The American Bear

Sunshine/Lollipops

[N]early half a million workers ‘disappeared’ last month. Yes, disappeared. The Labor Department tracks what it calls the ‘labor force participation rate’ — wonk-speak for the percentage of people working or actively hunting for a job. In March, that number slumped to 63.3%, the lowest point since 1979. That means there are millions of people out there who have lost their jobs, stopped interviewing or even applying, who have packed it in, given up. The government excludes them when it calculates the main unemployment rate. They have entered the invisible workforce. … The unemployment rate ticked down from 7.7% to 7.6% in March. Some might cheer that news. Don’t. The jobless rate didn’t dip because the economy improved; it dipped because the government simply stopped counting a half-million out-of-work people as out of work. Andy Kroll

Put crudely, the corporocrats have discovered that if job markets are weak enough, they can keep all the benefits of productivity gains for themselves. The current economic ‘expansion’ has labor getting a vastly lower share of GDP gains than any of its predecessors. Those at the top don’t care, since their incomes continue to pull away from the rest of us. So lousy employment levels aren’t a policy mistake, they are a covert policy aim.

Time to Look Behind the Curtain and See Who is Against Full Employment

(Yves Smith / naked capitalism)

(Source: wateringgoodseeds, via randomactsofchaos)

The Deficit Was Not Ballooning Until the Economy Collapsed | Dean Baker

A Washington Post article on how most Democrats have come to support the Bush tax cuts for the bottom 98 percent of the population, after originally opposing them, told readers:

“The Democrats were also correct in warning about the effect on the government’s debt. The tax cuts did more to fuel ballooning federal deficits over the past decade than any other Bush administration action — including the wars in Afghanistan and Iraq and the creation of a prescription drug benefit for seniors, according to the Pew Fiscal Analysis Initiative. And in coming years, the Bush-era tax cuts are projected to expand the deficit by trillions more.”

Actually the deficits were not ballooning until the collapse of the housing bubble crashed the economy in 2008. The budget deficit in 2007 was 1.2 percent of GDP and the debt to GDP ratio was falling. The Congressional Budget Office projected that it would stay in this neighborhood for another decade or so even if the Bush tax cuts did not expire. The reason that the deficit became large and the debt to GDP ratio started to rise was that the collapse of the economy cost the government hundreds of billion in tax revenue annually and led to hundreds of billions of additional expenditures for unemployment benefits and other programs to counteract the impact of the downturn.

While the Bush tax cuts may have been bad policy, in fact they were affordable in the context of an economy that was near full employment. If the collapse of the housing bubble had not sank the economy, there would be little issue about the sustainability of the debt.

Working for the Weekend | Jacobin

We want full employment precisely because it weakens the disciplinary powers of the boss and opens up possibilities for less work and more leisure. A full employment economy raises the bargaining power and living standards of the working class in the short run and erodes the relative social power of capital, opening up possibilities for radical social transformation.

By full employment, I mean what most people would assume it to mean — an economy in which everyone who is willing and able to work has access to a job. Mainstream economics, however, offers a rather different conception of full employment, the “Non-Accelerating Inflation Rate of Unemployment.” Broadly speaking, NAIRU corresponds to an ostensibly “natural” level of unemployment that does not place significant upward pressure on the rate of inflation. This is to say, it doesn’t reflect the commonsense definition of full employment at all. It’s merely a projection of the amount of unemployed people needed to keep wages and prices down and maintain investor confidence.

The concept of NAIRU itself is an ideological response to the political ramifications of the postwar full employment economy, where average unemployment levels across the developed world dipped below 3% in the 1960s. This state of near-full employment dramatically increased working class leverage by eroding the disciplinary power of the boss, who could no longer discipline workers by pointing to the unemployed masses outside the factory gates or the office door.

This strengthening of labor’s power vis-a-vis capital is reflected in the massive strike wave of the late 1960s and early 1970s, when workers sought not only higher wages and expanded benefits but a measure of control over the organization and management of the workplace itself. This dramatic shift in the balance of power also played out in innumerable small-scale confrontations between workers and bosses on the shop floor.

In one telling anecdote from the period, an assembly-line worker at GM who skipped work nearly every Monday is confronted by his foreman. When asked why he only worked four days a week, the worker replied: “Because I can’t make a living working three days.” Who would have the audacity to say that today?

