Jobless-Future Watch (2 July 2010)

Data out today from the Labor Department in the U.S. shows that job creation simply isn't happening in the American economy. The end of Census work meant that jobs were down 125,000, with the private sector creating only 83,000. The New York Times story notes that this doesn't keep pace with population growth.

Indeed, the overall Labor Department numbers remain weak. The median forecast from economists was that the nation would add 110,000 jobs. The economy needs about 130,000 to 150,000 jobs just to keep pace with new workers entering the market. The labor pool is already packed with 15 million Americans looking for work.

Construction, hurt by plummeting home sales and depressed office market, shed 22,000 jobs — on top of 30,000 lost in May — and state and local governments cut another 10,000 jobs, numbers that most expect to accelerate sharply in coming months.

And the underlying data shows many signs of slippage. The labor-force participation rate — that is, the number of workers counted as participating in the national economy — fell by 0.3 percentage point, and there were slight decreases in the number of hours worked and average hourly earnings....

Digging a little deeper, the recovery from the Great Recession appears to be leaving more and more Americans behind. In June, about 2.6 million people were marginally attached to the labor force, an increase of 415,000 from a year earlier. This means they are not counted in the unemployment numbers but that they have looked during the past year and they want a job.

So, the reserve army of discouraged workers is growing, even despite the noble efforts of the U.S. Senate to deny lazy slobs an extension of unemployment benefits. (As Sharron Angle, the Republican candidate for U.S. Senate in Nevada has insisted, "there are jobs that do exist" -- never mind all the jobless people contending for them. Meanwhile Nevada's unemployment rate is tops in the nation, at 14%.)

The WSJ's Sudeep Reddy elaborates:

June’s decline in the civilian labor force of 652,000 was the sharpest one-month decline in 15 years in the Labor Department’s survey of households. Some people could be frustrated with their job searches, choosing to take time off or pursue other options like school. Some could be experiencing the end of their unemployment benefits, which required them to maintain an active job search. Whatever the cause, over the past two months almost one million people simply stopped looking for work. And over those two months, the U.S. population grew by 361,000 — with more than half of that gain coming in June.

At what level of nonparticipation will the vast numbers of jobless become a concern? And to what degree should it be a concern, if the work not being done by these nonparticipants in the economy could serve no socially necessary function (other than supporting their own well-being, perhaps). Matt Yglesias argues that "There are millions of Americans who were gainfully employed in 2006 who are no longer gainfully employed today but who have the physical capacity to produce useful goods and services. There are also millions of young Americans who weren’t in the labor force in 2006 but who have all the basic attributes of people capable of producing useful goods and services, who are currently sitting idle." Most of us sort of take for granted that this proposition is true, that there is no finite lump of labor in the world that needs doing, and no more. But what really joins the labor we do for self-actualization, to please ourselves, with the broader economy of socially necessary activity? What defines the necessary? And would they be joined at all, or would we try to join them, if not for capitalist organization? Is there a necessary relation between what we feel like doing and what needs being done? What would we all do if automation reached the point where all the "necessary labor" was easily taken care of? Have we reached that point, with the broad edifice of consumerism build up to give us all something seemingly meaningful to do? What is the relationship between growth in capitalist economies and improvements in the standard of living -- does growth equate to socially useful innovations, or just wheel-spinning? (Do I need to read Player Piano?)

Tyler Cowen, living currently in Berlin, posted recently about the city, making me wonder if I should be living there:

As I've noted before, neither land nor labor are remarkably scarce here, and so most items and apartments are very cheap, especially by European standards but even by south German standards. Could it be that marginal cost pricing reigns at the retail level?

The cheapness makes Berlin a magnet. I am told that large numbers of people -- especially foreigners -- live here part of the year but earn most of their money elsewhere. Think of a twenty-something writing a novel or a dancer or singer in training.

Did you know that only about forty percent of the German population is employed? I would be surprised if it were that much in Berlin. You can view that figure as a realization of (temporary) utopia, the result of screwy anti-work economic policies, or a bit of both.

As the nonparticipation rate continues to rise, one has to wonder how much of the U.S. is trending in this direction. Are there semi-Utopian pockets in the country where you can buy a house for cheap and do your own thing? Or are such places just full of forgotten people who have no avenue to the dignity that having a job affords? I don't know if we could create a Berlin in Detroit, no matter how devalued property gets. But I wonder if we should be trying, or if that would merely intensify submerged conflicts in the American psyche.