02.12.11
US environment radically hostile to middle class employment
Mike Konczal has started to answer the question from a Reuters news item today:
Since 2008, the American labor force — that is, the number of people either working or actively working for work — hasn’t grown at all, The Economist reports, looking at Labor Department numbers.
That’s not unusual during a recession, which typically leads some of the unemployed to become discouraged and give up looking for work, or to retire early. At the other demographic end of the labor market, recessions can also prompt some young people to go to school instead of entering the workforce, The Economist explains.
But things usually turn around during the recovery. This time, however, that’s not happening: Since the Great Recession officially ended in mid 2009, the “participation rate” — the share of the population in the labor force — has continued to decline, especially among the young.
But the problem appears to have deeper roots. In the 1990s, the labor force grew by 1.3 percent a year. Last decade, that figure dropped to 1 percent. And the Congressional Budget Office predicts that over the next decade, it will grow by only 0.7 percent.
Taken together, the slow growth of the labor force and the low participation rate mean that the offiical [sic] unemployment rate, now at an already high 9 percent, underplays the actual rate of joblessness even more than such official figures usually do. That’s because the official rate doesn’t include workers who have grown discouraged and stopped looking for work–and that number appears to be unusually high.
The obvious irony here is the case of Egypt, illustrating what happens on the extreme end of the curve, with its decades-long entrenched system of throwing away its human capital for the sake of a looter upper-class holding the reins of power.
Question: What happens when all manufacturing and jobs have gone overseas and there are less and less who can even raise a demand for the cheap stuff?
Answer: Like Walmart, you build overseas or diversify into things like drug sales to the elderly, which the US government underwrites, or white-knuckle banking and financial services for the poverty-stricken who still need to buy a few sticks of clothing. Or like Target, you turn half the store into a supermarket because people still must buy food, which the government can help pay for with food stamp programs.