Jobs? What Jobs?

Today’s report of a jump in claims for unemployment assistance – by 37,000 to a total of 464,000 – is both disappointing and salutary. Yet expected.

The declines of the past two weeks had been given an artificial boost by the auto industry’s policy this year of not shutting down for a summer break. This created a distortion in the statistics, the seasonal adjustments overestimated the improvement. So there is noise in the data at the moment, but we all expected a correction to be embedded in the reports for the next couple of weeks.

What we didn’t expect was the sharpness of the increase. Clearly the economy is stuck somewhere in no man’s land. It appears to be growing, and has been for several quarters now, but at the same time it isn’t creating many new jobs. Growth without jobs is an illusion for most households as the fear of unemployment limits the willingness to consume. And the unwillingness to consume inhibits growth.

This cycle of fear leading to retrenchment is one that is extraordinarily difficult to break. Japan is still stuck with an economy about the same size as it was back 20 years ago in the immediate aftermath of its own real estate bubble. That languishing has robbed Japanese consumers of almost a generation’s worth of wealth and created political and economic tensions yet to be resolved.

The US looks headed in the same direction.

One of our problems is that economic policy has not focused heavily on jobs, but has been generalized. It has also been hobbled by the fractured nature of our politics: remedies are long term, politicians worry about the two year election cycle. I cannot blame the politicians for thinking short term. Especially when the public is both fickle and ill informed.Of course, politicians don’t seem to be too concerned about getting good information out to voters either! No wonder our discourse is so juvenile.

Meanwhile the unemployed suffer.

Last week’s drop in long term unemployed seems to be directly related to the expiry of benefits. Thousands of people are being abandoned to manage for themselves at a time when they have no opportunity. It is one thing to preach puritanical morality when jobs are abundant and those who want to work can easily find a job. It is totally different to so preach when no matter how hard someone searches they find nothing. The cynicism of that latter approach is sickening. It also completely undermines any talk of “values”: if we cannot help each other it times of crisis, then we should abandon any notion of being a community.