The weak job numbers are there for a reason: There are NO jobs!
And when I go back to the house
I hear the woman’s mouth
Preaching and a crying,
Tell me that I’m lying ’bout a job
For the second month in a row, there are no jobs. This unsettles both the White House and Wall Street. Why? I don’t know. It would appear they both live in this fantasy world where everything will be all right again just as soon as this economy gets going. Well, guess what? The economy has been going for months and still there is no job growth.
The reason for that is best illustrated by this fact: In 1950, it took 30,000 people to produce 5 million tons of steel. Today, it takes 5,000 people to produce 7.5 million tons of steel. Which part of that doesn’t Wall Street and the White House get?
The numbers are just stupid. More gist for the fantasy mill. In April, employment grew by just 115,000. That followed a disappointing job gain in March. Together, the March and April average was only about half the 250,000 jobs added monthly in December, January and February. Half of a WHOLE QUARTER.
The real reason: “For the last couple of months we have a situation where the unemployment rate is still declining, but that’s because people are leaving the workforce,” says Gary Burtless, a labor economist at the Brookings Institution. He says it’s usually good news when the unemployment rate drops, because lots of people are getting hired, but that wasn’t the case in April.
Some people might have left the workforce because they reached retirement age, and it’s possible they weren’t replaced by young people, who may have decided to stay in school because the job market is still dicey. Or, because WE DON”T NEED PEOPLE TO DO THOSE JOBS ANYMORE!
“I’ve been feeling very dejected and depressed,” says one woman who has stopped looking for work. She’s 61 years old and she kept being told that “Someone else was getting chosen because they fit the culture better and I recently realized that that was code for I’m older and it doesn’t fit the image that they want to project,” she says. My shocked face goes here.
“It was somewhat humiliating and very depressing,” she says. “It was a shock to realize this isn’t working, because I tend to push on and push through and last week when I just decided to stop, it was an emotional change for me. I realized I have just given up.”
Repeat this story about 500,000 times and you have today’s job market. Here’s the nasty combo:
- Workforce is in their 50’s and 60’s – nobody wants to hire – benefits too costly – undesired optics – businesses want young and vital, not old and tired
- Skilled jobs are now automated – factory as well as service force
- Competition for unskilled jobs is from workforce in their 20’s – mostly college degreed job seekers willing to trade down through the job types
- Only turnover in public sector jobs are pensioners with contracts too expensive to replace
- Same story in private sector union jobs – no replacement workers
- Housing market stalled for like, … ever, depressing related construction, engineering, architectural, building supply, manual labor and maintenance jobs
- No credit for small to medium business, so no business expansion jobs
- Austerity, coupled with high gas prices subtracts spending on tourism, so no seasonal tourist industry jobs
- Home grown austerity measures focused on discretionary spending, so no restaurant, entertainment, upgrade on existing appliance, auto, home improvement related service sector jobs
- Even Microsoft, who used to create 6 service sector jobs in and around Redmond for every employee hired, now creates only 1, as employee benefits are substantially reduced
All of those jobs that we fantasize about are simply never going to come back. That’s why people have stopped looking. The “people stop looking for work” bubble is huge and growing. As Paul Krugman said yesterday, unless we can kick this economy into a much higher gear and forget all about the negatives related to unemployment and the workforce and austerity, we are on a path to become the Greece of the New World.
Of course, my solution is always around initiatives like Crowdfunding and Startup University, which have the greatest chance of creating NEW employment of anything we have done so far. But, the Obama White House still hasn’t called.