America Isn’t Working

The U.S. has the most creative imagination and flexibility, but unemployment is wasting our potential.

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America isn't working. The grim reality of today's economy is that 23 million people who want to work cannot get a job. That's an astounding number. We won World War II with fewer people: A total of 16 million Americans served in the U.S. Armed Forces. Think what they accomplished, and what might be achieved by the modern army of the unemployed—7 million more than the WWII personnel in the Army, Navy, Air Force, Marines, and Coast Guard.

Put it another way. More men and women are out of work in the United States than the entire population of Australia, and more than the populations of 150 other countries. It is shameful, an insult to the millions and to the very ideal of America. And that is just for starters.

Nearly 5 million of the new army have been idle for six months or more, 3 million, for more than a year. That's a level of long-term unemployment that has not been seen since the Great Depression, and we thought we'd learned so much from that terrible experience, which wasted too many lives.

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The way the unemployment figures get headlined has given the impression, month after month, that such bad old days are behind us. We look back on October 2009, when the official jobless rate hit a peak of 10 percent, and take comfort from the fact that in three years the rate has fallen 2.2 points to 7.8 percent. Where's the cloud to this silver lining? It lies in the fact that the decline in the rate does not reflect an increase in the number of jobs in America. It is because the percentage of working-age people who are in the labor force, either employed or looking for work, has fallen. Most of the drop-outs have surely been discouraged by the search, filling in form after form, knocking on door after door. So the "labor force participation rate" reflects this with a fall from 65.7 percent in June 2009 to a historically low 63.6 percent today. Without that decline, the jobless rate would be just a shade under 10 percent today.

In the 36 months after the rate of unemployment peaked in 2009, about 4.7 million non-farm payroll jobs have emerged, an increase in total employment of about 4.4 percent. But contrast this to the 9.1 million jobs gained in the 36 months after the December 1982 peak in joblessness, when the economy and the population and the number of workers were much smaller. The significance is that the gain in the '80s was 12.5 percent. The average job creation these days is about 155,000 per month, well below the 272,000 we would need to get the jobless rate down from the current 7.8 percent to 6.5 percent by the end of the year.

What we have become good at is creating more part-time jobs. Many of the part-timers are in low-wage jobs, and manufacturing jobs have been replaced by new jobs in healthcare, warehousing, and retail that often don't allow workers to rack up enough hours to earn healthcare benefits, let alone break out of poverty. (And Obamacare makes it costly for a small business to take on more than 50 people.) Eight million workers are stuck in part-time jobs because their hours were cut back or they were unable to find full-time positions. Low-wage occupations have grown nearly three times as fast as mid-wage and higher-wage occupations, according to a recent study by the National Employment Law Project. These days employers are less willing to provide full-time jobs, since part-time work allows them to reduce costs through diminished benefit packages or none at all. Not to mention that those in part-time jobs lose training opportunities and thus limit their future.

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According to the Bureau of Labor Statistics, the most rapidly growing job sectors are in healthcare, social assistance, and retail, industries that are noted for low-wage and precarious work. In the retail sector, employers need an on-call workforce that they can hire when demand is high and disband when business is slower. American retailers have gone from a ratio of over 70 percent full-time workers to at least 70 percent part-time. It is hard to believe that after the 20th-century labor struggles to achieve a 40-hour workweek, the 21st-century struggle is a fight for enough working hours to make a living.