The jobs meltdown

July 11, 2011

Gary Lapon explains what's behind the latest disastrous employment statistics.

TWO YEARS after the economic "recovery" is supposed to have begun by the official calculations, the latest report on jobs from the U.S. government shows the Great Recession is alive and well for anyone who has the misfortune of looking for work.

According to the Bureau of Labor Statistics (BLS), the U.S. economy added just 18,000 jobs in June, and employment figures for May were revised down to just 25,000 new jobs. That's a huge drop from February through April, when politicians and commentators celebrated announcements of more than 200,000 new jobs each month.

In addition, approximately a quarter of a million people gave up looking for work in June, joining the ranks of the millions of "discouraged workers" who are no longer even counted among the unemployed.

A significant portion of the decline in the overall unemployment rate in the past 18 months is the result not of new jobs being created, but of unemployed workers giving up on finding work. But job creation in June was so bad that even with so many "discouraged workers" dropping out of the statistics, the unemployment rate still jumped to 9.2 percent.

Applicants line up at a job fair at the New Yorker Hotel in January 2007
Applicants line up at a job fair at the New Yorker Hotel in January 2007 (Frances Roberts)

Unemployment is always a feature of capitalism, even in boom times, but it has reached nightmarish proportions in the U.S. and across the world in the wake of the most recent economic crisis.

In an issue brief that puts the June unemployment numbers in perspective, Heidi Shierholz of the Economic Policy Institute pointed out that while there are currently 6.9 million fewer jobs than at the start of the Great Recession, "we should have added around 4.1 million jobs to keep pace with population growth. This means that the current gap in the labor market is roughly 11 million jobs. To close that gap within three years, we would have to add around 400,000 jobs every single month."

Even worse, the number of underemployed--those who work part time but would like a full-time job--has barely declined during the "recovery." As Shierholz writes, "In the 23 months since the end of the recession, the total number of un- or underemployed workers has decreased from 26.1 million to 24.6 million, a decline of only 1.5 million."

The picture looks grim from the statistics--but the individual stories behind the numbers are even more wrenching. As Chelsea, from Rochester, N.Y., described her situation:

"I have an associate's degree, and when I lost my union grocery job last summer, it was four months before I found anything. And that anything was Wal-Mart. I lost my health insurance, I had health issues that began to spiral out of control, and I faced an imminent eviction. Now I can only work 25 hours a week or I lose my Medicaid, without which I can't work or live."

UNEMPLOYMENT FOLLOWING the recent recession is much longer term than in any recovery of the recent past, with over 45 percent of the unemployed having been without a job for over six months.

And after being hardest hit in the depths of the crisis, Blacks and Latinos haven't shared equally in what little job growth there has been. Unemployment for Latinos stands at 11.9 percent, a very slight decline from 12.2 percent two years ago. And during the "recovery," unemployment for African Americans increased from 14.9 percent to 16.2 percent, according to Shierholz--compared with a jobless rate of 8 percent for white workers.

Budget cuts at all levels of government have exacerbated the jobs crisis, especially for Black workers and women, who are disproportionately represented in a public sector that has shed more than 400,000 jobs since the recession.

These public-sector losses have erased nearly half of the growth in private-sector jobs, according to Shierholz--and the austerity agenda coming from both Democrats and Republicans promises more job losses to come in the public sector, as well as cuts to wages and benefits.

According to BLS figures, job losses and long-term unemployment in the wake of the Great Recession represent a deep hole unlike any other recession since the Second World War. And there doesn't seem to be any end in sight.

The bad employment news comes as the college class of 2011--which the Wall Street Journal dubbed "the most indebted ever" due to their record average student loan debt of $22,900--joins millions of workers in the search for jobs that just aren't there.

According to Time magazine, with estimates of real unemployment among those under 25 topping 50 percent, it's expected that as many as 85 percent of new college graduates will move back home with their parents.

For example, Owen, who is finishing up his college degree in New York City, has been searching in vain for a job for over six weeks:

I've been sending out resumes daily, talking to everyone I know. I've turned up nothing. I've gotten two interviews, but no callbacks. It's depressing. If I don't find a job in the next six weeks, I'll have to move back in with my parents in Maine, where the job market is even worse.

OF COURSE, the misery isn't being shared by America's ruling class. In fact, Corporate America is profiting as a result. U.S. corporations raked in record profits of $1.68 trillion in the last quarter of 2010, even more than the boom years before the Great Recession, helped in no small part by the jobs crisis.

These profits were achieved in large part because companies were able to return production to pre-crisis levels, or close to it, while employing millions fewer workers--in other words, making their employees work harder to produce more for the same or less pay and benefits.

Karl Marx's words in Capital never seemed more relevant: "The over-work of the employed part of the working class swells the ranks of its reserve [of unemployed], while, conversely, the greater pressure that the reserve by its competition exerts on the employed workers forces them to submit to overwork and subjects them to the dictates of capital."

Meanwhile, capitalists are hoarding the immense wealth from this increased level of exploitation, rather than investing it in expanding production and creating jobs. As the Canadian Marxist David McNally wrote:

The big reason for the failure of jobs to return is that while profits have recovered, business investment has not. In one major economy after another, corporations are hoarding cash rather than investing it...Put simply, the rise in profits is not translating into new capital accumulation on any meaningful scale. Instead, corporations in the U.S. and elsewhere are simply hoarding cash, holding onto it in larger amounts than at any time in the last 60 years. By the beginning of 2011, in fact, non-financial firms in the U.S. had at least $2 trillion in cash and checking deposits."

With Republicans and Democrats bickering over how much to cut, not whether to cut at all, it's clear that there won't be any alternative to austerity and the corporate offensive coming from above. The challenge will have to develop out of the self-organization and solidarity of the working class--employed and unemployed.

In fact, though it is generating records profits, the jobs crisis is also at an international wave of discontent and protest that is finding expression from the Arab revolutions that began in Tunisia and Egypt, to the huge labor protests of Wisconsin, to the strikes and mass mobilizations in European countries like Greece and Spain.

In all these struggles, un- and underemployment, especially for young workers, are an important grievance.

Historically, the unemployed have played a vital role in class struggle, even in the midst of a crisis, when employers attempt to pit workers against each other. For example, organizing among the unemployed was essential to winning the Auto-Lite strike in Toledo, Ohio, in 1934, the first of three major labor battles that year which opened the way for the mass union struggles to come.

As Subterranean Fire author Sharon Smith wrote, the strike at Auto-Lite:

began on very weak footing. The 4,000 strikers represented less than half of the total workforce at Auto-Lite. Moreover, fully one-third of all Toledo workers were unemployed at the time. Under these conditions, the strike could easily have been doomed, since unemployed workers might have been expected to rush to take the strikers' jobs in desperation.

Instead, the unemployed played a key role in winning this strike, thanks to an ingenious strategy advocated by the radical pacifist A.J. Muste, an organizer from the American Workers Party. Although courts had prohibited solidarity picketing, Muste's Lucas County Unemployed League pledged to bring large numbers of unemployed workers to the picket line...

When the National Guard was sent in to help the police, its troops fired on the picketers, killing one and injuring many. But the picketers kept fighting back in a standoff that lasted six days--until the company finally agreed to close down production at the plant and troops were removed on May 31...The company finally surrendered on June 4, agreeing to recognize the union and to rehire all of the strikers to their old jobs--in a complete victory.

Despite the mass human suffering reflected in the jobs reports from May and June, there is also hope to be found in the struggles of today and yesterday against austerity and for the right to jobs with dignity and security.

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