Focus on monthly jobs report distracts from underlying economic problems

Come Friday, the Bureau of Labor Statistics will release another monthly jobs report. This report and the next one on October 5 are the two that will presumably have the greatest impact on the election. (The report on November 2 will come too late to matter.) Some analysts go so far as to say the election results themselves can be predicted based on those numbers. Personally, I wouldn't bet $10,000 on that. But there's no denying they will affect news coverage and, to some unknown extent, voter preference.

Even though the BLS report is filled with other numbers, the two that will stick in people's minds, as always, are the ones the headline writers focus on'the amount of new jobs created and the official unemployment rate.

The truth is those two numbers aren't quite real. They are a concocted brew of raw data and formulas of seasonal adjustments, estimated business creation and business collapse, as well as standardized measurements that don't provide the whole picture. Indeed, although no conspiracy is involved, taken in isolation those numbers deeply distort our true situation.

For example, if you live in one of the 60,000 randomly sampled households the BLS contacts for its monthly report and you tell them you are working six hours a week, you're counted as employed. Add together enough people working six hours a week and it will bring the unemployment rate down a notch or two even though most people working six hours a week want to be working more than that. To be sure, those people do get counted as underemployed in another BLS gauge abbreviated as "U6." But until recently that hardly ever made the headlines. And even now it gets only a bare mention. Those underemployed people'who are not included in the 8.3 percent (or whatever latest number the BLS arrives at)'are in real pain. Calling them employed may make some sort of statistical sense, but to anyone who cares about their well-bring, it ought not to be the least bit soothing.

There are also people who haven't had a job for a year or more who want to work but haven't actively hunted for a job in the past 12 months. They aren't included as part of the labor force at all and thus skew the unemployment rate downward. They, too, can be found in the statistics for those who want to dig a bit. But they rarely, if ever, make the news. If they and the part-timers who want to be full-timers were counted in the headline numbers, the total count of the unemployed and underemployed right now would be 27.4 million, more than double the headline number.

For the past five years, we have been mired in the impacts of recession, even if, officially, that recession is over and we've been in recovery for 38 months. It has been a stagnant, frustrating, expectation-smashing recovery that offers hope for a few months and then smacks it down for a few, then repeats. What the monthly jobs report provides is a snapshot through the lens of crisis'a blurry snapshot'of the real economic condition of Americans further distorted by traditional media's cropping out of most of the details.

By any measure, the situation is better than it would have been had Barack Obama not been the fellow who had stepped into the Oval Office in January 2009. We know full well what the right wing would have done. Waited for the economy to right itself on its own. That's what a big chunk believe should have happened in 1933 when their bête noire stepped into the White House and, something their every move these days denies, saved capitalism from the capitalists. Instead of acknowledging that Obama succeeded in partially altering the awful economic trajectory launched during the administration of his predecessor, they keep twisting the facts to show that the president's policies have made things worse than they were when he took office.

To that end, Team Romney has been working the monthly BLS reports assiduously, offering solutions like the creation of 12 million jobs in four years without actually explaining the specific ingredients that will go into this Clinton-topping miracle. Based on other elements of the Romney campaign team's plans, presumably 11 million of those jobs will be for roughnecks working oil derricks in North Dakota, the National Parks and off-shore.

There is literally less than nothing in the Republicans' economic plans to improve matters for anyone except the top tier. That applies both to the two headline numbers in the BLS report and to healing the damage caused over the past generation of economic changes.

Indeed, what we're hearing is the same old, same old cut-taxes-for-the-rich-and-they-will-build-it manure that those of us old enough to remember have heard now going on four decades. During that period we saw first a nibbling and then great bites taken out of the economic well-being of working-class Americans, a category which, despite pretentious conceits, includes the middle class.

Beneficiaries? Thanks to the Occupy movement, we've got a shorthand for them: the one percent. The same old, same old team'the one percenters and those who dream of joining them'is well-prepared for next steps: a full-bore dismantling of the remainder of the Great Society and New Deal programs that provide poor and working-class Americans a modest cushion.

