Update II: The new corporate business model: increase profits, not jobs

Posted by AzBlueMeanie:

Update to The new corporate business model: increase profits, not jobs (Harold Meyerson, Washington Post) and UPDATE: The new corporate business model: increase profits, not jobs (Bob Herbert, New York Times).

Bob Herbert of the New York Times continues to be the voice for the forgotten unemployed in this country with today's opinion The Horror Show:

The employment situation in the United States is much worse than even the dismal numbers from last week’s jobless report would indicate. The nation is facing a full-blown employment crisis and policy makers are not responding with anything like the sense of urgency that is needed.

* * *

The employment data for July, released by the government on Friday, showed that private employers added just 71,000 jobs during the month and that the unemployment rate remained flat at 9.5 percent. But as bad as those numbers were, if you look beyond them you’ll see a horror show.

Government workers were walking the plank from coast to coast. About 143,000 temporary Census workers were let go, and another 48,000 government employees at the budget-strapped state and local levels lost their jobs. But the worst news, with the most ominous long-term implications, was that the reason the unemployment rate was not higher was because 181,000 workers left the labor force.

With many of them beaten down by the worst jobs situation since the Great Depression, they just stopped looking for work. And given the Alice-in-Wonderland way in which we compile our official jobless statistics, they are no longer counted as unemployed.

Charles McMillion, the president and chief economist of MBG Information Services in Washington, is an expert on employment and has been looking closely for years at the issue of labor force participation. “Over the past three months,” he said, “1,155,000 unemployed people dropped out of the active labor force and were not counted as unemployed. Even ignoring population growth, if these unemployed had not dropped out of the labor force, simple arithmetic shows that the official unemployment rate would have risen from 9.9 percent in April to 10.2 percent in July, rather than — as it has — fallen to 9.5 percent.”

Because of normal growth in the working-age population, the labor force increases by roughly 150,000 to 200,000 people per month. If those folks were factored in, said Mr. McMillion, “unemployment now would be even higher than 10.2 percent.”

We are not even beginning to cope with this crisis, which began long before the onset of the so-called Great Recession. The economy is showing absolutely no sign of countering the nation’s staggering jobs deficit.

“We have a large number of people who have just given up hope of finding a job,” said Mr. McMillion. He pointed out that there are record numbers — “I mean lights-out record numbers” — of long-term unemployed people who are still looking for jobs. Of the 14.6 million men and women officially counted as unemployed, nearly 45 percent have been out of work for six months or longer.

* * *

Said Mr. McMillion: “When you combine the long-term unemployed with those who are dropping out and those who are working part-time because they can’t find anything else, it is just far beyond anything we’ve seen in the job market since the 1930s.”

* * *

Millions are suffering and the entire economy is being undermined, and what are they doing? They’re appropriating more and more money for warfare while schizophrenically babbling about balancing the budget.

At some point we’re going to have to claw our way out of this denial. With 14.6 million people officially jobless, and 5.9 million who have stopped looking but say they want a job, and 8.5 million who are working part time but would like to work full time, you end up with nearly 30 million Americans who cannot find the work they want and desperately need.

We’ve got more and more people in our working-age population and fewer and fewer jobs to go around. Mr. McMillion tells us that there are now 3.4 million fewer private-sector jobs in the U.S. than there were a decade ago. In the last 10 years, we’ve seen the worst job creation record since 1928 to 1938.

We’re not heading toward the danger zone. We’re there. The U.S. will not remain a stable society if this great employment crisis is not addressed head-on — and soon. You cannot allow joblessness on this scale to fester. It’s wrong, and the blowback will be as destructive and intolerable as it is inevitable.

To illustrate the jobs deficit further, let's use the benchmark number of 150,000 new jobs created each month just for the economy to keep pace with the population entering the work force each month. One year = 150,000 x 12 = 1.8 million jobs. For the "lost decade" of 1999-2009, this would have required 18 million new jobs created over the decade.

The Bush administration created only three million jobs (net) over its eight years, much of it in the public sector, the worst track record on record. Bush On Jobs: The Worst Track Record On Record – Real Time Economics – WSJ. This weak "net gain" in employment was entirely wiped out by huge job losses since the start of George W. Bush's Great Recession. By the time he left office, George W. Bush had a net loss of job creation, for the first time since Herbert Hoover.

This does not even begin to take into account the long-term structurally unemployed which would take this unemployment number higher.

The very segment of the economy that was supposed to thrive under the Bush administration (private sector job creation attributed to the Bush tax cuts for corporations and the über-rich) ended up with a net loss of 223,000 jobs since August 1999, according to figures from the Bureau of Labor Statistics. Meanwhile, the nation's population grew by 33.5 million people. That's the worst job-creation performance by the private sector since, you guessed it, the Great Depression. Lost decade for job growth MarketWatch First Take – MarketWatch

President Obama inherited a decade-long job deficit of more than 17 million jobs (not including long-term structural unemployment) and George W. Bush's Great Recession shedding jobs at more than 600,000 jobs per month when Obama assumed office. It has been a herculean effort to begin turning these unemployment numbers around. President Obama has had modest success, but by no means good enough to turn around a decade-long jobs deficit.

Steve Benen writes at the The Washington Monthly:

The relatively good news is that private-sector job growth exists, and it was a little higher in July than in the previous two months. In May, private-sector job gains totaled 51,000; in June the number was 31,000; and in July it was 71,000. We've now seen seven consecutive months of job growth in the private sector, a streak we haven't seen in a long while.

The bad news is this isn't remotely good enough to help generate a sustained economic recovery.

Adding insult to injury, as discouraging as these numbers are — and have been in recent months — there's no reason to think policymakers will intervene to help. Congressional Republicans have made it clear that deficit reduction and spending cuts have to take priority over economic growth, and the GOP will block votes on recovery efforts, even if Democrats were to propose them. Indeed, in July, government jobs fell by 202,000 — which was preventable, if there was the political will to do something about it, or the legislative ability to overcome Republican obstructionism.

It would take a massive federal employment initiative on the scale of the "New Deal" Works Progress Administation (WPA) and Civilian Conservation Corps (CCC) during the Great Depression to even begin addressing the long-term structural unemployment situation in the U.S. There is no political will to do so.

Instead, we are forced to endure the mythical nonsense that the Bush tax cuts for corporations and the über-rich must be extended to incentivize job creation — despite a decade of data and evidence to the contrary — at a time when the new corporate business model is to maximize profits and to minimize jobs. High unemployment is becoming the new normal. And it is a recipe for disaster.