In light of today's terrible job numbers, it's a bittersweet experience to re-read a recent report from Wells Fargo Bank which argues that high unemployment is "the new normal." While it's comforting to find Wells Fargo employees who aren't laundering money for the Mexican drug cartels, their report is one more ideologically-driven nail in the coffin of America's jobs agenda.
Ideology's not a bad thing in politics, but it is a bad thing when it's disguised as as a work of unbiased analysis. Despite their mild disclaimers, that's exactly the posture Wells Fargo's economists are adopting.
They may not even realize how biased and ideological their report is, and that's the problem. Almost three years later, people are still hewing to the flawed philosophies that led to the financial crisis. That prevents the country from taking steps to end the permanent recession that enshrouds whole segments of our population.
Let's be very clear about what these economists are selling: For decades, "full employment" meant that one out of twenty (5%) of working Americans was looking for work. As they found jobs, others became unemployed. Today the official unemployment rate is nearly twice that, 9.1%, and the unofficial rate is much higher. Many unemployed people are staying that way indefinitely, which means they're plunged into a cycle of hopelessness. An entire generation of young people is beginning its work life in a state of prolonged unemployment, and the jobless rate for African Americans is twice that of whites.
That's a national emergency. Yet, shockingly, almost nothing's being done about it. The White House is diffident about proposing bold initiatives to address the problem. Republicans are adamantly opposed to helping the unemployed at all, because that might create new pressure to tax their wealthy clientele. The Federal Reserve's efforts are enriching Wall Street but providing very little incentive for banks to lend and get the economy moving. Without relief, underwater homeowners aren't buying goods and services and can't move to find new jobs.
How can the country's leadership justify their inaction? That's where economists like the Wells Fargo team come in. Like the free-market actors they revere, they're filling a demand -- in this case, for certified experts who can justify inaction on technical-sounding grounds.
They claim that millions of Americans are unemployed, not because the economy needs more stimulus, but because they're not the workers employers want. The jobs are out there, say these economists, but unemployed Americans aren't right for them. As a result, the Wells Fargo team writes, "American workers will unfortunately have to get used to a higher 'normal' unemployment rate in the post-Great Recession era. By our calculations (that rate is) around 7.0 percent."
That's a popular opinion in some circles, because it lets a lot of powerful people off the hook. Even if they're wrong, these economists' continued employment is assured. (Talk about "moral hazard"!) And so, with a stroke of the pen, millions of Americans are dismissed from working life.
Predictably, conservative pop sociologist David Brooks argues that "more American men lack the emotional and professional skills they would need to contribute" in the workplace." (I wish Brooks had elaborated on those missing "emotional" skills. Are these men insufficiently submissive? Getting the wrong results on their Myers-Briggs tests? Are American men from Mars while employers are from Venus? Maybe there's a new book in the offing.)
Remarkably, Brooks somehow managed to discuss American unemployment without ever mentioning the recession. To be fair, he does wander from the "structural unemployment" reservation by observing that the nation should spend some money to address this problem. The argument's real value is that it can be used to argue that we can't spend money to fix it. We can only accept the fact that higher unemployment's here to stay.
To accept the "structural unemployment" argument, you have to believe that our economy radically changed in 2008. It's true that housing construction fell dramatically, costing up to two million jobs. But there are at least 25 million un- or under-employed. The reality is that 70% of our economic activity comes from consumer spending, and the "structural" argument suggests that our entire economy was driven by the now-burst housing bubble.
But we had much lower unemployment before the bubble than we do now. While NAFTA devastated large parts of the manufacturing job market, that doesn't come close to explaining today's numbers or suggest there's a "new normal." And it doesn't explain the high rates of unemployment among African Americans or young people.
The "structural" crowd offers very few prescriptions, and those they do offer don't make sense. More education? College graduates are educated, and they can't find jobs. Lower wages? Young people and minorities will accept lower wages, and they're still unemployed. Tax breaks for big business? They're already sitting on $2 trillion in cash, but they won't hire without consumers to buy their products.
Here's the reality: Thanks to Wall Street's mischief, consumers are mired in debt and states are laying off workers. The economy only added 54,000 jobs last month, and we'd need to add between 350,000 and 400,000 jobs a month for three years if we wanted to achieve 6% unemployment. That requires government investment, which is opposed by both the ideologues and the undertaxed wealthy.
The "structural unemployment" crowd argues that the workforce needs different workers. Apparently those workers need to be white people. And they better be over thirty (but under fifty). They can't live in certain Rust Belt areas, either (but then, they can't move in this housing market.) What these economists are really suggesting is that we discard entire groups of Americans, millions at a time, to avoid inconveniencing a certain clientele.
That may not be their objective. They may just be reflecting the biases of their peers, a group that clung to its worldview even after the events of 2008 discredited it. (In an entertaining essay, at least for econo-nerds, Mike Konczal observed that his graduate macroeconomics course was "the most ideologically indoctrinating class I've ever seen. By a mile.")
