The Jobs Disaster Continues

http://online.wsj.com/article/SB10001424127887323478004578303992482199574.html?mod=WSJ_Opinion_LEFTTopOpinion

http://www.nytimes.com/2013/02/18/opinion/krugman-raise-that-wage.html?hp

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"The difficulty lies not so much in developing new ideas as in escaping from old ones." (John Maynard Keynes)

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Two articles struck me today: one from wsj.com and one from nytimes.com. Both were written by powerful people. I have attached both articles but I fear that wsj.com will only provide the "link" and not the content. Even though I pay for my own subscription, I guess that's not enough for the capitalists at wsj.com who are looking to make money wherever they can.

I took the title of this post from Mort Zuckerman's article in wsj.com 2/15/13. Zuckerman, as Chairman and Editor In Chief of U.S. News & World Report, has access to much more research and information than I do. His position on the gravity of the jobs problem is correct and much more detailed than I could be.

Zuckerman's position is that, after 4 years, America remains in a jobs depression as great as the Great Depression. We just don't see it every day because there aren't "bread lines" and "soup kitchens." There are 12.3 million unemployed today and there were 12.8 million unemployed in 1933.

While the population of the U.S. is much larger now, 12 million people is still 12 million people. And, as Zuckerman says, we see less today because, in this "recovery," millions of people are being assisted, out of site, by government checks, unemployment checks, Social Security disability checks and food stamps.

Zuckerman: "More than 48 million Americans are in the food-stamp program - an almost incredible record. That is 15% of the total population compared with 7.9% participation in food stamps from 1970-2000. Then there are the more than 11 million Americans who are collecting Social Security checks to compensate for disability, also a record. Half have signed on since President Obama came to office. In 1992, there was one person on disability for every 35 workers; today it is one for every 16."

Further: "The U.S. labor market, which peaked in November 2007 when there were 139,143,000 jobs, now encompasses 132,705,000 workers, a drop of 6.4 million jobs from the peak. The only work that has increased is part-time, and that is because it allows employers to reduce costs through a diminished benefit package or none at all."

As Zuckerman points out, the real unemployment rate today is not 7.9%. It's 14.5%. The 14.5% reflects the unemployed and three other categories: 8 million people who are employed part-time for economic reasons (because their hours have been cut back or because they have been unable to find a full-time job), the 10 million who have stopped looking for work, and those who are marginally attached to the workforce.

So, it typically takes 25 months to close the employment gap from the unemployment peak near the start of the downturn. Yet this time, more than 60 months after employment peaked in January 2006, nonfarm unemployment is still more than 3 million jobs below where it started.

There are many more statistics but, basically, Zuckerman has proved that America has failed on this issue and there doesn't appear to be anybody leading the way on what to do about it.

Enter the "minimum wage" which Krugman writes about today. He agrees with the President's suggestion that the minimum wage should be raised from $7.25 to $9. He thinks it's a good idea which, interestingly, runs counter to most economists and even his own textbook. The old argument that raising the minimum wage will cost jobs doesn't work anymore because there is ample evidence that, when it has been raised in one state versus another (what Krugman calls "natural experiments," ), there is no negative on employment.

It would appear that there is a Republican objection to this and, while I will not take political sides here, I'm with Krugman who, basically knows more about this than any politician.

So, overall, unemployment continues to be a disaster, but raising the minimum wage is something we can all (except many Republicans) get behind.