The Polish Marxist economist Michal Kalecki presaged these developments in his classic 1943 essay “The Political Aspects of Full Employment.” A full employment economy would, at least in theory, benefit capitalists by boosting the purchasing power of the masses and consequently the profits of companies looking to meet that demand. But as Kalecki observed, capitalist resistance to full employment policies derives from a different set of concerns. In a full employment economy, the disciplinary effect exercised by the reserve army of the unemployed is fatally undermined. [continue]

Is the ‘jump’ in unemployment claims really a ‘surprise’? To whom? It feels to me like the classic Doonesbury cartoon about the ‘secret’ bombing of Cambodia, in which two peasant farmers are being interviewed, and both of them explain that the bombing wasn’t secret to them. ‘I stood right here,’ one of them says, ‘and I said, ‘Look, here come the bombers.’’ Out in the country, there is no surprise anymore that more people are out of work. Chronically high unemployment is part of daily life now. We see it on the local news, hear about it on the radio, talk about it at the corner joint. We develop elaborate coping strategies — one of which, unfortunately, seems to be blaming our unemployed neighbors for their plight. There is a sullen ugliness building in the land, and professorial explanations about ‘the long-term’ aren’t cutting it any more. And, no matter how correct the president is about the destructively goofy ideas coming from the other side, it doesn’t hide the fact that, for too many people, many of his policies seem to be happening somewhere else to somebody else. Charles P. Pierce (via pieceinthepuzzlehumanity)

(via pieceinthepuzzlehumanity-deacti)

theatlantic:

Why Long-Term Unemployment Is Much, Much Worse Than You Think
Pop quiz: What’s the biggest menace to the economy right now? Is it: (1) the budget deficit, (2) inflation, or (3) long-term unemployment? The presidential campaigns will tell you it’s the deficit. The Federal Reserve might tell you it’s inflation. But with our debt cheap and inflation low, it’s clear that the right-now crisis is that people out of work can’t find their way back in.
Long-term unemployment hasn’t been this high since the Great Depression. It’s an economic scourge because the longer you’re out of work, the harder it is to get work. Employers lose confidence in the jobless and the jobless lose skills the longer they go without a job. Stay unemployed too long and you become unemployable.

Read more. [Image: St. Louis FRED]

theatlantic:

Why Long-Term Unemployment Is Much, Much Worse Than You Think

Pop quiz: What’s the biggest menace to the economy right now? Is it: (1) the budget deficit, (2) inflation, or (3) long-term unemployment? The presidential campaigns will tell you it’s the deficit. The Federal Reserve might tell you it’s inflation. But with our debt cheap and inflation low, it’s clear that the right-now crisis is that people out of work can’t find their way back in.

Long-term unemployment hasn’t been this high since the Great Depression. It’s an economic scourge because the longer you’re out of work, the harder it is to get work. Employers lose confidence in the jobless and the jobless lose skills the longer they go without a job. Stay unemployed too long and you become unemployable.

Read more. [Image: St. Louis FRED]

(via nickturse)

Joblessness can easily be eliminated by putting the unemployed and underemployed to work meeting a vast range of unmet human needs from rebuilding and greening our physical infrastructure to providing essential human services, eliminating dependence on fossil fuels, and converting to systems of local organic food production. If the primary constraint is money, the Federal Reserve can be directed to create it and channel it to priority projects through a national infrastructure bank—a move that avoids enriching the bankers and does not create more debt. David Korten, “America’s Deficit Attention Disorder.” (via utnereader)

(via questionall)

'Funemployed' Is Not a Trend. Nothing Fun About It. | Charles Pierce

What most people would call unemployment, Van Gorkom embraced as “funemployment.”Los Angeles Times

I hate everybody involved with this Los Angeles Times story. I hate its feckless subjects. I hate the “experts” who are quoted in it, and all their fanciful theories about why its feckless subjects do what they do. I hate that there’s a cutesy name for what they do, and I already hate the inevitable future episode of Girls in which it is discussed. I hate the person who wrote it. I hate the trend-happy editors who gave the reporter the green light to write it. I hate the top-level editors who hired the trend-happy editors in the first place. I’m not really fond of the people who delivered the paper, although I might be willing to cut them some slack.

