Guest Post by Niko Karvounis: Untangling the Jobless Recovery

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Niko Karvounis is a policy analyst at the New America Foundation/Next Social Contract Initiative.
For the last few months, many discussions about the recession have centered on the supposed emergence of “green shoots,” or incipient signs of economic recovery. But now even the optimists must admit that the seemingly positive recent developments haven’t initiated a sustained recovery.
Consider a story from yesterday’s Washington Post, “Recovery’s Missing Ingredient: New Jobs,” which rightly points out that – for all the stock market bounces and better-than-expected bank profits – the economy continues to hemorrhage jobs. The Post story speaks to the fact that, due to the nature of this recession, we’ll see persistently high unemployment for a good many months even as other economic indicators such as GDP and inflation settle into desirable levels.
There are a many reasons for such a “jobless recovery,” including the breakneck pace of job loss we’ve seen during this recession, rising productivity that allows firms to maintain output while hiring fewer workers, and fundamental economic changes (such as the implosion of the auto industry and financial sectors) which necessitate additional time to relocate and retrain workers.
Making things worse is the fact that unemployment is concentrated in productive sectors like manufacturing, the very industries that we need to grow in order to move away from a precarious, consumption-based economy.
For an in-depth analysis of the jobless recovery and what it means for our economic future, the New America Foundation/Smart Globalization Initiative will host an event tomorrow from 1:00 pm2:15 pm on Capitol Hill.
The event will feature Senator Sherrod Brown, Chairman of the Senate Banking Subcommittee on Economic Policy (D-OH) and Leo Hindery, Jr., Chairman of the New America Foundation/Smart Globalization Initiative, who will discuss the jobless recovery, its threat to our long-term economic health, and potential solutions.
You can also check out the New America Foundation/Economic Growth Program‘s recently published report on the subject.
— Niko Karvounis

Comments

10 comments on “Guest Post by Niko Karvounis: Untangling the Jobless Recovery

  1. Jolene says:

    The president’s “Green Jobs” may turn out to be nothing more than millions of adults cutting grass to somehow make ends meet.

    Reply

  2. Richard W. Crews says:

    What if our current economic mess isn’t a recession but a correction? That means housing prices aren’t coming back, most stocks are where they belong, and America will lose our manufacturing foundation. If oil goes big, the American Way of Life expected by many will not be experienced. Everyone but the wealthy will face a lifestyle rearrangement.
    The only organization that can help us be successful is our government. Market solutions have failed us.
    We need mass transit to address the new economics of broke and/or shortage. As unemployment grows and stays, we’ll need National Health Care. It’s illogical and unfair to have our health insurance linked to a job with no assurances of lasting.
    We could save GM, and our enterprising spirit if we had National Health Care. It would free people to try new entrepreneurial efforts or personal direction. It would strengthen family health and stability. We could run our military cheaper. It would allow our citizens to face an uncertain world with some assurance of a bottom level, a safety net, of decency and fairness. Our health care in the USA is the most expensive and the most unfair in the industrialized world. It is a travesty.

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  3. bob h says:

    Can’t we at least wait for the recovery to begin before we pronounce it jobless? All agree that growth will not resume until late 2009, at best, and joblessness is always a lagging indicator. This is the way all downturns play out. Wait until we get back to positive growth before assessing its joblessness?

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  4. ... says:

    it is called ‘how to create something out of nothing’ or if you prefer ‘out of thin air’… the federal reserve does it all the time, i don’t see why some pesky economist can’t too… it is henceforth called ‘the jobless recovery’ coming to a vacant parking lot near you, or something like that…

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  5. TonyForesta says:

