loopholes moving headquarters to a tax haven
- bear the cost of health insurance here, but are in competition with companies that don't in nations with national health insurance
- get R&D and investment tax credits even when moving manufacturing off shore ... the U.S. doesn't fully benefit
- employ flawed transfer pricing schemes to avoid U.S. taxes
- compete with subsidiaries in dictatorial nations without labor & environmental standards ... the costs of environmental degradation and injuries to workers are externalized
(Note: democracy is undermined: individuals don't value and "purchase" clean environment & workplace safety, governments do; if a government isn't a democracy, it doesn't represent the interests of its citizens)
- write-off the cost of shutting down a factory in the U.S. when it transfers the work to a factory in a foreign country.
- write-off the cost of bringing new foreign employees to the U.S. and requiring its U.S. employees, as their last duties before being fired, to train the foreign employees to do their jobs.
Business Week's traditional business thinking is a prescription for failure.
US Unemployment Rate - Official vs. Actual
While there's concern that the Official Unemployment Rate (U-3) rose to 10.2% in Oct, there should be even more concern. Government's more comprehensive measure, U-6, is not at 17.5%. What I call the "Real Unemployment Rate" is ~25%.
Official unemployment has always been a vast underestimate. In 2003 when U-3 was about 6%, U-6 was over 10%, but that didn't make the news then.
It would be a mistake to dismiss my higher estimate as absurd. John Williams (Shadow Government Statistics) has his SGS-Alternate Unemployment Rate for Oct at 22.1% ... my estimate isn't all that much different. Here's an excerpt from his 11/6/09 Commentary.
During the Clinton Administration, "discouraged workers" those who had given up looking for a job because there were no jobs to be had were redefined so as to be counted only if they had been "discouraged" for less than a year. This time qualification defined away the long-term discouraged workers. The remaining short-term discouraged workers (less than one year) are included in U.6.
Adding the excluded long-term discouraged workers back into the total unemployed, unemployment more in line with common experience as estimated by the SGS-Alternate Unemployment Measure rose to about 22.1% in October
Williams' Employment and Unemployment Reporting primer is educational, as is his special report on the coming Hyperinflationary Depression. Note the latter was written on 4/8/08, well before the stimulus package that has raised so much ire; we were already well on the way to a Hyperinflationary Great Depression. Excerpt:
The U.S. government and Federal Reserve already have committed the system to this course through the easy politics of a bottomless pocketbook, the servicing of big-moneyed special interests, and gross mismanagement. ...
The U.S. economy is in a deepening structural change that has resulted from U.S. trade policies that have driven the U.S. manufacturing base offshore. As a result, a large number of related, high paying jobs have been lost to U.S. workers.
As shown in the accompanying graphs, as the U.S. trade deficit has risen to the highest level for any country in history, U.S. average weekly earnings, adjusted for inflation, have fallen. Even using official CPI for deflation, current real earnings are below their peak back in the 1970s. Adjusted for the SGS-Alternate CPI measure, real earnings have been falling since the early 1980s. ...
The effect of this structural change has been that most consumers have been unable to sustain adequate income growth beyond the rate of inflation, unable to maintain their standard of living. The only way that personal consumption the dominant component of GDP can grow in such a circumstance is for the consumer to take on new debt or to liquidate savings. Both those factors are short-lived and have reached untenable extremes. Debt expansion and savings liquidation both were encouraged by the investment bubbles created by Alan Greenspan; he knew that economic growth could not be had otherwise. Part of what is happening today is payback for those policies.
Part-Time Workers Mask Unemployment Woes By DAVID LEONHARDT 7/14/09
The national unemployment rate has risen to 9.5 percent, the highest level in more than a quarter-century. Yet it still excludes all those who have given up looking for a job and those part-time workers who want to be working full time.
Include them as the Labor Department does when calculating its broadest measure of the job market and the rate reached 23.5 percent in Oregon this spring, according to a New York Times analysis of state-by-state data. It was 21.5 percent in both Michigan and Rhode Island and 20.3 percent in California. In Tennessee, Nevada and several other states that have relied heavily on manufacturing or housing, the rate was just under 20 percent this spring and may have since surpassed it.