Both Flores and Rounsaville discovered that they like themselves better when they’re not consumed by their jobs. ”This is the best version of me,” Flores said, adding that she feels “completely healthy,” relaxed and focused. Rounsaville agreed: “The rat race puts blinders on you and makes time fly, and then the next thing you know, you’ve missed the chance to be your more exciting self, or to push yourself in a gutsier direction.”

Please push yourself in the direction of a large steaming vat of STFU, the two of you.

I don’t suppose I should expect much from the people who produce this drivel, but some sort of acknowledgement that there is a difference between leaving your job with Yahoo! at 28 to find your muse, and getting laid off by the plant at 54 with two kids in college and a spouse with a chronic illness. I give this thing about eight hours before it finds its way into at least 30 wingnut screeds about how unemployment benefits should be cut back so lazy bastards don’t go on trips to Mongolia, and about how Americans who don’t have cushy no-show jobs at the Cato Institute are all miserable moochers who need to be turned into food for their betters.

And I hate myself for having read it.

The Political Economy of Mass Incarceration | thecurrentmoment

[The] main purpose of the penal system under Jim Crow was not to produce the directly coerced and cheap convict labor itself, though that was certainly a part of the regime of exploitation, but to produce a forced labor regime with nominally free labor. (Lest we think this was merely a Southern project, as Richard Bensel showed in Yankee Leviathan, the North was content with this new regime of controlled labor. Financiers were happy since it brought cotton back online – and thus foreign exchange to pay back debts and stabilize the dollar – and industrialists were now more concerned with the emerging problem of labor control, and increasingly troubled by the precedent set for the North by redistributing land and property to Southern freedmen.)

Daron Acemoglu and James Robinson thus mischaracterize the specific problem of social control in this period when they characterize the “practical problem” of Jim Crow in the following way:

… now that blacks were no longer slaves and could not be directly disciplined and punished by their masters, how should they be kept under control? Locking them up — when mob violence and lynchings didn’t do the job — seemed like a natural idea, but this would cost the state a lot of money, especially at a time when resources were scarce and the prison system was both underdeveloped and severely gutted by the Civil War.

The problem was not a ‘general’ one of how to control free blacks, but a specific modality of social control: how to produce a docile agricultural proletariat. Though Acemoglu and Robinson are sensitive to the idea that underlying Jim Crow was a particular “extractive regime,” they miss the way in which Jim Crow was a kind of exercise in primitive accumulation. One of the key features of primitive accumulation is the use of direct coercion until the wage-labor/capital relationship is naturalized – at which point Marx’s famous ‘dull compulsion of the economic’ takes over. The political struggle, at least for a brief time, during Reconstruction was whether emancipation would mean real liberation – Jim Crow settled the question securely in favor of former plantation owners, and the criminal law was the central instrument through which wage-labor was instituted.

The social control problem of the 1970s was decidedly different. It was as much if not more Northern and Southern, it was as much if not more urban than agrarian – indeed the urban race riots of the late 1960s and early 70s were a key precipitating event, alongside racial mutinies on the front lines of Vietnam, the rise of the Black Panthers, and the civil rights struggle. But in the background, the key political-economic shift was not from slave to proletariat, but from proletariat to lumpenproletariat. The flight of middle class blacks from desegregating inner cities, deindustrialization, the loss of jobs in the North, and increasingly concentrated urban unemployment among black males produced a surplus labor population. The role of the criminal justice system in this context was to police an underclass, not make workers out of slaves. And it became increasingly so as other, more benign, modes of social control – like welfare, public housing – sputtered. This new carceral regime invovled the state taking on direct responsibility for control of a population now that it lacked a strong tie to economic life. And it did so by criminalizing one of its few economic activities: drugs. The war on drugs was the pivotal instrument for introducing this new form of social control. It not only massively increased the prison population, but subjected them, and urban black communities more widely, to the continual supervision of public coercive authority.

[Just] as the use of convict labor dwindles [and with the inauguration of Nixon’s ‘War on Drugs’] the prison population explodes. Where during Jim Crow convict labor and the criminal law was an appendage of the wider, Southern agricultural political economy, in the new era of mass incarceration it is imprisonment that is the point. Being jailed or being threatened with imprisonment is the instrument for containing the problems left by the failure of society to deal with mass unemployment not mass unwillingness to sell labor. Put another way, under Jim Crow the point of criminalization was to create wage-laborers, under the drug war the point is to create criminals.

