Monstrous Unemployment

NEW YORK – A few years back I was talking with the girl who used to cut my hair. She said she was tired of New York and would soon be moving back to Miami.

Everything she had in her apartment would fit into a U-Haul, a rented container on wheels that can be hitched to your car. Off she would go. She was finalizing a lease on a property in Florida. And employment? Not a problem, she said; she would think about that when she got there.

These were the years of “full employment” in the United States. For almost the entire second half of President Bill Clinton’s tenure (1993-2001), unemployment was fixed between 4% and 5%. Work was a secondary issue.

Last week, we learned that U.S. unemployment rose to 10.2% in October, the largest unemployment rate in two and a half decades. There were 190 thousand people unemployed that month. Not since the post-World War II era has it been so difficult to find work and make future plans in the United States.

These job losses occurred very abruptly in the deregulated labor markets of major economic sectors. Half of those currently unemployed were fired in less than 18 months. In the American economic scheme, unions, which represent only a portion of the U.S. workforce, may safeguard workers’ rights and negotiate periods of sick leave. But millions have to take unpaid leave if they miss work, even for legitimate reasons. People are also fired without compensation or penalty, which cannot happen in Brazil without “just cause.” In America, where labor is considered an expense, financial cutbacks in a recession constitute “just cause” for termination, hence the speed of the layoffs.

With rising unemployment, productivity increased for those who continued working. Between July and September productivity saw its biggest increase in the 60 years these statistics have been compiled. This explains why the U.S. economy has grown 3.5% in annualized terms for the third quarter, despite rising unemployment. During this period, productivity rose 9.5%.

In any recession the labor market is the last to recover. This one won’t be any different. The problem this time is that only the public sector is spending and hiring. The rest of the country (which is technically out of the recession, with an increase in GDP for the third quarter) is going in the opposite direction.

Since the beginning of the recession (December of 2007), 8.3 million people were laid off in the United States, largely in industry and construction. In this period, the healthcare industry, which is heavily dependent on public funds, was the largest, employing: 597,000 people.

Meanwhile, in promoting his economic recovery plan, Obama has been inflating the numbers. He says his $787 billion tax incentives program helped create or maintain 650,000 jobs this year. In fact, the official website for the plan states vaguely that the purchase of a $1,050 single lawn mower for a public cemetery in Arkansas would have helped retain or create 50 jobs.

If you look for signs of sustainable recovery in the U.S., it’s clear that they have not yet emerged from this monstrous unemployment.