Almost nobody believes that unemployment has finished rising, either. ...
Looking at the graphs you can see why I sure don't.
Another report noting the major understatement of unemployment is Not Out of the Woods: A Report on the Jobless Recovery Underway by Niko Karvounis 6/8/09. Excerpt:
Because of the incompleteness of official measures, Leo Hindery, Chairman of New Americas Smart Globalization Initiative, in cooperation with New Americas Economic Growth Program, has constructed a broader measurement of unemployment called effective unemployment. Effective unemployment incorporates the BLS more inclusive U6 measurement along with the 4.4 million-strong labor force reserve to give a more accurate accounting of the number of Americans lacking full-time, productive work. Currently, the effective unemployment total is 30.2 million people, more than twice the official BLS unemployment estimate. This numberwhen compared against a labor force measure that includes the 6.6 million Americans who report wanting work, who the BLS does not officially include in its calculationsrepresents an alarming 18.68 percent effective unemployment rate (Figure 1).
I maintain this latter is also an understatement. What I call the "Real Unemployment Rate" is more like 22.7% and 41.4 million persons. My number includes adding to the government's U-6 statistic those extra in the Orwellian classification, "Not in labor force, but Persons who currently want a job". It also adds those needed to keep up with population growth ... see the gap at the 4th figure from the top ... that's 11.9 million persons.
For how I arrive at these numbers see Unemployment: Official, Effective, Real. For the real-life impact see There's no 'free market' for Labor. Ever wonder why the official poverty rate in America is between 12% and 13%? It's no coincidence.
|Different Measures of the Unemployment Rate|
Below is the Bureau of Labor Statistics data on Job Losers: U-2 Job losers and persons who completed temporary jobs, as a percent of the civilian labor force. This measure increased to 6.9%. Think about that ... one in every fifteen persons lost their job last month.
With this many job losers per month, there's no way the economy will level off, much less recover, anytime soon.
|Job Losers - the BLS U-2 rate: Job losers and persons who completed temporary jobs, as a percent of the civilian labor force|
US Unemployment Level - Official vs. Actual
There are now more like 45.8 million persons unemployed in compared to the official U-3 number of 16.6 million and U-6 number of 27.4M. None of this counts those "Not in labor force, but Persons who currently want a job" or the underemployed. In 2006 there were 36.5 million people in poverty. No wonder!
Why is this? We have a failed economic system thanks to "conservative" economic policies of "free trade", deregulation, financial fraud, and speculation with the systematic undermining of U.S. wages. Tax cuts of recent years, ostensibly to stimulate the economy by increasing investment and supply, don't work when demand is collapsing because lost jobs & stagnant wages.
|Different Measures of the Unemployment Level|
Recent Relevant Articles
John Williams on the currrent/worsening depression: That the root of the problem is falling demand from declining consumer income is also noted by John Williams (Shadow Government Statistics) in his DEPRESSION SPECIAL REPORT, 8/1/09:
U.S. Economy Is in a Multiple-Dip Depression. The grand benchmark revision of the national income accounts on July 31, 2009 confirmed that the U.S. economy is in its worst economic contraction since the first downleg of the Great Depression, which was a double-dip depression. The current economic downturn increasingly will be referred to as a depression, and it is far from over. There will be intermittent blips of new activity, such as the current cash-for-clunkers automobile giveaway program that appears to be generating a one-time spike in auto sales. Yet, this downturn will continue to deteriorate, proving to be extremely protracted, extremely deep and particularly nonresponsive to traditional stimuli.
As discussed in recent writings, the economy suffers from underlying structural problems tied to consumer income, where households cannot keep up with inflation and no longer can rely on excessive debt expansion for meeting short-falls in maintaining living standards. The structural issues are not being addressed meaningfully and cannot be addressed without a significant shift in government economic and trade policies, which under the best of circumstances still would drag out economic woes for many years.
