Technically, from the bloodless standpoint of pure economics, we’re coming out of the recession, but you wouldn’t know it from the jobless figures, a persistent drag on the economy that may make recovery agonizingly slow.
For September, the unemployment rate edged up to
9.8 percent, the highest in 26 years, since June 1983. That’s even worse than it seems because it’s a percentage of a work force that is 7.2 million jobs smaller than it was when the recession began in December 2007. If you count those who have quit looking for jobs or been forced to settle for part-time employment, the rate is more like 17 percent. The U.S. Department of Labor says 15.1 million Americans are now out of work, over one-third of them for longer than six months.
The economy shed 263,000 jobs last month, and if you want to be Pollyanna-ish about it, that is an improvement over earlier in the year, when we were losing jobs at the rate of 691,000 a month.
Also last month, 571,000 people — more than the entire population of Washington, D.C. — dropped out of the work force, discouraged by the lack of jobs so they simply quit looking for one.
This dismal jobs picture has serious consequences for economic recovery, both short and long term. In the short term, people who have lost their jobs or are worried about losing them don’t spend, and consumer spending drives 70 percent of the economy. Long term, as The Economist magazine points out, “High unemployment can do lasting damage, as people lose their skills or their ties to the world of work.”
For what little comfort it’s worth, we are not alone. The European Union says the unemployment rate of the 16 nations in the euro zone averaged 9.6 percent in August. Even in France, where the government actively tries to prevent layoffs through mandatory short work weeks and tax incentives, the jobless rate was 9.3 percent.
Federal Reserve Chairman Ben Bernanke says the unemployment rate will stay about 9 percent for all of 2010. You hope he’s wrong, but somehow you sense he’s probably right. Drat.