Posts Tagged ‘unemployment’


In a recently leaked audio file (from a private fundraiser in February), Hillary Clinton referred to them as “children of the Great Recession. . .living in their parents’ basement,” who “feel they got their education and the jobs that are available to them are not at all what they envisioned for themselves. And they don’t see much of a future.”*

Well, as it turns out, the children of the Great Recession, especially those who completed college in recent years, were right: the jobs that have been available to them have not been at all what they envisioned for themselves.


According to new research by Jaison R. Abel and Richard Deitz, unemployment among all workers, including college graduates, rose sharply during the Great Recession and continued to climb in the early stages of the recovery to levels not seen in decades.** It also increased dramatically for recent college graduates (whom the authors define as those with at least a bachelor’s degree who are 22 to 27 years old), doubling from about 3.5 percent before the recession to a peak of more than 7 percent in 2011. And even while unemployment among recent college graduates began to fall in late 2011, and to decline thereafter, it fell less steeply than for both college graduates as a whole and for all workers.


But high rates of unemployment only reveal part of the plight of recent college graduates during the second Great Depression. Many of them also found themselves underemployed, that is, working in jobs that did not require a college degree. Not all of them were working as baristas, of course, but their underemployment rate has consistently held well above the rate for all college graduates (which, historically, has hovered at around one-third)—climbing well into 2014, rising to more than 46 percent, a level not seen since the early 1990s. As Abel and Deitz explain,

This divergence between falling unemployment and rising underemployment among recent college graduates between mid-2011 and mid-2014 suggests that more graduates were finding jobs during this time, just not necessarily good ones.


The fact is, no matter how hard they tried, recent college graduates have had a difficult time finding jobs that met their degrees. That’s because, beginning in 2011, the demand for college jobs has fallen further and further behind postings for non-college jobs. According to the authors,

The steady growth of non-college jobs, coupled with the relatively soft demand for college graduates during this three-year period, appears to have forced many recent college graduates to take jobs not commensurate with their education. With the demand for college graduates rising again beginning in mid-2014, underemployment also started to come down. However, even with this modest improvement, 44.6 percent of college graduates—nearly one in two—found themselves underemployed in the early stages of their careers following the Great Recession.

What’s interesting is that recent college graduates, who were disappointed by the fewer and worse jobs they offered, for which they and their families had accumulated large amounts of student debt, did not choose the safe, mainstream option. They opted for a much-derided “idealism” and supported Sanders in much higher numbers than his self-identified “center-left/center-right” opponent.

For the last few decades, the value of a college degree has been economic and social dogma in the United States. Recent college graduates, who were forced to confront that dogma, were perhaps more prepared then to challenge other dogmas, including the political options presented by the American establishment.


*From Clinton’s perspective, underemployed Millennials’ support for Bernie Sanders betrayed “a deep desire to believe that we can have free college, free healthcare, that what we’ve done hasn’t gone far enough, and that we just need to, you know, go as far as, you know, Scandinavia, whatever that means, and half the people don’t know what that means, but it’s something that they deeply feel.”

**The charts from the Abel and Deitz research paper are updated on the Federal Reserve Bank of New York web site.


Rev. Michael Pfleger pours mock blood on the ground, to spell out “SOS,” at the corner of West 79th Street and South Racine Avenue, to raise awareness of Chicago’s gun violence 31 August 2016

It may be nice to take a run in New York City’s Riverside Park—where “There are people of all ages, and, yes, all races exercising, strolling hand in hand, playing with their dogs, kicking soccer balls and throwing Frisbees”—but it’s no sign all is well in American cities.

Certainly not in Chicago (or, for that matter, Milwaukee, Baltimore, Ferguson, Flint, Detroit, and many other cities across the United States).

Back in June, as the number of shooting homicides in Chicago continued to rise, I wrote that the mounting gun violence was “The more or less inevitable result of creating and perpetuating an urban economy characterized by high rates of unemployment and poverty, in which racial and ethnic minorities are forced to endure much higher rates of unemployment and poverty and are then segregated into a few neighborhoods.”

while on the surface they’ve been assaulted by gangs and guns, too many Chicagoans have actually been wounded or killed by a City of Unequally Unemployed and Impoverished Segregated Neighborhoods.

2016_shot_clock chalkie-2016


As of yesterday (the end of August), the number of shooting deaths—at least 425—has surpassed the total for all of last year, with four months still to go.


