Mort Zuckerman: President Obama’s Economic Programs Have Failed
America has long been a country where almost everyone, including the poor and unskilled, could get a job. Given the will to do a reasonable day’s work, a job was a passport to economic and social well-being; it was the fount of self-esteem and the foundation of family life. Indeed, work was Life.
More than 15 million Americans no longer have that passport to Life. Think of it as roughly the entire population of the states of Connecticut, Delaware, Arkansas, Iowa, and Oklahoma, all standing idle—every man, woman, and child. The traditional breadwinners, namely men between the ages of 25 and 54, are among those hardest hit. According to an Investor’s Business Daily/TIPP poll, some 25 percent of households include someone who is unemployed and looking for work. As well as laying waste to work, to the equivalent of losing every job created in the last decade, the Great Recession has visited us with reduced incomes, declining home equity, and a growing contraction in credit.
For the 80 percent of Americans born after World War II, this is their Depression. They have 5.5 million fewer jobs than at the recession’s start in 2008, despite the most stimulative fiscal and monetary policy in our history. Employment has been below the pre-recession peak for over 50 months. It’s the longest time since the Great Depression that payrolls have not made a new high. The 120,000 new jobs for March make no dent (and adjusted for the peculiarity of warm weather, the number of real net jobs created was 76,000); we need at least 125,000 jobs each month just to provide for new entrants in a rising population.
Discouraged workers dropping out of the labor force make the unemployment rate look fractionally better, but the 8.2 percent headline masks the misery. It is a reflection of the U-3 statistic, which counts only people who have applied for a job in the last four weeks. Among the jobless army, a staggering 42 percent of them are long-term unemployed, without jobs for six months or longer. Look instead at the more relevant U-6 statistic, which counts the number of people who have applied over the last six months. U-6 also includes those who are involuntarily working on a part-time basis. That U-6 unemployment is now in the range of 15 percent. Since 2008, some 3 million people have dropped out of the job market. If they hadn’t, the unemployment rate would be about 10.8 percent. In March, the unemployment rate seemed to fall a tenth of 1 percent, yet the number of people who are actually employed dropped by 31,000. Why? Because the number of people who looked for a job dropped by 164,000 and they are not considered unemployed. Not to mention that half the new jobs are in temporary help agencies.
America’s great job creation machine is sputtering badly. It is now estimated that structural unemployment has risen from 5 percent before the crisis to close to 7 percent today. This means that one third of the rise in American joblessness may be impervious to the business cycle; it represents lost jobs that cannot be restored by boosting demand.
The problem now is not that people are being laid off by the millions. When an economy has reached bottom, as it did, it has already shed much of its labor, and layoffs slow. But the anemic recovery has not yielded job vacancies. Hiring today is at about 70 percent of the 2006 level. Given the increase in unemployed totals, job seekers are only about one third as likely to find work as in 2006.
Compare that to the fabled Great Depression of the 1930s. In the three years after 1933, the economy rebounded with growth rates of 11 percent, 9 percent, and 13 percent. But in 2010, months into our recovery, growth was about 3 percent, followed by 1.7 percent growth in 2011. The rate for 2012 could be about 2 percent—below the 3.4 percent throughout the postwar period.
What has happened? The process of making stuff fosters innovation, leading to new products. When companies go from prototype to mass production, they scale up, figure out where they can build factories affordably, and hire people by the thousands. But many enterprises in America have discovered they cannot compete in engineering or manufacturing with their Chinese or Indian counterparts, which are equally, if not more, productive with workers willing to accept significantly lower wages. In turn, they gain the skills, knowledge, and experience to innovate. Hence our loss of 6 million blue-collar manufacturing jobs.