230,000 Unemployed Will Lose Benefits This Weekend | David Dayen

The deal to extend the payroll tax cut through the end of the year included a deal to “extend” unemployment benefits. I put “extend” in sarcasm quotes because the bill actually reduced that extension gradually. Instead of 99 weeks of unemployment to jobless workers in hard-hit states, the bill gradually backed that off to 79 weeks or less. This hurt the most vulnerable population in the labor force, the long-term unemployed, sadly a fast-growing sector even during this modest recovery.

Evidence of this comes this week, as eight states will see jobless benefits cut:

More than 230,000 jobless Americans will lose their unemployment insurance by this weekend as reductions in the federal program that provides extended benefits to the long-term unemployed take broader effect.

The new round of reductions is hitting eight states this month, meaning that about 400,000 long-term unemployed Americans in 27 states will have been cut off of the federal government’s extended unemployment benefits program this year, according to an analysis by the National Employment Law Project, which advocates for the unemployed […]

Most states provide 26 weeks of benefits, and the federal government provides the rest, partially through a complicated formula that requires jobless rates to be both high and increasing to reach the benefit limit.

But the nation’s jobless rate has been steadily declining — from 9.1 percent in August, to 8.1 percent last month — causing the maximum benefit period to contract in most states. The extended benefits were reauthorized in February, but efforts by some Democratic lawmakers to adjust the formula in a way that would have kept the 99-week limit intact were unsuccessful.

The states are California, Texas, Pennsylvania, Florida, Illinois, North Carolina, Colorado and Connecticut. It’s based on the “look-back” in the bill. Jobless rates in these states are now below what they were three years ago, though in some cases above where they were four years ago. But Congress did not extend the look-back to take this into account. As a result, hundreds of thousands will lose benefits.

Not only is this a tragedy for the long-term unemployed in these states, it’s a legitimate hit to the economy. Unemployment benefits are among the best stimulative programs we have, with one of the highest economic multipliers. Taking these benefits away means perhaps billions of dollars in economic activity going away.

The point is not to extend 99 weeks or more of unemployment benefits forever, but it’s to recognize that the recovery has not arrived for a significant subset of unemployed Americans, and that now is not the time to leave them behind.

pantslessprogressive:

“The reason that unemployment is high clearly has nothing to do with taxes. Consequently, there is no reason to think that reducing taxes further will do anything to raise employment by reducing the tax wedge.
Additional evidence on this point comes from a new study by the Organization for Economic Cooperation and Development on taxes paid by average workers in its 34 member countries. The data [above] are for a single worker without children.
As one can see, the United States is a low-tax country with a total tax wedge of 29.5 percent. Three-fourths of O.E.C.D. countries have a larger tax wedge on average workers.
I have also included the latest data on the percentage of workers employed as a share of the working-age population. I think this is a better measure of the health of the labor market than the unemployment rate, which goes up and down for a variety of reasons unconnected to taxes.
Here, too, there is little evidence that taxes affect employment one way or another. Almost half of the countries with a bigger tax wedge employ a larger percentage of their working-age populations than the United States does, and more than half of those with a smaller tax wedge have lower employment ratios. […]
There is simply no evidence that cutting taxes at the present time will do anything to raise employment.” - Bruce Bartlett: Taxes and Employment

pantslessprogressive:

The reason that unemployment is high clearly has nothing to do with taxes. Consequently, there is no reason to think that reducing taxes further will do anything to raise employment by reducing the tax wedge.

Additional evidence on this point comes from a new study by the Organization for Economic Cooperation and Development on taxes paid by average workers in its 34 member countries. The data [above] are for a single worker without children.

As one can see, the United States is a low-tax country with a total tax wedge of 29.5 percent. Three-fourths of O.E.C.D. countries have a larger tax wedge on average workers.

I have also included the latest data on the percentage of workers employed as a share of the working-age population. I think this is a better measure of the health of the labor market than the unemployment rate, which goes up and down for a variety of reasons unconnected to taxes.

Here, too, there is little evidence that taxes affect employment one way or another. Almost half of the countries with a bigger tax wedge employ a larger percentage of their working-age populations than the United States does, and more than half of those with a smaller tax wedge have lower employment ratios. […]

There is simply no evidence that cutting taxes at the present time will do anything to raise employment.” - Bruce Bartlett: Taxes and Employment

(via pantslessprogressive)