Last week’s unrest in Milwaukee wasn’t caused by the police killing of Sylville K. Smith, a 23-year-old black man. It’s been brewing for decades.

As Roger Bybee explains,

The recent outbreak of violent rioting in Milwaukee came as no surprise to anyone paying even the slightest attention to the deterioration of conditions for the city’s African Americans, especially the young.

Even CNN [ht: ja], which botched (and then, later, apologized for) its reporting of Sherelle Smith’s remarks about moving violence away from the local community, understood “The ongoing protests and violence that have occurred over the past several days in Milwaukee are about more than the police killing of Sylville Smith.”


In a recent report, the National Urban League (pdf) examined economic data for African Americans (and Hispanics) in 70 metro areas and found that Milwaukee has the largest gap in unemployment between blacks and whites in the country and the second biggest income gap.


The unemployment rate for blacks in Milwaukee is 4 times that for whites, while the median income for black households is only 40.8 percent of white household income. (Nationally, the corresponding numbers are 2 and 60 percent.)



Those racial inequalities in Milwaukee are both a condition and consequence of the economic and racial segregation of the city. Thus, while the majority-white downtown area is booming (with trendy new restaurants and craft breweries), outlying majority-black neighborhoods in and around Sherman Park (where the shooting took place) are falling farther and farther behind.


And, in the final contribution to the foul Milwaukee brew, the homicide rate (at 23 per 100,000, higher even than Chicago’s) is also unequally distributed across the city. Thus, for example, in the police district that includes the downtown, the homicide rate was just two, while in the bordering district to the northwest of downtown (which includes Sherman Park), the murder rate was 36, or 18 times as high.

As Daniel Kay Hertz explains,

High levels of gun crime profoundly affect neighborhood residents whether or not they are a direct victim. Witnessing a shooting, or having a friend or loved one become a victim, can be deeply traumatic, leading to depression, anxiety, difficulty concentrating at school or work, and other issues. High crime rates can affect whether businesses are willing to locate near your home, reducing your access to important services like banking, and contributing to depopulation and abandonment. . .

Nor are neighborhoods facing these issues randomly distributed: They are much more likely to be home to disproportionate numbers of people with low incomes and people who are black or brown. That racial and economic segregation play an important role in perpetuating deep social inequalities has been well-established. Directly and indirectly, violent crime is itself a crucial part of the basket of disadvantages that make living in a segregated neighborhood so costly.

It should come as no surprise then that the Brew City, with its strict segregation and profound racial inequalities, should have erupted after the latest police shooting.

And, as Bybee warns, unless the racial political economy of Milwaukee is criticized and transformed, “the recent explosions may signal more episodes of rage to come in the months ahead.”


Special mention

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Here’s an episode concerning U.S. unemployment statistics I was not aware of: in September 1961, James Daniel, writing in the Readers’ Digest, accused the U.S. government of providing “excellent fodder for the communist line.”

Daniel’s article, “Let’s Look at Those ‘Alarming’ Unemployment Figures,” began as follows:

For months the U.S. Bureau of Labor Statistics has been pouring out a stream of doleful figures depicting the worst ‘unemployment crisis’ in the United States since the Great Depression of the 1930′s. Almost daily some administration official tells us that nearly seven percent of our labor force is out of work. Meanwhile, Congress has passed one emergency spending bill after another on the ground, in part or in whole, that it will help employment…. All this unemployment news out of Washington provides excellent fodder for the communist line, of course.

At least in part in response to the Daniels article, in November 1961, the President’s Committee to Appraise Employment and Unemployment Statistics was appointed. Then, in 1963, the Subcommittee on Economic Statistics of the Joint Economic Committee held hearings on “Measuring Employment and Unemployment” (pdf).

Here’s Robert A. Gordon, the chair of the president’s committee:

You will forgive me if I say that this article represented an egregious example of irresponsible journalism. In effect, it charged that the official data on unemployment were being deliberately manipulated in order to justify larger Government spending and more extensive Government controls.

The entire transcript of the hearings is worth reading, if only to get a sense that there is no level of unemployment “out there” to be measured. The measuring of unemployment (like all such statistics, from national income to profits) is a social construction.


Today, of course, the rate of unemployment is once again contested, as conspiracy theorists (like Donald Trump) argue the official unemployment numbers out of Washington are exaggerated. However, in their case, it’s not that they’re too high, but too low.