The current depression likely will show multiple dips in business activity, as was seen during the Great Depression and in the double-dip recession of the early-1980s. I shall argue that the current downturn started at least a year earlier than the December 2007 onset proclaimed by the National Bureau of Economic Research (NBER), official arbiter of U.S. recessions. The current depression is the second dip in a multiple-dip downturn that started back in 1999, and it preceded and in fact was the proximal trigger for the systemic solvency crisis that rose to public view in August 2007. The ensuing systemic problems did not cause the slowdown in business activity, but they exacerbated it significantly.
While the current circumstance should become recognized as a "depression," worse lies ahead as the U.S. governments long-range insolvency and current efforts at debasing the U.S. dollar trigger a hyperinflation in the next five years. Risks for the onset of a hyperinflation in the United States are particularly high during the next year. As will be discussed in the soon-to-be-updated Hyperinflation Special Report (see the existing April 2008 version for basic background), the United States would be particularly hard hit by such a circumstance. Unlike Zimbabwe, which has been able to maintain some level of functioning commerce during its hyperinflation, due to the backstop of an active black market in U.S. dollars, the United States has no such backstop. Accordingly, a U.S. hyperinflation likely would force cessation of regular commerce, triggering a great depression of a magnitude never before seen in the United States.
Robert Fisk asserts that the dollar will decline as foreign governments abandon the dollar.
The demise of the dollar By Robert Fisk, 10/6/09
In a graphic illustration of the new world order, Arab states have launched secret moves with China, Russia and France to stop using the US currency for oil trading ]
Fisk's article had a dramatic effect:
Dollar tumbles on report of its demise By Stephen Foley, 10/7/09
Gold price at record high as Independent story sends global markets into a frenzy
... Economists noted that the US resisted pressure to include a promise to protect the stability of world currencies in last weekend's communiqué from the International Monetary Fund (IMF), sparking growing concern that the Obama administration could be content to see the currency fall. That would make US exports more competitive and could spark a manufacturing jobs revival.
Overseas governments are in a bind because they hold trillions of dollars as reserves to protect them against a financial crisis. They are seeing the value of those reserves decline, but starting to swap them for gold or other currencies could deluge world markets with unwanted dollars and send the value of the greenback even lower. The situation is particularly sensitive for oil-producing nations, who are paid in dollars for their exports and therefore hold high dollar reserves. ...
Mike Whitney says it's private industry, not governments, that will lead the way to dollar collapse.
Dollar Hysteria: Is the Sky Really Falling? by Mike Whitney, 10/6/09
Yes, the dollar will fall, (eventually) but not for the reasons that most people think. It's true that the surge in deficit spending has foreign dollar-holders worried. ... The real reason the dollar will lose its role as the world's reserve currency is because US markets, which until recently provided up to 25 percent of global demand, are in sharp decline. ... US consumers are buried under a mountain of debt, which means that their spending-spree won't resume anytime soon. On top of that, unemployment is soaring, personal wealth is falling, savings are rising, and Washington's anti-labor bias assures that wages will continue to stagnate for the foreseeable future. Thus, the American middle class will no longer be the driving force behind global consumption/demand that it was before the crisis. Once consumers are less able to buy new Toyota Prius's or load up on the latest China-made widgets at Walmart, there will be less incentive for foreign governments and central banks to stockpile greenbacks or trade exclusively in dollars. ... As private industry veers away from the dollar, governments, investors and central banks will follow. ]
I don't know which will lead the way, but the dollar will fall.
On the "banking crisis": Conservative historian and proponent of a McCain presidency, Niall Ferguson, had this view, 4/26/09:
Ferguson also agreed with advice offered by Paul Krugman (an "unprecedented" event, by Ferguson's own admission) that the "only way to deal with these big insolvent institutions is to take them into temporary conservatorship, let's use that lovely euphemism not nationalization, as happened with Fannie Mae and Freddie Mac, institutions that they quite closely resemble anyway. It's going to happen; we're going to end up doing this. And you restructure them."
