The extent of our labor market problems has been highlighted many times and in many ways. Yet, with little being done to correct them, it is worth keeping the issue in the public eye.
What follows are three charts from the Economic Policy Institute. This one highlights the ratio of unemployed persons to job openings. Although the ratio has fallen since the “end” of the recession, it remains considerably higher than a decade ago. It currently stands at 4 unemployed per job opening.
This one breaks down the data by industry. It reveals that there are problems across the board.
This final one shows that the job crisis is hitting everyone. As the Economic Policy Institute explains: “Those with higher levels of education are leaving (or never entering) the workforce at the same rate as those with just a high school degree.” Only those with less than a high school diploma seem to be experiencing improved employment opportunities.
And the response of many political and business leaders to this dismal situation? Primarily calls for austerity–or better said cuts in social spending. Some economists have even developed a theory of austerity-led growth, arguing that slashing government spending will unleash private investment and job creation.
We have been witnessing a test of this theory in Europe and not surprisingly it hasn’t produced positive results. As the economist Kevin O’Rourke explains: “One lesson that the world has learned since the financial crisis of 2008 is that a contractionary fiscal policy means what it says: contraction. Since 2010, a Europe-wide experiment has conclusively falsified the idea that fiscal contractions are expansionary.”
I am willing to bet that this outcome wasn’t a surprise to most workers.
Comments 2
Yrro Simyarin — January 4, 2012
They are seriously claiming that European "austerity" since 2010 count as proof that austerity doesn't work? What about the trillions of Keynesian stimulus that has failed to have real effects in the US economy since 2008?
These deficits exist because governments promise services they can only afford to give out in the best of times - if a level of spending turns every economic downturn into a debt crisis, it is too high.
I don't know that a balanced budget amendment is a good idea - there are reasons for short-term deficit spending. But there's nothing short term about the current obligations faced by either the US or Europe.
ron — January 4, 2012
The decrease in jobs is a results of three things:
1. steadily increasing productivity
2. extreme (and growing) wealth inequality
3. maintained or increased work time for those with jobs
The systematic solution to the problem: universal basic income.
Basic income has fair redistributive effects, strengthens worker power and leads to more job distribution. All highly desirable effects.
Those currently working themselves unhealthy and unhappy can have the economic means to work less, thereby letting those longing for work to pick up the slack.