Americans never get a break from what is going on in their economy. The US government and related institutions publish data on a near-daily basis, so the economic health is always under the microscope. Financial markets react to these data, and the media try to comment about them. But, they all represent real events, so those captured by the statistics cannot be indifferent to them, especially when they are part of the data. I say that to focus on the latest data released about the state of the US labour market, the initial jobless claims data that are released each Thursday.
Yesterday, those data showed that 500,000 Americans had filed new claims in the week ending August 14 (see Bloomberg report and Washington Post). The Post article is especially poignant in pointing out that , while this rate of claims is lower than the same time last year (550,000), the forecast consensus had been expecting to see fewer claims (hoping for a decline from the previous week’s 482,000 to 478,000), and people in general were hoping for lower figures. The fact is that the economy needs to see under 400,000 new claims for some time before employers are expected to start rehiring at any significant rate. The economy needs about 125,000 new jobs each month just to keep up with population growth. What I have found bothersome for some time is a less-reported fact: some 1.2 million unemployed people have given up looking for work or want to work full-time but can only find part-time work. If you count those, then the already high rate of unemployment, at 9.5%, moves to a disturbingly high 16.5%. That is not a rate of un- and under-employment that should make anyone comfortable. It is 1 person in 6 out of the work force, and means that it is hard to not know anyone who is or has been out of work, and been so for a long time.
The immediate concern with unemployment as a statistic should never hide the fact that as a social phenomenon it is a drag on lives as well as on the economy. Many people derive much of their sense of self-worth from the fact that they can say that they have a job. The process of going to work is something that many are raised to admire, so when it disappears, people fear the social stigma of not having what it takes to interest an employer. It is not fanciful or irrelevant to talk about the opportunities that unemployment offers, in terms of deciding to retrain or do other things, and so open new doors or opportunities for work. But, that process is neither fast, nor smooth, nor easy. It is not a matter of mere intent, either. Families can be wrenched apart by unemployment: it can change long-held roles, or force changes that were never envisaged (such as having to move location), or push down expectations dramatically, and more.
Economists, bureaucrats, and entrepreneours will say that jobs that last need innovation on many levels: the economy and people need to do things differently. That’s the essence of being competitive. If they do not adapt then the work, if it is to be done, will be done elsewhere. That’s really to story of how Asian economies have grown so rapidly over the past 50-70 years. It was pertinent that in talking on NPR’s Market Place yesterday about the backlog of patent approvals, the David Kappos, Director of the US Patent And Trademark Office, mentioned the importance of moving that process so that it could “incent” people. I must admit that I was more taken with what I thought was his personal innovation in creating a new word, but found that it does exist already. He mentioned how even his organization has to find new ways to do things so that people can work more to get more people to work: he mentioned running the air conditioning over the weekend so that staff could and would work during those periods.
Whether individuals see that they are part of the solution to solving unemployment is not a given. Many will wait, hoping to see things get better, not sensing that time is working against them. Some will feel despair at having to see their skills and experience remain idle. Some will feel resentment at those who have not lost jobs, or at those who do not find being without a job the end of life as they know it. They will feel dumbfounded when they see people working who seem to have no idea what they are doing. Whether politicians or policy makers can address these aspects are as important as whether they can address issues that may help create new work.