Bob Trotman, “Business as Usual” (2009)

Is anyone else struck by the contradiction between what is actually going on in the world and the fact that, for those in charge, it’s just business as usual?

Consider, for example, the decision to drop the charges against the three remaining officers facing trial in connection with the April 2015 death in policy custody of Freddie Gray. In fact, according to Mapping Police Violence, “only 10 of the 102 cases in 2015 where an unarmed black person was killed by police resulted in officer(s) being charged with a crime, and only 2 of these deaths (Matthew Ajibade and Eric Harris) resulted in convictions of officers involved.” Charles Blow, for one, is appropriately “incandescent with rage”:

Bill Clinton, who I found more beguiling than many, apparently, took the stage and shifted the burden of dismantling oppression from the shoulders of the oppressors to the shoulders of the oppressed, saying: “If you’re a young African-American disillusioned and afraid, we saw in Dallas how great our police officers can be. Help us build a future where nobody is afraid to walk outside, including the people that wear blue to protect our future.”

How are the people without the power, the people against whom the power is being exercised, supposed to alter the perversion of that power if the abusers are not held accountable?

I am exhausted. I am repulsed. I am over all the circular dialogue. But I don’t know precisely where that leaves me other than in a hurt and festering place. America is edging ever closer to telling people like me that the eye of justice isn’t blind but jaundiced, and I say back to America, that is incredibly dangerous.

And during that same convention, as broad swathes of Americans continue to suffer from the Wall Street-engineered crash of 2007-08 (not just, as Barack Obama put it, “pockets of America that never recovered from factory closures”), hordes of financial industry executives (as well as drug companies, health insurers, and others) descended on Philadelphia.

While protesters marched in the streets and blocked traffic, Democratic donors congregated in a few reserved hotels and shuttled between private receptions with A-list elected officials. If the talk onstage at the Wells Fargo Center was about reducing inequality and breaking down barriers, downtown Philadelphia evoked the world as it still often is: a stratified society with privilege and access determined by wealth.

In fact, as Thomas Frank warns, Donald Trump might end up stealing the voters Hillary Clinton and the Democratic Party are taking for granted.

Let’s see: trade agreements, outreach to hawks, “bipartisanship”, Wall Street. All that’s missing is a “Grand Bargain” otherwise it’s the exact same game plan as last time, and the time before that, and the time before that. Democrats seem to be endlessly beguiled by the prospect of campaign of national unity, a coming-together of all the quality people and all the affluent people and all the right-thinking, credentialed, high-achieving people. The middle class is crumbling, the country is seething with anger, and Hillary Clinton wants to chair a meeting of the executive committee of the righteous.

When Democrats sold out their own rank and file in the past it constituted betrayal, but at least it sometimes got them elected. Specifically, the strategy succeeded back in the 1990s when Republicans were market purists and working people truly had “nowhere else to go”. As our modern Clintonists of 2016 move instinctively to dismiss the concerns of working people, however, they should keep this in mind: those people may have finally found somewhere else to go.

Meanwhile, the European Union is disintegrating and the euro zone continues to impose Draconian austerity measures. As Joseph Stiglitz explains in a recent interview, banks and corporate interests generally have been the only beneficiaries.

Q. In your telling, Germany has imposed austerity across Europe out of faith in a discredited economic idea, the notion that if policy makers concentrate solely on preventing budget deficits and inflation, the markets can be counted on to deliver prosperity. A lot of your book is devoted to demolishing this idea. Does the German elite still really believe in this philosophy, or is something else at play?

A. I’ve visited Germany often, and I’m shocked about how strong the belief is in this view that has been totally discredited elsewhere.

But the policies are mixed together with interests. When the Greek crisis broke out in 2010, what was really at risk were German and to some extent French banks. And there was an enormous bailout that was called a bailout of Greece but was really a bailout of German and French banks. Most of the money went to Greece and then right away went back to Germany and France. . .

Q. You argue that some European leaders secretly welcomed mass unemployment as a means of adjusting to the crisis because this was the only way they could see to spur investment — lowering wages. The strictures of the euro took other options off the table: Crisis countries could not let their currency fall or lower interest rates or expand government spending. Was unemployment really embraced as a fix?

