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Employment in today’s realonomy

The past few months have brought us headlines like “Sharp Drop in Unemployment Rates” and “New Unemployment Claims at 9-Month Low.”  It sounds like employment trends today are finally looking up.  Things are getting better.

We all want things to get better, but are they getting better?

In the Plutonomy at the top 1% of the nation’s income distribution, they certainly are.  In the Realonomy where the other 99% live, sadly no.

The best we can say about the Realonomy is that it has stopped getting worse.  Fewer employed people are losing their jobs than usually lose their jobs in November.  That’s not saying much.

The headline news last week was that new unemployment claims are down to 381,000 per week this year, down from 425,000 last year.  These figures are seasonally-adjusted.  The actual number of new unemployment claims last week was 523,642.

That’s right — over half a million Americans lost their jobs last week.

In normal times, employers lay off around 300,000 people each week, while in the worst weeks of 2008 employers laid off over 600,000 people each week.  It’s certainly not bad news that the weekly new unemployment claims are wandering back into the 300,000s (from the 600,000s).  But that doesn’t mean people are actually being hired.

For the 22 million Americans who are either entirely unemployed or unable to find full-time employment, the situation has barely changed.  The Realonomy has hit them the hardest.  There are no jobs for them.

As of November 2011 there were a total of 113,101,000 full-time jobs in America (seasonally adjusted).  This was up from a low of 110,403,000 in December 2009.  That’s an increase of almost 3 million jobs over two years.

Over those same two years the population aged 20-64 has increased by 2,395,000.  That means that the total increase in full-time jobs since the worst month of the recession has been just about 600,000.  In other words, we’re just one or two weeks of layoffs above the bottom.

Full-time employment in today’s Realonomy is down 8 million from 2007.  The population aged 20-64 is up 5.5 million over the same period.  Assuming that about 4 million of those 5.5 million would want full-time jobs if they were available, we’re down about 12 million jobs.  And 2007 wasn’t really a great year to begin with.

There is one bright spot.  The Realonomy has added 3 million part-time jobs since 2007.  So we’re down 12 million full-time jobs and up 3 million part-time jobs.  That’s 9 million down overall, with a serious deterioration in the availability of full-time versus part-time jobs.

The economy is currently adding about 100,000 new jobs per month (many of them part-time).  Meanwhile the working-age population is increasing by about 100,000 people per month.  Not all of those people want full-time jobs, but assuming that about three-quarters of them do we’re looking at a net increase (after population growth) of about 25,000 jobs per month.

Dividing the 9 million net jobs needed by the 25,000 net jobs being created . . . it would take 30 years for us to get back to 2007 real employment levels — and many of those new jobs would be part-time instead of full-time.

Job increases beat job losses any day, and the fact that the recession has reached its bottom is not bad news.  But real unemployment has hardly budged in three years.  Yes, the official unemployment rate has fallen, but mainly because many high school and college graduates and late-career job-losers aren’t even bothering to look for work anymore.  The work just isn’t there for them.

The tragic flip-side to this mass under-utilization of America’s human resources is that there’s lots of work to be done.  Our schools need teachers and aides; our nursing homes need care workers; our social services agencies need workers of all kids.  We have bridges and levees to fix and mass transit systems to build.  There’s no reason for anyone to be unemployed.  We — as a country — simply choose not to employ them.

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Sydney-based globalization expert Salvatore Babones is available to speak on the Chinese economy (demographics, growth, technology), the Belt & Road Initiative, global trade networks, and Australia-China relations. Contact: s@salvatorebabones.com