If all you heard about the September 2011 Employment Situation released this past Friday from traditional media and stock market reports that the market closed up you would conclude that the employment situation was just hunky dory. But if we were given some context about September’s job number we would realize that it’s just another weak report and another indication that the ‘New Normal’ will be very painful for most families.
Context matters particularly in terms of economic data. Bureau of Labor Statistics released the September Employment Situation last friday. The main story from the report were 103,000 jobs created in September and 9.1% unemployment which was unchanged from August. Sounds positive but there is more information - troubling information that was excluded from most traditional media’s analysis of the release. One huge omission from news reports was that 103,000 jobs included 45,000 returning Verizon workers who were on strike in August so if excluded those jobs then the economy only generated 56,000 new jobs. Oh, but there’s more.
Economic Policy Institute has been providing some very important analysis and context for the monthly job reports. This is what they said about Friday’s report:
The U.S. is currently 6.6 million jobs below where it was when the recession started. But because the working-age population grows as the population expands, in the three years and nine months since the recession started we needed to have added around 4.5 million jobs to keep the unemployment rate from rising. Putting these numbers together means the current gap in the labor market is roughly 11.1 million jobs. To ﬁll that gap in three years—by Fall 2014—while still keeping up with the growth in the working-age population—would require adding around 400,000 jobs every single month. To ﬁll the gap in five years—by Fall 2016—would mean adding 280,000 jobs each month. By comparison, over the last three months, the economy added just 96,000 jobs per month on average. At this rate, the unemployment rate will not come down.
Wow, 400,000 jobs per month! We’re not even close to that. The jobs hole is very deep and weak job growth as reported on Friday will help very little. Even future prospects for significant job and economic growth appear very bleak especially with more talk of austerity at federal, state and local levels.
Oh, but wait there’s even more context that was missing from traditional media reports:
Not to mention that the unemployment rate held steady at 9.1% - a relatively high number.
Want more context? Let’s not stop with just the employment situation. What household incomes? High unemployment provides downward pressure on wages and incomes. So it should not be a surprise when we read or hear about reports like this:
Between June 2009, when the recession officially ended, and June 2011, inflation-adjusted median household income fell 6.7 percent, to $49,909, according to a study by two former Census Bureau officials. During the recession — from December 2007 to June 2009 — household income fell 3.2 percent.
Welcome to the New Normal! This is going to be painful. But it doesn’t have to be this way. There are alternatives/solutions to this New Normal.
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