    “Better than expected bank profits”? Are these people insane? Are they incapable of reading or simple math. The finance sector alone squander 12 TRILLION or in Steve parlance 12 thousand billion tax payer dollars at the government trough in the last year alone, is giveaway loans, credits, and direct aid. And these mastersoftheuniverse predator class parrots percieve the gargantuan profits of the banks as “better than expected”. It’s insulting. As erichwwk quotes above (“an infinitesimal two-tenths of one percent of U.S. taxpayers now earn about half of our nation’s individual income”. 85% of all the money the FED has ever dishedout since it’s inception in 1913 was funnelled into the offshore accounts of the predatorclass thieves and swindlers in the finance sector in the last year alone. Why American have not stormed these beasts homes, penthouses, and lofts and tarred and feathered them (or preferrably worse) on the posh lawns or ornate lobbies is testament to just how, ignorant, lost, and apathetic the American public has grown.
    We are witness to the greatest redistribution of wealth in the history of the world, and it all went to the offshore accounts of the predatorclass who are responsible for bringinig the entire world economy to the brink of collapse.
    Failed management of FAILED institutions bruting and pimping FAILED products, (toxic assets, irredeemable debt products, and other PONZI schemes) FAILED!!! They FAILED castrastophically, and the Obama administration has betrayed all those who voted for him, by turning his back on the American poor and middle class, refusing to give voice to the voiceless as he promised, and forking over 12 TRILLION American tax payer dollars to the predatorclass thieves and swindlers on Wall Street who are singularly responsible for the greatest economic calamity since the great depression.
    Unless and until these criminals are held accountable, deprived of their illgotten gains, and sent to jail, (or worse) – there will be no hope for recovery. These criminals want the world to return to the unsustainable bubble/burst economies of the last 30 years because they alone will profit.
    The government is owned and controlled by the predatorclass.
    samuelburke’s poignant though dark commentary above cuts to the heart of the issue.
    Iranians had the courage to stand up and take it to the streets to protest the governments abuses, and be heard. They had the courage to act out in the streets controlled by a highly oppressive regime. They had the courage to face thas Bajish militias, gunfire, battons, and the threat of imprisonment and worse to be heard, to express their dismay and disatisfaction at the actions of an obviously corrupt government.
    Americans? Not so much. We are a nation of fat ignorant redneck sheeple who blindly follow the gospel according to fox as godswill directly over the proverbial cliff, or into those HMS detention centers, or off to gitmo or the ovens.
    Cowards. Idiots. America has shapeshifted into a nation of the predatorclass, by the predatorclass, and for the predatorclass EXCLUSIVELY. There will be no recovery for poor and working class Americans because we are of absolutely ZERO interest or concern to the predatorclass the politicians, and socalled regulators they have captured, (as in own, as in bought and paid for by the predatorclass).
    We will all get what we deserve. There will be blood, a reckoning, and a balancing.
    In a world where there are no laws, – there are no laws for anyone biiiaathes!!!

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  6. Don Bacon says:

    With all due respect, when we’re subjected to a common robbery we don’t need an economic advisor to describe it for us.
    The US State Department has been a primary agent for stripping the US of jobs under — I kid you not — the Commerce Department’s “Manufacturing Initiative.” Here’s the current US ambassador to Poland, Victor Ashe, on the subject, in 2005:
    “When the Polish government next releases statistics, they will show that we’ve increased our share of investment and that the United States is now the second largest investor in Poland. The list of new investments is growing so quickly–Gillette, Avon, Johnson Controls, Pratt and Whitney, 3M, Firestone, and so on—that I risk inadvertently overlooking someone. These add up to hundreds of millions in dollars in investments, thousands of new jobs, and billions of dollars worth of future business activity. . . Our Commercial Service—the part of our embassy that devotes itself to trade promotion–has given priority to several sectors, under the Department of Commerce’s priority ‘Manufacturing Initiative.'” –Ambassador Ashe, Sep 13, 2005
    http://warsaw.usembassy.gov/poland/ashe_amcham.html

    Reply

  7. erichwwk says:

