Les Leopold
The Great Unemployment Cover-up and the Looting of America
Losing your job is tragic. It sends tremors through your nervous system, through your family, and through your community. It gnaws at your health. Your children sense the fear, the shame, the anger. I remember clearly the look on my father's face when he got laid off from his factory job during the Eisenhower recession. He was never just a statistic.
Yet unemployment numbers are critical to society. They provide the very best measure of our economic health. And today, we found out again how sick we are. In May, unemployment hit 9.4 percent, the highest in over 25 years as another 787,000 people lost their jobs. Fourteen and half million real people are out of work. And there's more misery on the way as the auto industry and the many firms that supply it, contract even more.
We'll be hearing this unemployment number again and again. Sure, it's bad, but the media will tell us it's a "lagging indicator", meaning that the economy might be getting better even though jobs are still being lost. We might hear that the rate of job loss is slowing. And we might also be reminded that it's not as bad as during the Great Depression when folks were lining up at soup kitchens and selling apples on Wall Street. In those days, unemployment soared. The system had fallen apart and working people were in the streets fighting for unions, preventing foreclosures, and interfering with evictions. Most Americans were rejecting the right of corporate elites to rule their workplaces and their society. Wall Street was on the run.
But that was then. Now we sit and wait, hoping things will get better. And besides, unemployment really is much lower than it was in the 1930s... or is it?
The much-publicized unemployment rate is a sham. Until the Great Depression, unemployment wasn't even counted. Captains of industry, economists, and policy makers were worried about not having enough workers, rather than having too many. Sure there were "panics" from time to time, but the theory was that when workers wages dropped sufficiently, everyone who wanted a job would find one. If you didn't have a job, it was because you didn't want one.
During the Depression the economy collapsed. It could not produce enough jobs. That spurred the first systematic efforts to figure out how to count the unemployed. But we didn't have a system in place for determining a national unemployment rate until 1940. By the then the military buildup was underway and again the main worry was finding enough workers for the war effort. We only have estimates for the Great Depression and those suggest that at least one in four was jobless.
After WWII, as a nation we made a commitment to create a full-employment economy. But what was full-employment? The answer depended on how you counted it. Step by step the official unemployment rate computations were slimmed down making it easier for politicians to claim we were at or near full-employment. Since the economy was doing pretty well in the post-WII era, few worried about the changes in how unemployment was counted.
But these changes matter. Today, the number the media repeats does not count those who have stopped looking for work but who, according to the Bureau of Labor Statistics, "indicate that they want and are available for a job and have looked for work sometime in the recent past." Some of these workers are "discouraged workers who have given a job-market related reason for not looking currently for a job." (Translation: there are no jobs available anywhere near where I live, so why waste my time looking for something that doesn't exist?) Those who have stopped looking for work are just not counted as being part of the labor force and therefore are not unemployed. The publicized rate also doesn't count "those who want and are available for full-time work but have had to settle for a part-time schedule." These folks are working part time because they have no other choice. And part time can mean as little as one hour per week. (Also we don't count the 2.5 million who are in prison - and we have the largest prison population in the world by far, more than China, more than Russia. Seehttp://www.nytimes.com/2008/04/23/world/americas/23iht-23prison.12253738.html)
Isn't that convenient? If you want work but have slowed down your search because there are no jobs around, you aren't counted. If you want to work full-time and have been forced into part-time work, you're not counted as unemployed - even if you are barely working. And you certainly not counted if you're behind bars.
Fortunately, the Bureau of Labor Statistics also publishes a much broader number that includes the excluded (except for prisoners). It is referred to as the U6 jobless rate. Note the subtle distinction between the "jobless" and the "unemployment" rate. Give me a break!
So if you count those who are really having a tough time finding work - like they live in an area that once produced automotive vehicles and parts - and if you count those who are involuntarily part-time, you get a much bigger number. For May, the jobless rate was 15.4 percent -- 25 million of us.
Thank goodness it's not as bad as the Great Depression. One big reason is that we actually have in place unemployment insurance and other government programs to mitigate the negative impacts--programs that working people fought for and won in the 1930s.
So why don't we see these more realistic numbers being reported more often? I think the cultural pattern was set during the Cold War. We wanted our system to look good to the rest of the world: The lower the rate, the less fuel for Communist propaganda. Since the economy was in relatively good shape compared to the Depression, it was easy for policy leaders, economists and journalists to justify and reinforce the continual usage of the lower rates. It also makes sense for major media outlets to promote a more optimistic outlook. As my editor put it, "Newspapers and TV news programs get their money from advertisers; advertisers want readers and viewers to be happy, gung-ho consumers; bad economic news makes people more hesitant to spend money on useless crap, which is bad for the advertisers, which is bad for the media. So there's a structural bias towards reporting the less-bad news." (After writing this piece, I discovered that Reuters, thankfully, is doing its job. See http://www.reuters.com/article/GCA-Economy/idUSTRE5077TM20090109)
If we continually heard the larger and more honest numbers, we might become more rebellious and demand more changes. We might demand stronger policies to create more jobs....perhaps, even at the expense of the elites who got us into this mess in the first place. If the true unemployment rate really hit the news, more of us might come to realize that the Wall Street high-flyers who crashed the economy actually are causing more harm than we realize. We might come to understand that digging ourselves out of the crater will be harder and take longer than the folks at CNBC will admit, and that there's that much more reason to impose deep structural fixes that are necessary to prevent the next crash, the kind of steps Congress and President Obama still seem reluctant to take.
And there's a reason for that reluctance. At this very moment a battle is going on between Wall Street and the rest of us about whether fantasy finance derivatives will be adequately regulated and about whether outrageous Wall Street salaries will be capped. You can take it to the bank (if it doesn't go under) that Wall Street and its CNBC cheerleaders do not want the higher jobless rate to enter the discussion.
But a Wall Street victory is not inevitable. We can begin to open up the discussion starting right here...and now.
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