Unfortunately, Obama is not doing this even though he's being charged with taking over the banks and being a "socialist." As done by Bush's Treasury Secretary Henry Paulson, Obama's Tim Geithner, former head of the New York Fed, is bailing out the banks with few, if any, strings attached. That's the banks controlling government, not the government controlling the banks. That's a lot like fascism, not socialism.
Hollywoods Brilliant Coda to Americas Dark Year By FRANK RICH
Hollywoods Brilliant Coda to Americas Dark Year By FRANK RICH 12/12/09
ON Christmas Day, Hollywood will blanket America with a most unlikely holiday entertainment. Thats when Up in the Air, the acclaimed new movie starring George Clooney, will spread from its big-city engagements to more than 2,000 screens. Clooney plays Ryan Bingham, a corporate road warrior for a small, Omaha-based contractor hired to lay off employees for companies that prefer to outsource that unpleasant task. Ryan has fired so many people in so many cities that he is approaching a frequent-flier status unknown to all but a few Americans.
How could a film with that premise be a Christmas hit in a country reeling from the highest unemployment rate in decades? By using the power of pop culture to salve national wounds that continue to fester in the real world.
Up in the Air is not a political movie. It wont be mistaken for either a Michael Moore or Ayn Rand polemic on capitalism. What makes it tick is Ryans struggle to reclaim his own humanity, a story that will not be described or spoiled here. But the films backdrop is just as primal and these days perhaps more universal than the personal drama so movingly atomized by Clooney in the foreground.
Here is an America whose battered inhabitants realize that the economic deck is stacked against them, gamed by distant, powerful figures they cant see or know. Up in the Air may be a glossy production sprinkled with laughter and sex, but it captures the distinctive topography of our Great Recession as vividly as a far more dour Hollywood product of 70 years ago, The Grapes of Wrath, did the vastly different landscape of the Great Depression.
While Up in the Air opens with a remix of Woody Guthries Depression-spawned This Land Is Your Land, its dispossessed Americans dont resemble those in a black-and-white Dorothea Lange photograph. Theyre not the familiar contemporary blue-collar factory workers in our devastated manufacturing economy. They are instead mostly middle-class refugees from the suburban good life depicted in credit card ads. Their correlative to the Dust Bowl is a coast-to-coast wasteland of foreclosed office spaces where desk chairs and knots of dead phones lie abandoned in a fluorescent half-light. Up in the Air taps into the desperation, fear and anger that both the populist left and right are trying to articulate right now, and that leaders of both parties have failed to address.
Retailers are down 20 percent, Ryans boss tells his troops in a conference room. Auto industry is in the dump. Housing market doesnt have a heartbeat. It is one of the worst times on record for America. This is our moment. And so it is. In constant flight from hub to hub, his staff parachutes into troubled companies to lay off dozens of workers with impressive assembly-line efficiency. The genial Ryan and his fellow transition specialists never use the word fired, of course. They tell employees they are being let go and not to take it personally. They hand their prey slick-looking severance packets and, with a doctors bedside manner, intone that were here to talk about the future. Soon its time to send the discarded employee to collect his personal effects on the way to the exit.
A new colleague of Ryans, a dynamite young woman from Cornell, comes up with an innovative strategy for downsizing the downsizers. To eliminate travel costs, she proposes that in-person firings instead be executed long-distance by teleconference, with ranks of termination engineers at computer screens reciting from a script titled Employee Termination Workflow. In a dry run, the guinea pig is a burly 57-year-old office worker who refuses to stay in the camera frame and staggers off in a paroxysm of anger and sobs. Its like watching a man being assassinated by a predator drone. But this is Detroit, not Waziristan.
The fictional doings in Up in the Air, adapted from a 2001 novel by Walter Kirn, are bookended by brief montages culled from interviews that the director, Jason Reitman, conducted with real-life laid-off workers while shooting in Detroit and St. Louis. He asked the interviewees what they had told or wished they had told the H.R. bureaucrats who let them go. On the stress level, Ive heard that losing your job is like a death in the family, says one man. But personally I feel more like the people I worked with were my family, and I died.
