The Wrongologist

What’s Wrong Today:

Recent economic news brings three more depressing facts about the jobs market.

First, the Economic
Populist reports that The
Bureau of Labor Statistics (BLS) February (it is lagged by a month) JOLTS report, or Job
Openings and Labor Turnover Survey shows there are 3.1 unemployed per job opening, compared with 1.8 per opening at the start of the
recession in December, 2007. Job openings increased 8.7% from January to a
total of 3,925,000.  

While job
openings have increased 80% from July 2009, they still remain 15% below
pre-recession levels of 4.7 million: 

Actual
hires increased 2.8% to 4,418 million and hiring has only increased 22%
since June 2009. Below is the graph of the official unemployed per job opening.
 There were 12.03 million unemployed in February 2013.

And people could be unemployed for a long time. It could take 10-15 years to bring
the available workforce and the demand for workers back to an equilibrium
similar to what it was prior to 2007.

Second, according
to the Wall Street Journal, 284,000
Americans with college degrees were working minimum wage jobs last year, which
is 70% more college grads
working for the minimum wage than there were 10 years ago.


Nearly half of the college graduates in the class of 2010 are working in jobs
that don’t require a bachelor’s degree and 38% have jobs that don’t even require
a high school diploma, according to a January report from the Center for
College Affordability and Productivity.


The New York Fed reports that student loan debt has tripled over
the last eight years to $966 billion.  That is a 70% increase in borrowers
and a 70% increase in debt held by each.  Student loan debt is now the
second largest consumer debt, trailing only residential mortgages and student debt is not discharged
through bankruptcy.

It used to
be college was affordable as well as the ticket to a stable career.  That
dream has been replaced by profit centers making money by selling dreams to
unemployable teenagers.  Worse, for many, despite having fresh skills
straight out of school, they still cannot get a job.

Third, the March employment reports show that the
Employment Ratio (EMratio) and the Labor Force Participation rate (LFrate) again
haven’t improved. If fact, the EMratio is where it was in January 1984
while the LFrate is where it was in January 1979.

But let’s
start with a few definitions from
the BLS:

The labor force participation
rate is the percentage of the civilian noninstitutional population
that is in the labor force. Who is in the civilian non-institutional population? Persons 16 years and older residing in the
50 States and the District of Columbia who are not inmates of institutions and
who are not on active duty in the Armed Forces.

The employment-population ratio represents the percentage
of the civilian non-institutional population that is employed. The civilian
labor force consists of all persons classified as employed or
unemployed.

Here is a graph of both through
February 2013:

Bill
McBride  of Calculated Risk unpacks some of the detail behind
the overall rates:

• There
  is a big decline in the LFrate for those in the 16 to 19 age group, due mostly to
  higher enrollment rates by these groups in school. This could be encouraging news
  for the future, but these kids are building more student loan debt as described
  above and their jobs could still be low wage.

• We
  are experiencing a slow decline in participation for those in their key working
  years (25 to 54). They are back to where they were in January 1984. As these
  are our most productive citizens, that is very disturbing. See the graph below:

• The
  55 and overs have increased their participation. This is probably a combination
  of financial need (not good news) and more workers staying healthy.

We have come to the end of excuses
for the last half decade of bad employment news. Congress and the White House
have no answers and apparently, no will to try to find any answers.

This
economy has been called the knowledge
economy. Maybe so. It is an economy organized to benefit a coalition of politicians and financial elites. In
the new economy, the only members of the working classes with good jobs are the
knowledge worker technocrats that serve both.

However,
the majority of workers are skilled and low-skilled service workers.

Robert Reich
divides service workers into “routine producers” and “in-person
servers.” Since service workers own and leverage less capital (or less knowledge),
their ability to create surplus value and thereby demand high wages is
intrinsically less than that of knowledge workers.

This has created a massive structural
tension, as society tries to establish a way to maintain the wages (or standard
of living) of the service workers in an economy where the value they produce and
income they can generate by their labor is capped.

This
is the economy every student and every worker must understand if they are to
navigate it to their benefit.

There are many
companies, big and small, that repeatedly post the same exact jobs. They interview
for those jobs, choose not to fill them, and re post them. This goes along with
the STEM and H-1 visa gaming of the “no qualified Americans,”
“we need a tax break to hire,” game.

We
grew up in a society where merit was rewarded and performance was measured by
getting ahead in a corporation, where expanding the middle class was preferable
to steepening the climb up the ladder.  

We now
inhabit a different world. Not simply one where the historical warnings of
Jefferson and Eisenhower (banks, corporate hegemony) have come to pass, but one
with automated toll booths, self-checkout in the retail store, faux job
postings.

In our world,
one in six Americans live in poverty.  The number of Americans living in
poverty is now at a level not seen since the 1960s.


In our world, 20% of all children are living in poverty.  Incredibly, a
higher percentage of children are living in poverty in America today than was
the case back in 1975.

We inhabit
a world where dis-empowerment of the individual and dis-empowerment (or
co-option) of the lower and middle economic classes are the rule of the day.

If we taxed politicians
based on stupidity, we might solve the deficit problem.