Unemployment rose to 9.5 percent of the workforce according to the BLS. But, the effective jobless rate is 18.7 percent, if we use more exacting data formulated by Leo Hindery, chair of the Smart Globalization Initiative at the New America Foundation, with more than 30 million of us out of work or forced into part time work because of the lack of jobs.
We got into this mess because of a gigantic failed experiment that began in the late 1970s. The idea was to deregulate the financial sector and cut taxes on the super-wealthy. The sales pitch in favor of these changes was that we'd create an investment boom and improve jobs and incomes for everyone. Part of the experiment worked: Money gushed to the top fraction of one percent and certain kinds of investing did increase. But average wages after inflation actually declined so that today they are 18 percent lower in buying power than in 1973.
Instead of creating more and more investments in the real economy--the kind of investments that actually promote improvements in living standards--the money accumulated by the super-rich flowed into Wall Street and fueled an enormous fantasy finance bubble. Wall Street created synthetic derivative securities, often based on junk debt, that sucked up the wealth and added little or nothing to the real economy. But the bubble made Wall Street filthy rich. When markets finally realized how hollow the bubble was, prices collapsed and the banking sector froze. The real economy was starved for credit and pushed into a free-fall unseen since the 1930s. (See The Looting of America).
Not only did all boats fail to rise on the way up, but all boats are not sinking as fast on the way down. Contrary to media portrayals, Wall Street is still doing quite well compared to other sectors. We all know about the million-dollar bonuses financial management is paying itself out of taxpayer bailouts, but also consider the unemployment situation. According to the latest BLS data, the unemployment rate for "Financial Activities" was only 5.5 percent--that's the kind of unemployment rate most of us associate with boom times, not deep recessions. Meanwhile, construction workers face a 17.4 percent unemployment rate (and this is the building season), while 12.6 percent of all manufacturing workers were out of jobs. Even the "information" sector is suffering with a 11.1 percent unemployment rate. (Table A-11, http://www.bls.gov/news.release/pdf/empsit.pdf)
So why hasn't the crash devastated employment in the financial sector? One big reason is that we put the entire sector on welfare. We pumped in several trillion dollars of cash and asset guarantees to keep the entire sector afloat. You would think Wall Street would be thanking us all for taking the hit while they roll along. Nope. Instead they are doing all they can to gut each and every regulation that might protect us against their fantasy finance schemes. They are even mounting a full scale attack (using our resources) against the proposed Financial Consumer Protection Agency. (See "Redefining Chutzpah: Wall Street Uses Bailout Money to Kill Financial Consumer Protection Agency" at http://www.huffingtonpost.com/les-leopold/redefining-chutzpah-wall_b_224493.html)
When you step back and look at the arc of this, it makes you wonder about what our nation has become. We give the financial sector the keys to our economy, and they literally crash it so badly that we start to slide into a depression. Our real economy collapses and nearly 30 million workers suffer joblessness to greater and lesser degrees. We then are forced to bail out the financial sector and they are spared not just the worst of the suffering, but almost any degree of suffering at all. Then they take our money and fight against regulations that might protect us.
And yet the biggest protests we've seen so far come from the tea-bagger's brigade, shrilly decrying miniscule tax increases on the very, very rich. What's wrong with this picture?
Les Leopold is the author of The Looting of America: How Wall Street's Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It, Chelsea Green Publishing, June 2009.
Follow Les Leopold on Twitter: www.twitter.com/les_leopold
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How can it be that W.S. stays near full employment
Despair appears to be rolling through the country like a fog, and no amount of Hollywood Happy Faces or TV escapism can control it. I keep hearing the voice of Gordon Gekko--the hostile takeover character in the 1987 film "Wall Street." He smiled and spit out his mantra, "Greed is good!"
As an aside, a few years ago when Bush Jr. failed to get his agenda of tying the U.S. Social Security program to the stock market, I believe his W.S. financiers said, "Okay, we'll go to plan B--bailout
Keep up the good work, Les.
Obama has guaranteed bankster compensati
Obama has virtually abandoned the average middle class family and totally abandoned small business.
I guess that Axelrod and Emanuel figure that either the middle class is too stupid to notice or the Republican
I regret supporting Obama, and have never voted Republican
Obama/Geit
Wall St. steal trillions "through the too big to fail and if we dont fail them we'll have total chaos"
con job.
Obama/Geit
While the Republican
politician
was .. " the too big to fail and if we dont fail them we'll have total chaos"
should be: "the too big to fail and if we dont *bail* them we'll have total chaos"
When housing prices skyrockete
Income from labor is taxed as high as 37%, yet income from capital is taxed at only 15%.
One article somewhere said 18000 corporatio
Obama's stimulus included the largest middle class tax cut in US history, not one Rep in Congress voted for it.
Capitalism is the new welfare and conservati
Can't WAIT for that Healthcare "reform" thingy.
I remember the late John Gotti's assistant, Sammy "the Bull" Gravano saying that every waking moment was spent discussing ways to make money. What is apparent is greed has driven out any semblance of a conscience
The Bureau of Labor statistics for unemployme
No high school diploma: 15.5% unemployme
High school diploma: 9.8 % unemployme
Bachelor degree or higher: 4.7%
Virtually no Wall Street workers fall into the "no high school" or "high school" categories
The author has cherry picked some statistics
http://www
The link attached from the Bureau of Labor backs up my statistics
Furthermor
I hope you take a look at "The Looting of America." I'd appreciate your comments
I disagree strongly. There's a very specific relationsh
See "Enron: The Smartest Guys in the Room".
This whole crash was rigged by MBA's and accountant
... the savings & loan scandal, the BCCI scandal, the NASDAQ scandal, Drexel Burnham Lambert, Long Term Capitol Management
... the list is endless, but all of them have the same common denominato
We also need to place a significan
We need to realize that people who say "Governmen
There are six changes/re
1. Dismantle the big Wall Street firms. No more too big to fail.
2. Reinstitut
3. Completely reform the SEC. They have proved themselves incompeten
4. Require Wall Street to carry more reserves so they can fail without huge repercussi
5. Place all owner occupied mortgages in the hands of Fannie Mae and Freddie Mac.
6. Lower 30 year fixed interest rates to 3%. That will stop the falling housing values, put some cash in the hands of the middle class, and start the economy moving again.
so renumber your list, and make #1: hire trustworth
how do we start that movement? is there a website listing which congressme
the first step must be taking Congress back from the elite. the only power the working class has is its size. the ballot is where we must use it, legally. the only other option is revolution
We are no longer known for our Constituti
Read the story on Goldman Sachs in Rolling Stone, watch the documentar
http://www
http://www
If there really IS intelligen