In rolling out his latest jobs initiative last week, President Obama said, Sometimes its hard to break out of the bubble here in Washington and remind ourselves that behind these statistics are peoples lives, their capacity to do right by their families. True enough, and in this movie you see a few of the lives behind the statistics, however fleetingly. But the point of Up in the Air is not to deliver the message that mass unemployment is a terrible tragedy. We hardly need a movie or a politician to deliver that news at this late date.
What gives our Great Recession its particular darkness and gives this film its haunting afterlife is the disconnect between the corporate culture that is dictating the firing and the rest of us. In the shorthand of the day, its the dichotomy between Wall Street and Main Street, though that oversimplifies the divide. This disconnect isnt just about the huge gap in income between the financial sector and the rest of America. Nor is it just about the inequities of a government bailout that rescued the irresponsible bankers who helped crash the economy while shortchanging the innocent victims of their reckless gambles. What Up in the Air captures is less didactic. It makes palpable the cultural and even physical chasm that opened up between the two Americas for years before the financial collapse.
The private-equity deal makers who bought and sold once-solid companies like trading cards, saddling them with debt, never saw the workers whose jobs were shredded by their cunning games of financial looting. The geniuses in Washington and on Wall Street who invented junk mortgages and then bundled and sold them as securities didnt live in the same neighborhoods as the mortgagees, small investors and retirees left holding the bag once the housing bubble burst.
Those at the top are separated from the consequences of their actions. They are exemplified by Robert Rubin, formerly of Citigroup and a mentor to both Obamas Treasury secretary and chief economic adviser. He looked the other way when his bank made ruinous high-risk bets, and then cashed out and split, leaving taxpayers to pay for the wreckage while he escaped any accountability. Such economic wise men peer down at the country from a hermetically sealed bubble of privilege and self-interest, much as Ryan does from the plane flying him to his next mass firing. And they tend to think, as Lloyd Blankfein of Goldman Sachs notoriously put it, that they are doing Gods work to sustain our free-market system.
Mad Men literally whacked one such executive this season. Its fans loved watching a drunken office-party accident maim a visiting overseer from the British corporation that had swallowed and downsized Sterling Cooper, the shows fictional Madison Avenue ad agency. The episode was set in 1963, but Mad Men resonates in part because it prefigures todays corporate culture. One recent plot line dealt with the mercurial machinations of the hotel tycoon Conrad Hilton, a potential client of Sterling Cooper. As coincidental thematic synergy would have it, Up in the Air portrays Ryan as an elite cardholder in a Hilton Honors program that defines brand loyalty with a mercenary zeal the Connie Hilton of Mad Men would relish.
Last week Goldman Sachs announced it would grant some of this years bonuses in stock, not cash, to try to stanch the public backlash to the record profits it piled up thanks to government largess. But Washington remains strangely oblivious to the mood out there. Financial reform has been embattled on Capitol Hill, where the financial industry has spent $344 million on lobbying in the first three quarters of 2009. The big ratings agencies that gave triple-A stamps of approval to Wall Streets junk are back to business as usual. Bank of America and Citi are racing to return TARP money to Washington not because they have necessarily recovered but because they want to shower rewards on their executives with impunity.
The rage engendered by this status quo is across the political map. As unlikely as it sounds, Ron Paul and Jim DeMint, political heroes of the tea party right, and Bernie Sanders and Alan Grayson, similarly revered on the left, have found a common cause in vilifying the Federal Reserve Bank and its chairman, Ben Bernanke. The Fed is hardly the root of all evil, but you can see why it is a handy scapegoat. Like the institutions it failed to police during the boom, it wields its power from on high with little transparency to those below.
Meanwhile, at the company where I work, as at many others, the latest round of layoffs will be completed by Christmas. Even for the survivors it feels a little like serial deaths in the family. And who believes were near the end of this story? For all of Wall Streets and Washingtons rumors of a recovery, the fate of Americans on the ground remains very much up in the air.
