Jobs Report Shows Continuing Challenges
The last unemployment report to be released before the election reiterates how far we have to go to reach pre-recession levels of prosperity. The 7.9 percent unemployment rate recorded for October is up slightly from September's 7.8 percent. Even more discouraging, it is slightly higher than the 7.8 percent recorded when President Obama first took office while the recession was at its peak.
Although the recession officially ended in June 2009, that is just a technicality for the more than 20 million Americans still struggling to find full-time work. "Recovery" is basically meaningless unless it is accompanied by job creation, and this recovery has earned a place in the history books as the slowest ever recorded. This is the first downturn since World War II in which jobs lost in the recession had not been restored by this point in the recovery.
When the jobs report is examined in depth, the challenges appear even more daunting. Although the unemployment rate has rebounded from an average high of 9 percent in the recession aftermath, many of the recovered jobs are only part-time positions. The number of full-time employees has actually dropped by 371,000 since January 2009 while the number of part-time workers has increased by more than 1.5 million. Many have just given up. Over the past three years, 7.8 million people have dropped out of the workforce altogether, compared to just 1.2 million new employees. If the unemployment rate included those who have given up and dropped out of the labor force, real unemployment for October stands at 10.9 percent. Of those, 5 million people have been unemployed for six months or more. In January 2009, only 2.7 million people were counted among the long-term unemployed.
This is the sobering context in which the upcoming lame duck Congress will tackle the rapidly approaching fiscal cliff. Failing to prevent the tax hikes and irresponsible spending policies collectively known as the fiscal cliff would be dangerous in the best of times, but persistently high unemployment makes the stakes that much higher. If Congress fails to act, all working Americans will be hit with a tax hike totaling $4.3 trillion over 10 years and $300 billion in 2013 alone. Military spending will be gutted, leading to another wave of job losses. Economic experts, including those at the nonpartisan Congressional Budget Office, universally warn that this outcome would plunge us back into recession and raise unemployment back above 9 percent.
While we should be grateful for the progress in job growth -- however slow and minimal -- we should be under no illusions that the economy is out of danger. In a weak economy further weakened by a major natural disaster, preventing the fiscal cliff tax increases in December is more important than ever.