The new emphasis on "structural employment" is the latest intellectual trend among economists who have proven surprisingly responsive to the self-interest of the moneyed class. We know that at least one group of workers has adapted to meet the economy's new "structural" needs, thereby ensuring its own continued employment.
That group is Wall Street economists.
Follow Richard (RJ) Eskow on Twitter: www.twitter.com/rjeskow
Leo Hindery, Jr.: Why We Need a Manufacturing Renaissance - Economically and Ethically
Stocks Are Down on Weak Monthly Jobs Report
TREASURIES-Poor jobs data boost US bond prices
Strategists suggest poor jobs report benefits Huntsman, Romney most
US Stocks Drop Following Disappointing Jobs Report
BASE METALS: Comex Copper Pulls Back After US Jobs Report
Boehner on weak jobs report: 'It's time to get serious about cutting spending'
The wasteland of democratic policy is not quite as bad as the wasteland of the Soviets, we still have a chance.
People try to get real for once in your lives. The assumption that there is a segment that needs government help and assistance is perhaps the most arrogant assumption in American history.
Hey, you can't fault WellsFargo for telling the truth even if their report is not what most would consider a "scientific" analysis. WellsFargo is accurately pointing out the painful reality of our predicament: the accepted percentage of unemployed IS going to be 9-10% from now on. Get used to seeing the number, folks. In time we won't flinch seeing 10% anymore than we flinched when we saw 4-5% a few years ago.
Meanwhile the new permanently unemployed will make do by doubling and tripling up with friends and family members in similar circumstances in order to keep roofs over their heads, while dumpster diving, foraging and visiting local food banks and charities for their meals and clothing. Thankfully, the air is still free to breathe----so far. In this way the basic necessities of survival are met. Gradually these tens of millions of new down-and-outs will fade from our collective consciousness as the USA gradually morphs into another India.
But the good news is that there has never been a better time to be filthy rich. The number of mega-yachts has doubled in the last decade (http://www.msnbc.msn.com/id/13345720/ns/business-cnbc_tv/#).
Fun yacht video: http://www.youtube.com/watch?v=iXVxPpvIszY
Something to think about.
Funny when we started to support Free Trade many of us thought we would be exporting American values and a model for other nations to build a middle class.
What we got was a Banana Republics Economy! The rich get richer and the middle class disappears!
We were taught what was good for Wall Street was good for America and as long as Wall Street and the large Corporations were limited in manufacturing in America because of tariffs it worked!
We purposely limited the size of banks but when they complained they were to small to compete with the large banks in Europe and Japan we allowed them to grow. What a mistake this was!
We need a new model.
Let's face it Free Trade was an old British Empire Economic Theory to make the rich richer and to save their Aristocracy. Free Trade still makes the rich richer and empowers the new Aristocracy, Wall Street Traders
Think about it, public discourse is about entitlement programs that Americans feel like they pay for with their taxes. No one talks about the fact the we are fighting THREE WARS with no return on investment or corporate welfare.
We are American's. Get over it. And get off your butts. It is up to us to create the "normal" that we will accept.
Employed? Help your less fortunate friends and neighbors. Be selective where and how you spend your money to maximize the impact on our society. Tutor and mentor kids getting ready to enter the workforce. Ask your employer what it would take for him/her to hire more people.
Under employed? Get involved in the community. Make connections. Create a network of friends and those that might be willing to help you. Talk to people about their needs and what your community does not provide. THINK. Find a part time start-up business that fills a true need.
Unemployed? Spend no less than 10 hours a day with groups of people. Talk to and befriend everyone you possibly can. If you are on a first name basis with fewer than 250 people then you haven't truly spread yourself out. Join every group that you can. Work hard to contribute to your neghborhood, town, county or state. Your efforts will be noticed and rewarded.
If you are waiting for someone to fix your problems, you don't deserve the help. Those who get the most help are those that work hard to help themselves.
What would it take for employers to hire more people? Need. It's really that simple. An employer must need another employee before the employer will hire one. Don't believe the nonsense about "uncertainty." There's a lot more uncertainty in Pakistan, and do American corporations invest there? Sure they do.
The problem right now, simply stated, is that there is no work that needs doing that it's not already someone's job to do. I know that's hard to understand, but we find ourselves with nothing to do at home all the time. The laundry's folded, the bookcase is neat, the floor's been vacuumed. You have nothing to do but stare into space. Anything you did would not be because it needed doing, but you'd do it just to avoid staring into space.
That's exactly where we find ourselves today. There is nothing to do that needs doing enough that someone's willing to pay for it.
the demand is down because income is down (or non existant)
business wants customers just not the expense of workers
So, I respectfully disagree that these techniques would only fill currently open positions. I believe Americans can create all of the jobs needed if they are willing to do the hard work of identifying needs that are going unmet. And you don't do that sitting at home looking for work on the computer.