There is no silver lining to the dark cloud that has enveloped America. A slight decline in the rate of job losses at the end of last year, coupled with a rise in the gross domestic product, gave hope that we were at the beginning of a sustained recovery from the Great Recession. The December jobs report has doused that hope.
Unemployment has graduated from being a difficulty, a headache, a setback, a worry. Now it is nothing less than a catastrophe. The true measure of it is that nearly a million Americans have become so demoralized that they are no longer even trying to find work. No fewer than 929,000 men and women who want a job haven't looked in the past year. That is nearly 50 percent more than the number who felt it was a hopeless quest a year ago (642,000 in 2008). With 15.3 million out of work in the longest and deepest downturn in our economy since the Great Depression, the unemployment rate managed to hold at 10 percent in December only because of an extraordinary shrinkage in the labor force: Some 661,000 gave up their searches for work. (Job losses totaled 85,000, according to the Bureau of Labor Statistics' nonfarm payroll data; the bureau's household survey indicated a loss of 589,000 jobs.)
Roughly 40 percent of the unemployed, or a total of 6.1 million, have been out of work for more than 27 weeks. The average period of unemployment exceeds 26 weeks, the highest level in postwar history; the previous peak, in July 1983, was just 21.2 weeks. The better and more comprehensive measure of both the unemployed and underemployed, the household survey, edged up to 17.3 percent, up from 8.4 percent two years ago and just a shade below the all-time record. But the bureau's unemployment numbers are extrapolations from only 60,000 household interviews. Experts who have looked at these statistics and made adjustments to account for the survey's limitations get an unemployment/underemployment rate of a staggering 22 percent. Since the recession began, some 8.6 million jobs have been lost!
There is no end in sight. Because our potential labor force is expanding by almost 1.3 million job seekers annually, even if we had the strong job growth we saw in the 1990s, it would take at least six years to get unemployment down to 5 percent. Instead, businesses continue to slash labor costs at rates not seen in any downturn since World War II.
The fall in employment is so bad that last year's decline of 3.7 percent was the worst since 1938, when Franklin Roosevelt misjudged an incipient recovery and cut public investment, resulting in a 5.8 percent plunge in employment. See our descent: Last year's average unemployment rate was 9.3 percent, compared with 5.8 percent in 2008 and 4.6 percent in 2007. The employment-to-population ratio for men ages 25 to 54 is the lowest since the Bureau of Labor Statistics began keeping track in 1948. Those without a high school diploma have an unemployment rate of 15 percent, compared with 5 percent for those with a bachelor's degree or higher. For adult heads of household younger than 25, the unemployment rate is approximately 16 percent, reflecting the dearth of jobs for recent graduates and other young people.
More than 4 million people have exhausted their regular unemployment benefits and are surviving on emergency jobless insurance. And months after we supposedly emerged from the recession, we are facing about 450,000 monthly claims for unemployment insurance. Small businesses, the normal source for new jobs, are still shedding workers. Fewer than 10 percent added employees, while more than 20 percent cut back—and the cuts averaged nearly twice as many per firm as the hires at the expanding companies.
Economists may see the recession as being over, but the man in the street sees it differently. From his perspective, these are by far the worst times for American workers since the 1930s. Expectations are low, too. Roughly 60 percent of the public believes the recession still has a way to go, compared with 52 percent in September. Only 29 percent of those polled in a Wall Street Journal/NBC News Poll believe the economy has hit bottom. Even those who have not suffered know someone—a friend, a neighbor, a family member—who is being hurt. Two in three say the rally in the stock market has not changed their views.