A. They wanted to break the back of workers. Their view was that workers needed to accept a wage cut and we are going to change the bargaining rules to make it more difficult for them to resist. And if we need to add on a little dose of unemployment, well, that’s unfortunate.

Q. Doesn’t that goal predate the crisis?

A. It’s very clear that the euro was a neo-liberal project in its construction. Employers like low wages. They have broken the back of the unions in many of the countries of Europe. They would view that as a great achievement.

However ironically, it has fallen to the Boston Consulting Group [ht: sm] to sound the alarm about attempting to conduct business as usual:

Societies in the United States and Europe are being fundamentally challenged in ways we have not seen for decades—with nationalistic rhetoric and agendas from the far right and a deep distrust of business, globalization, and technology from the far left. Many worry that such a polarization of public opinion and policy making could introduce new risks and uncertainties that would deter investment (which is already far too low, judging by current interest rates) and undermine the basis for future prosperity.

Why this polarization? While there are many causes, and they vary from country to country, it reflects in large part widespread and growing dissatisfaction with entrenched economic and social inequality and greater personal uncertainty in a fast-changing global economy. It also reflects people’s mistrust of political and corporate elites, who are seen as the architects of this state of affairs. Economic inequality within our societies is a byproduct of the way we have managed the past three and a half decades of global economic integration. At the same time, technology—in particular, recent advances in robotics, machine intelligence, and distributed ledgers (blockchain)—could replace human labor in many areas, further compounding dislocation, inequality, and discontent.

Brexit was a watershed. The British vote to leave the European Union was motivated in large part by frustration with economic stagnation and inequality, and it has created fertile ground for nationalistic, anti-immigrant sentiment. The English West Midlands, the region with highest “leave” vote, has experienced stagnating median household incomes for nearly two decades.

The division between those who have captured the vast majority of the benefits from global integration and technological progress and those who haven’t runs between major cities and smaller communities, between young and old, and between people with different levels of education. And it’s not just Great Britain—70% of the US workforce has experienced no real wage increase in the past four decades. Similar patterns can be observed in Canada, Germany, and other European countries. Wealth concentration has also increased globally, with around 1% of people controlling 50% of the world’s assets.


Jason Furman (pdf), Chairman of the U.S. Council of Economic Advisors, gave a speech a couple of weeks highlighting the potential for automation to displace many of today’s workers, even as he insists we need more investment in artificial intelligence.

What they did on the Council is take the numbers produced by Carl Benedikt Frey and Michael A. Osborne, who argue that 47 percent of U.S. jobs are at risk of being replaced by automation (a study I discussed here) and then rank them by wages. What they found is that

83 percent of jobs making less than $20 per hour would come under pressure from automation, as compared to 31 percent of jobs making between $20 and $40 per hour and 4 percent of jobs making above $40 per hour

In other words, automation—which, of course, is deployed by private employers to increase profits—threatens to destroy a massive number of jobs currently done by the American working-class. Displaced workers will be jettisoned from the labor force and join the Reserve Army of the Unemployed and Underemployed.

It is true, over the long run (as long as capitalism continues to grow), new jobs will be created, and some of the displaced workers (and their children) will be forced to have the freedom to take them. But only some of them. In the short run (and, remember, the long run is merely made up of a series of short-runs), as Furman argues, “the process of turnover. . .could lead to sustained periods of time with a large fraction of people not working.”

Within the existing economic institutions, automated technologies are therefore likely to decrease the labor force participation rate, expand the ranks of the unemployed and underemployed, and increase already-high levels of inequality (as workers’ wages continue to stagnate and technology-induced profits soar).

To be clear, that’s not an argument against artificial intelligence and automation. Under other circumstances we might welcome them. It is a caution about the effects of deploying new technologies within the current economy—in which workers and their wages are mostly dependent on private employers, who hire them if and only if it is profitable.

“Is this time different?” Not really, outside of the mythical long-run, full-employment equilibrium offered by mainstream economists. Now as in the past, existing workers—on farms and in factories and offices, especially those who make the average wage or less—are forced to endure the consequences of the decisions their employers take to adopt new technologies.

As even Furman admits,

I see little reason to believe that the economic impact of AI will be very different from previous technological advances. But unlike many of the optimists, I do not find that similarity fully comforting, as technological advances in recent decades have brought tremendous benefits but have also contributed to increasing inequality and falling labor force participation.