The state of (un)employment

Unemployment didn’t push past 10% in December. Cause for celebration right? Well… not really:

Had the labor force not decreased by 661,000 last month, the jobless rate would have been 10.4 percent, according to economists including David Rosenberg at Gluskin Sheff & Associates in Toronto and Harm Bandholz at UniCredit Research in New York.

[…] About 1.7 million Americans opted out of the workforce from July through December, representing a 1.1 percent drop that marks the biggest six-month decrease since 1961, the Labor Department report showed. The share of the population in the labor force last month fell to the lowest level in 24 years.

Basically, unemployment didn’t go up because official statistics stopped counting people who gave up looking for jobs. But what about those people that are finding new work?

[…] Peter Cappelli, director of the Center for Human Resources at the University of Pennsylvania’s Wharton School, says the brutal recession has prompted more companies to create just-in-time labor forces that can be turned on and off like a spigot. “Employers are trying to get rid of all fixed costs,” Cappelli says. “First they did it with employment benefits. Now they’re doing it with the jobs themselves. Everything is variable.” That means companies hold all the power, and “all the risks are pushed on to employees.”

The era of the disposable worker has big implications both for employees and employers. For workers, research shows that chronic unemployment and underemployment cause lasting damage: Older people who lose jobs are often forced into premature retirement, while the careers of younger people are stunted by their early detachment from the working world. Even 15 years out of school, people who graduated from college in a recession earn 2.5% less than if they had graduated in more prosperous times, research has shown.

The recession is essentially turning a good chunk of the workforce into freelancers. Being a freelancer means you have no health insurance unless you get it from the Wild West individual market. It means you have no managed retirement plan like a pension or 401k. In a country geared around benefits provided by employers, you’re literally on your own. The recession is also stunting the potential of those near retirement and those just entering the workforce.

The solution to both problems is the same: Stronger, more robust safety nets.

Health insurance should be available to every American citizen regardless of age or employment status, and it should be paid for through Federal income taxes. Social Security should be strengthened and kids should be required to take classes on financial & retirement planning in high school. The government should be doing everything it can to fight unemployment through public infrastructure projects and more generous unemployment benefits.


  1. In the real world…..all counted the ones who stop looking, the underemployed and those who have given up, the unemployment rate is more like 18%, possibly closer to 20%….

  2. Clint

    “people who graduated from college in a recession earn 2.5% less than if they had graduated in more prosperous times”

    Shit. I should have stayed at UNC for the old “victory lap.”

  3. Ian

    I came basically to say what Lob said. The government always makes the unemployment rate look way better than it is.

  4. Ian


    That is what grad school is for. Hide out until the economy brightens 😀 Or just avoid real responsibility for a while.