There Aren't Enough Jobs For 4 Out Of 5 Unemployed Americans
There simply aren't enough jobs to employ four out of five unemployed Americans, according to recent data from the Bureau of Labor Statistics.
The total number of available jobs in September was 2.9 million, according to a BLS report released Tuesday. It's a decline of 163,000 job openings from the previous month. During that same period, there were about 14.8 million people unemployed, BLS data show (hat tip to Economic Policy Institute).
A simple calculation shows that the ratio of unemployed people to job openings was 5.0 to 1. Put another way, there are only enough jobs to employ a fifth of the unemployed population.
As the workforce suffers, the job-creators are flush with cash. With the main interest rate near zero, companies can get money cheaply. But because corporations have little incentive to spend that cash, many companies are simply hoarding it. As of the end of last month, U.S. companies hold about $1 trillion in cash, Reuters reported.
As HuffPost's Shahien Nasiripour reported, the Federal Reserve's quantitative easing program, in which it will buy up to $900 billion in U.S. debt, with the intention of lowering interest rates still further, won't necessarily do much to encourage companies to create jobs. With corporate America still in a defensive crouch, companies are likely to use the easy money to fill their coffers even more.
Charles Evans, president of the Chicago Fed, warned last month that the economy is in a so-called liquidity trap, in which money is cheap but people still don't put it to use. It's a rare situation in which the typical effects of monetary policy don't materialize. If Evans is right, then the quantitative easing program might not be as effective as some at the Fed hope.