Most people focus on the wrong thing when it comes to the economy. Although the terrible unemployment problem is significant, the decline in overall wages is far more significant.
The fact that only 7% if re-employed workers now have jobs that pay equal or better than their old jobs tells us volumes about the extent to which corporations and their investors have gained total control of the labor market.
Workers have lost all bargaining power, and while incomes of top level corporate executives and investors are skyrocketing, wages are tanking.
From Fortune magazine, December 2, 2011
Three reasons why the job market still stinks
The unemployment rate fell to 8.6% in November, but there’s not much to celebrate.
In November, the unemployment rate fell to 8.6% after hovering at around 9% for most of 2011, the U.S. Labor Department reported. Private employers continued adding jobs at a healthy pace, while the unemployment rate fell to its lowest level since March 2009. Nonfarm payrolls rose by 120,000, with private companies adding 140,000 jobs.
This might sound like good news, given that European officials don’t seem anywhere close to a meaningful remedy for Europe’s debt problems. But, while it might seem like the U.S. (at least for the moment) is shrugging off problems of the euro zone, all is far from well. If you’re reading the government’s report and still aren’t convinced your jobless plight is getting better, here are three possible reasons why:
The jobless have quit their job search.
The unemployment rate doesn’t measure the percentage of the population with a job, it just measures the number of job seekers. As a result, many people who have been unemployed for a while and who have given up looking for work aren’t factored into the rate. Indeed, November’s jobless rate fell partly because more workers got jobs, but it also fell because about 315,000 workers dropped out of the labor force. Even worse, the more than 13 million unemployed have, on average, been jobless for 40.9 weeks – an all-time high.
“It is likely that many long-term unemployed workers are dropping out as their unemployment insurance benefits expire,” according to a report by Moody’s Analytics. “Many of these workers will likely stay out of the job market permanently.”
Those who do find jobs aren’t financially better off.
As New York Times’ Motoko Rich points out, a new Rutgers University study shows that only 7% of those who lost jobs after the financial crisis have returned to or improved upon their previous financial position and lifestyle. The vast majority in the study’s survey say that have diminished lifestyles, with about 15% saying they have seen drastic reductions in their incomes.
And those with less education saw more job losses during the downturn. Even those who landed a job made significantly less than before the Great Recession.Government workers are getting the boot.
Employees of local and state governments probably have the least reason to celebrate. Whichever direction the unemployment rate moves seems almost irrelevant for them, as governments grapple to close budget gaps and shed workers. In November, the downward trend continued as the public sector lost 20,000 jobs – 5,000 of which came from the U.S. Post Service.
Not only are workers experiencing “diminished lifestyles, with about 15% saying they have seen drastic reductions in their incomes,” but public service employees are also losing their jobs. When they enter the labor market, they exert further downward pressures on wages.
Unless these trends are reversed, the U.S. is headed for an economic catastrophe.
Check out an excellent book about America’s disastrous adoption of free trade without a sensible industrial policy. It is Free Trade Doesn’t Work., and was written by Mr. Ian Fletcher, an Adjunct Fellow at the US Business & Industry Council when he wrote it. He is now a Senior Economist at the Coalition for a Prosperous America.
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Consider joining The Coalition for a Prosperous America. CPA is working for a new and positive U.S. trade policy that delivers prosperity and security to America, its citizens, farms, factories and working people. “We are an unrivaled coalition of manufacturing, agricultural, worker, consumer and citizen interests working together to re-build an America for ourselves, our children and our grand-children. We believe America can provide good jobs for workers, affordable goods for consumers, opportunity for farms and manufacturers and a clean environment without compromising our national sovereignty and security. We are committed to achieving this outcome.”