A New York Times article on Sunday by the fine journalist Catherine Rampell suggested that a reason the jobs crisis in America (my phrase) is not getting sufficient attention is that the unemployment rate, even if a very high 9.2 percent, still means that nearly 91 percent are employed.
But we need to take a moment to clarify what high unemployment really means, and how broad its implications are. It is an indicator of overall economic weakness, not merely a number about those without jobs. And as such, it suggests that much is seriously wrong. It does not mean that 14 million are hurting people and the other 125 million are not.
First of all, we of course know that millions are looking for jobs and have given up or have taken part-time jobs when they want full-time jobs. That adds another 7 or 8 percent to the unemployed or underemployed. We are now are getting to the point where one out of six workers or so is having employment disappointments. We also know many have been unemployed for a very long time -- a record number, in fact.
Second, these people have relatives and friends who increasingly realize they may also get the axe.Their families, not only themselves, suffer.
Third, when you lose a job you now usually lose your health coverage -- or have to pay up big time to retain it. That adds to the misery.
In fact, far more people than 9.2 percent are upset by the high unemployment rate. About a quarter say in surveys it is our number one problem.
But high unemployment also implies little or no wage growth for most employees. There are two theories about this. One is the classical theory that when labor markets are loose, there is more supply and the price will not rise readily -- that is, the wage. The other is a little more Marxian in orientation. When people are losing their jobs, they get scared -- and they don't ask for a raise, they work more hours if asked, and on.
Since mid-2009, when the recovery technically began, there has been almost no increase in wages and salaries. But profits have soared by hundreds of billions of dollars.
That's almost never been the case before. Indeed, the relationship between job creation and GDP growth seems to have changed some time ago. Many people, including Nobel laureate Michael Spence, hardly known as a progressive economist, worry that something is deeply wrong -- and a lot of it may be about globalization.
But when you consider that salaries and wages have risen slowly, stagnated, or fallen for almost all workers except those at the top for forty years, the American economic condition gets pretty frightening.
I think the unemployment rate suggests there is growing malaise in the nation. More and more people are pessimistic. Are Americans giving up on the future?
And yet both political parties talk far more about budget deficits than jobs. Obama has fallen into one of the great political traps of all time. On average, the media follow meekly behind. Yet Americans have long fallen for the deficit scare, back in the 1930s and even before that. That is an issue worthy of more discussion.
I wrote a few weeks ago on New Deal 2.0 that Obama should sound the jobs alarm. Leadership matters in America. That is the problem. Right now, we don't have it. Leaders have to tell Americans the economy is weak and the deficit is necessary right now.
But in sum, a high unemployment rate does not merely mean that 14 million Americans, and they alone, are suffering. It suggests far broader pain and suffering. And disappointment may turn to anger before we know it. The Tea Party is the first manifestation of this. What's next?
Cross-posted from New Deal 2.0.