    Thank you Nico – and Steve – for another heads up on Leo Hindery.
    Leo Hindery was the ONLY economic adviser in the last presidential election willing to address the fact that we have two America’s, a state that cannot be altered by the minor tweaking of the Obama team, but one that requires a major reform.
    I thought Hindery’s speech on May 19 at the New School on the jobless recovery was very much on target, and one I have widely distributed. It is archived at the NAF here:
    http://tiny.cc/IKSjL
    I hope this forum has a large audience, and I am glad that “a video will be posted on the event page after the event.” I look forward to watching it.
    To me, much of the fight in the U.S., and especially between the House and the Senate, is over the Two America’s and as Leo states in the above speech, the fact that:
    “an infinitesimal two-tenths of one percent of U.S. taxpayers now earn about half of our nation’s individual income”.
    This ability to capture what is common wealth is made possible by a obfuscating the limits of markets, and using government as a means to deny the existence of public goods in much the same way the Russian government used government to deny the existence of private goods, and both use government as a vehicle to transfer commonly earned wealth to a very few privileged elitists.
    As Joe Biden’s economics adviser Jared Bernstein wrote in his preface to “CRUNCH-WHY DO I FEEL SO SQUEEZED”:
    “Economics has been hijacked by the rich and powerful, and it has been forged into a tool that is being used against the rest of us.”
    As a result Congress discusses health care costs in much the same way the costs of a volunteer army were once discussed in the 1960’s – by pretending that these costs are “too high” when the truth is the real costs- the opportunity costs of what we give up – are higher under both a drafted army and a private health care system than the alternatives to which they are compared.
    Dolly Parton has often said “it costs a lot of money to look this cheap”, a quote which typifies how Congress has hijacked economic analysis to deny an honest discussion of health care policy options. Although a volunteer army was more expensive in terms of budgeted monetary cost, once we measured cost in REAL terms, the opportunity cost of the consumer goods we lose when young men transferred to military missions, it was generally recognized that monetary costs were not a good measurement of real costs, and we adopted the cheaper [in real terms] volunteer army, although it was more expensive in apparent monetary terms. At that time reality mattered.
    Similarly, if we measure health care in real terms – the quality and quantity of our lives, the “for profit model” does poorly compared to almost any other alternative. Rather than the expensive model our Senators try to spin on behalf of their elitist clients, “It costs a lot [in real terms] for our health care to be this cheap” [in budgeted money terms].
    I welcome Leo Hindery to the small group of knowledgeable economic advisers who is not willing to sell out and twist economic understanding to benefit narrow interests, and look forward to what he (and Sen. Brown) have to say.

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  8. Don Bacon says:

    The “jobless recovery” should be no surprise. The US has had a stellar record of helping corporations shuck jobs so as to improve their bottom line, the latest event being Obama’s demand that GM “slim down” in order to qualify for federal help.

    Reply

  9. samuelburke says:

    “It’s no secret, of course, that small-denomination bullion is hard to come by and gun sales are way up, but finding out first-hand that this stuff is unavailable brings home the reality of the situation, which is that the social mood is growing darker. On the surface everything looks normal; no one is protesting in the streets, the trash is getting picked up, and elections are as orderly as ever. But the market is quietly reallocating resources as individuals insure against a systemic breakdown.”
    http://www.321gold.com/editorials/rubino/rubino062309.html

    Reply

  10. samuelburke says:

    i ran across this stat the other day about the green shoots recovery.
    http://www.2000wave.com/article.asp?id=mwo061909
    “David Rosenberg, now with Gluskin Sheff, offers us this insight:
    “What really struck us in the employment report of a few weeks ago was the fact that the only segment of the population that is gaining jobs is the 55+ age category. This group gained 224,000 net new jobs in May while the rest of the population lost 661,000. In fact, over the last year, those folks 55 and up garnered 630,000 jobs whereas the other age categories collectively lost over six million positions. This is epic.” [See chart below.]
    “Moreover, the number of 55 year olds and up who have two jobs or more has risen 1.1% in the last year, the only age cohort to have managed to gain any multiple jobs at all. Remarkable. These folks have seen their wealth get destroyed by two bubble-busts less than seven years apart
    At this new normal, we will not need as many malls or factories or stores or new-car plants or car dealerships or any number of other things to satisfy the new normal of consumer desires. As an example, and jumping ahead to a statistic for one minute, capacity utilization is now approaching 65%. Anything under 80% is anemic. Does anyone really think that businesses (in general) are going to invest more money in expanding capacity, in the face of the lowest level of production relative to potential since the 1930s?”

    Reply

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