The Other Plot to Wreck America By FRANK RICH
The Other Plot to Wreck America By FRANK RICH 1/9/10
THERE may not be a person in America without a strong opinion about what coulda, shoulda been done to prevent the underwear bomber from boarding that Christmas flight to Detroit. In the years since 9/11, weve all become counterterrorists. But in the 16 months since that other calamity in downtown New York the crash precipitated by the 9/15 failure of Lehman Brothers most of us are still ignorant about what Warren Buffett called the financial weapons of mass destruction that wrecked our economy. Fluent as we are in Al Qaeda and body scanners, when it comes to synthetic C.D.O.s and credit-default swaps, not so much.
What we dont know will hurt us, and quite possibly on a more devastating scale than any Qaeda attack. Americans must be told the full story of how Wall Street gamed and inflated the housing bubble, made out like bandits, and then left millions of households in ruin. Without that reckoning, there will be no public clamor for serious reform of a financial system that was as cunningly breached as airline security at the Amsterdam airport. And without reform, another massive attack on our economic security is guaranteed. Now that it can count on government bailouts, Wall Street has more incentive than ever to pump up its risks secure that it can keep the bonanzas while we get stuck with the losses.
The window for change is rapidly closing. Health care, Afghanistan and the terrorism panic may have exhausted Washingtons already limited capacity for heavy lifting, especially in an election year. The White Houses chief economic hand, Lawrence Summers, has repeatedly announced that everybody agrees that the recession is over which is technically true from an economists perspective and certainly true on Wall Street, where bailed-out banks are reporting record profits and bonuses. The contrary voices of Americans who have lost pay, jobs, homes and savings are either patronized or drowned out entirely by a political system where the banking lobby rules in both parties and the revolving door between finance and government never stops spinning.
Its against this backdrop that this weeks long-awaited initial public hearings of the Financial Crisis Inquiry Commission are so critical. This is the bipartisan panel that Congress mandated last spring to investigate the still murky story of what happened in the meltdown. Phil Angelides, the former California treasurer who is the inquirys chairman, told me in interviews late last year that he has been busy deploying a tough investigative staff and will not allow the proceedings to devolve into a typical blue-ribbon Beltway exercise in toothless bloviation.
He wants to examine the financial sectors greed, stupidity, hubris and outright corruption from traders on the ground to the board room. Its important that we deliver new information, he said. We cant just rehash what weve known to date. He understands that if he fails to make news or to tell the story in a way that is comprehensible and compelling enough to arouse Americans to demand action, Wall Street and Washington will both keep moving on, unchallenged and unchastened.
Angelides gets it. But he has a tough act to follow: Ferdinand Pecora, the legendary prosecutor who served as chief counsel to the Senate committee that investigated the 1929 crash as F.D.R. took office. Pecora was a master of detail and drama. He riveted America even without the aid of television. His investigation led to indictments, jail sentences and, ultimately, key New Deal reforms the creation of the Securities and Exchange Commission and the Glass-Steagall Act, designed to prevent the formation of banks too big to fail.
As it happened, a major Pecora target was the chief executive of National City Bank, the institution that would grow up to be Citigroup. Among other transgressions, National City had repackaged bad Latin American debt as new securities that it then sold to easily suckered investors during the frenzied 1920s boom. Once disaster struck, the banks executives helped themselves to millions of dollars in interest-free loans. Yet their own employees had to keep ponying up salary deductions for decimated National City stock purchased at a heady precrash price.
Trade bad Latin American debt for bad mortgage debt, and you have a partial portrait of Citigroup at the height of the housing bubble. The reckless Citi executives of our day may not have given themselves interest-free loans, but they often walked away with the short-term, illusionary profits while their employees were left with shredded jobs and 401(k)s. Among those Citi executives was Robert Rubin, who, as the Clinton Treasury secretary, helped repeal the last vestiges of Glass-Steagall after years of Wall Street assault. Somewhere Pecora is turning in his grave
Rubin has never apologized, let alone been held accountable. But hes hardly alone. Even after all the country has gone through, the titans who fueled the bubble are heedless. In last Sundays Times, Sandy Weill, the former chief executive who built Citigroup (and recruited Rubin to its ranks), gave a remarkable interview to Katrina Brooker blaming his own hand-picked successor, Charles Prince, for his banks implosion. Weill said he preferred to be remembered for his philanthropy. Good luck with that.
