Pundits are just beginning to realize the magnitude of the unemployment issue. Don Peck has an important story that explains:
The unemployment rate hit 10 percent in October, and there are good reasons to believe that by 2011, 2012, even 2014, it will have declined only a little. Late last year, the average duration of unemployment surpassed six months, the first time that has happened since 1948, when the Bureau of Labor Statistics began tracking that number. As of this writing, for every open job in the U.S., six people are actively looking for work. All of these figures understate the magnitude of the jobs crisis.
That’s because the underemployment rate is really 17.4 percent. As Peck notes, the long-term consequences are quite devastating. (“If it persists much longer, this era of high joblessness will likely change the life course and character of a generation of young adults—and quite possibly those of the children behind them as well.”) The root of the problem is not simply staving off job losses but also creating enough jobs to put the unemployed back into the job market. As Peck notes:
The economy now sits in a hole more than 10 million jobs deep—that’s the number required to get back to 5 percent unemployment, the rate we had before the recession started, and one that’s been more or less typical for a generation. And because the population is growing and new people are continually coming onto the job market, we need to produce roughly 1.5 million new jobs a year—about 125,000 a month—just to keep from sinking deeper.
For one thing, it will undermine the feminist critique of society. It is the men who will likely suffer the most, with high layoff rates in male-dominated industries. (“In November, 19.4 percent of all men in their prime working years, 25 to 54, did not have jobs, the highest figure since the Bureau of Labor Statistics began tracking the statistic in 1948. At the time of this writing, it looks possible that within the next few months, for the first time in U.S. history, women will hold a majority of the country’s jobs.”)
The longish piece is worth reading in full to get an inkling of the far-reaching economic and social fallout from long-term unemployment. But for that one need only look at Europe, which has seen the erosion of the work ethic, decreased level of growth and wealth creation, and a lack of optimism and social connection for young adults.
On a political level, the situation calls for a dynamic change of course and a jump-start for wealth creation and job growth. In the late 1970s, we faced a similar crisis of economic and political confidence. It took a new president and a new economic outlook — based on a rebirth of faith in the ability of market capitalism to generate prosperity. Lower taxes, reduced regulation, and free trade were the keys. Unfortunately, our current governing class seems to doubt the efficacy of free markets and persists in schemes to suck wealth out of the private sector. It is a recipe for prolonged pain. Voters may sense we need something new. Hope and change, I think.