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Hammer Time: Former Labor Secretary Hits Nail on Head
October 2, 2009 by Neil · 8 Comments
New job numbers are out for September: No surprise to those following these numbers with their eyes open. Some, even the WSJ, were surprisingly surprised by the increase by describing it as “unexpected.” The unemployment rate, calculated using a survey of households as opposed to companies, grew 0.1 percentage point to 9.8%. Just last year, in July 2008 for example, the unemployment rate was under 6%. The real number for my money is not the “U-3 number,” as reported by the press. Rather, the real number is the U-6 number (Go to page 20 of the report below).
That number comprises “total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers.” In other words, not just the unemployed, but also the underemployed, and those who have given up. That number is at 17%, up from 16.8% last month. We are getting closer and closer to one in five people not adequately employed.
Former Secretary of Labor Robert Reich summed it up this way:
The federal government should be spending even more than it already is on roads and bridges and schools and parks and everything else we need. It should make up for cutbacks at the state level, and then some. This is the only way to put Americans back to work. We did it during the Depression. It was called the WPA.
Yes, I know. Our government is already deep in debt. But let me tell you something: When one out of six Americans is unemployed or underemployed, this is no time to worry about the debt…
[P]eople who are worried about their jobs or have no jobs, and who are also trying to get out from under a pile of debt, are not going do a lot of shopping. And businesses that don’t have customers aren’t going do a lot of new investing. And foreign nations also suffering high unemployment aren’t going to buy a lot of our goods and services.
My only quibble with that assessment? I would swap out the number six for five — an odd arithmetic error for a former Secretary of Labor.
As I mentioned in an earlier post, China is spending enormous sums of capital on commodities and building equipment, while building up its infrastructure and mass transit. These actions create short-term jobs, and then generate more jobs in developed, easily accessible communities.
Talk of a “jobless recovery” is oxymoronic, or perhaps 3/5 of that. We need to invest in our rapidly decaying infrastructure, which will also create jobs. The resulting infrastructure will also bring permanent, increased employment. Without that, more folks will be unable to pay their bills, and will be throwing their housekeys to banks. This will increase the rapidly growing housing inventory, shadow and otherwise, which will prevent multifamily housing from making its much needed recovery.
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