Among his causes is Carnegie Hall, where he is chairman of the board. To see how far American capitalism has fallen, contrast Weill with the giant who built Carnegie Hall. Not only is Andrew Carnegie remembered for far more epic and generous philanthropy than Weills some 1,600 public libraries, just for starters but also for creating a steel empire that actually helped build Americas industrial infrastructure in the late 19th century. At Citi, Weill built little more than a bloated gambling casino. As Paul Volcker, the regrettably powerless chairman of Obamas Economic Recovery Advisory Board, said recently, there is not one shred of neutral evidence that any financial innovation of the past 20 years has led to economic growth. Citi, that innovative banking supermarket, destroyed far more wealth than Weill can or will ever give away.
Even now despite its near-death experience, despite the departures of Weill, Prince and Rubin Citi remains as imperious as it was before 9/15. Its current chairman, Richard Parsons, was one of three executives (along with Lloyd Blankfein of Goldman Sachs and John Mack of Morgan Stanley) who failed to show up at the mid-December White House meeting where President Obama implored bankers to increase lending. (The trio blamed fog for forcing them to participate by speakerphone, but the weather hadnt grounded their peers or Amtrak.) Last week, ABC World News was also stiffed by Citi, which refused to answer questions about its latest round of outrageous credit card rate increases and instead e-mailed a statement blaming its customers for not paying back their loans. This from a bank that still owes taxpayers $25 billion of its $45 billion handout!
If Citi, among the most egregious of Wall Street reprobates, feels it can get away with business as usual, its because it fears no retribution. And it got more good news last week. Now that Chris Dodd is vacating the Senate, his chairmanship of the Banking Committee may fall next year to Tim Johnson of South Dakota, home to Citis credit card operation. Johnson was the only Senate Democrat to vote against Congresss recent bill policing credit card abuses.
Though bad history shows every sign of repeating itself on Wall Street, it will take a near-miracle for Angelides to repeat Pecoras triumph. Our zoo of financial skullduggery is far more complex, with many more moving pieces, than that of the 1920s. The new inquiry does have subpoena power, but its entire budget, a mere $8 million, doesnt even match the lobbying expenditures for just three banks (Citi, Morgan Stanley, Bank of America) in the first nine months of 2009. The firms under scrutiny can pay for as many lawyers as they need to stall between now and Dec. 15, deadline day for the commissions report.
More daunting still is the inquirys duty to reach into high places in the public sector as well as the private. The mystery of exactly what happened as TARP fell into place in the fateful fall of 2008 thickens by the day especially the behind-closed-door machinations surrounding the government rescue of A.I.G. and its counterparties. Last week, a Republican congressman, Darrell Issa of California, released e-mail showing that officials at the New York Fed, then led by Timothy Geithner, pressured A.I.G. to delay disclosing to the S.E.C. and the public the details on the billions of bailout dollars it was funneling to its trading partners. In this backdoor rescue, taxpayers unknowingly awarded banks like Goldman 100 cents on the dollar for their bets on mortgage-backed securities.
Why was our money used to make these high-flying gamblers whole while ordinary Americans received no such beneficence? Nothing less than complete transparency will connect the dots. Among the big-name witnesses that the Angelides commission has called for next week is Goldmans Blankfein. Geithner, Henry Paulson and Ben Bernanke should be next.
If they all skate away yet again by deflecting blame or mouthing pro forma mea culpas, it will be a sign that this inquiry, like so many other promises of reform since 9/15, is likely to leave Wall Streets status quo largely intact. Thats the ticking-bomb scenario that truly imperils us all.