Add the impact of that to the bashing these plutocrats and their puppets have already delivered and we've got the makings Third World U.S.A.

Catherine Rampell at The New York Times recently discussed one of one the impacts we've seen in the latest recession:

Across the country, in almost every demographic, Americans earn less today than they did in June 2009, when the recovery technically started. As of June, the median household income for all Americans was $50,964, or 4.8 percent lower than its level three years earlier, when the inflation-adjusted median income was $53,508.

The decline looks even worse when comparing today's incomes to those when the recession began in December 2007. Then, the median household income was $54,916, meaning that incomes have fallen 7.2 percent since the economy last peaked.

She added nuance by dividing these statistics by age, race and education. But there's not much solace to be found there.

Many factors are at work. Let's look at three.

' Workers with jobs aren't demanding raises because they are fully aware that they can be easily replaced by someone who will work for less when unemployed legions are scratching at the door. This is one of the impacts from what the 19th Century economist who must not be named called the "reserve army of the unemployed." Many 21st Century workers who were part of the reserve army and out of work for a long time have taken jobs at far less pay than they were getting previously. That's true whether the new job required the same skills and duties as the one they lost or if they took a lesser position out of desperation.

For older workers, a Government Accountability Office report states, the situation is particularly difficult. Those lucky enough to find a new job after a post-55 lay-off are likely to take a deep pay cut. According to the report, 70 percent of workers 55 or older who were laid off between 2007 and 2009 now earn less than in their previous job. But it's not that great for those aged 25 to 54. Some 53 percent of them took a cut in pay.

The large number of people who have been out of work for more than half a year contributes a good deal to this problem. Nearly 40 percent of the total number of people who are unemployed have been jobless for 27 weeks or longer. That number has been gradually improving, but it's still dreadfully high.

' Peter Edelman describes a second factor in this situation: "Low-wage work has become an endemic problem in the United States in recent decades." Edelman is specifically discussing policies designed to help people who work but don't make enough to thrive, policies like food stamps, for instance. While the Republicans pretend to care about the record number of Americans now on food stamps and use it as another arrow in their campaign quiver, they eagerly embrace Paul Ryan's plan to whack the program by turning it over to the states in block grants and capping the amount of money the federal government provides. Just one step above the days 50 years ago when states handed out surplus food to the needy.

But the problem of comparatively low wages goes well beyond those in the bottom tiers of the population. An American man at the median who did not have a high school diploma earned 66 percent less in 2009 than he did in 1969, after adjusting for inflation. If he had a high school diploma, his income was 47 percent less in 2009 than 40 years earlier. And even if he had a bachelor's degree, he made 12 percent less in 2009 than in 1969.

The National Employment Law Project came out with a new report last week that added a punch to groin:

During the recession, employment losses occurred throughout the economy, but were concentrated in midwage occupations. By contrast, during the recovery, employment gains have been concentrated in lower-wage occupations, which grew 2.7 times as fast as mid-wage and higher-wage occupations. Specifically:

' Lower-wage occupations were 21 percent of recession losses, but 58 percent of recovery growth.
' Mid-wage occupations were 60 percent of recession losses, but only 22 percent of recovery growth.
' Higher-wage occupations were 19 percent of recession job losses, and 20 percent of recovery growth.

' The third factor, one obviously entangled with the others, is the jobs lost because of our "free" trade arrangements.  

The Economic Policy Institute recently released its report on a decade's worth of trade policy with China:

The United States is piling up foreign debt and losing export capacity, and the growing trade deficit with China has been a prime contributor to the crisis in U.S. manufacturing employment. Between 2001 and 2011, the trade deficit with China eliminated or displaced more than 2.7 million U.S. jobs, over 2.1 million of which (76.9 percent) were in manufacturing. These lost manufacturing jobs account for more than half of all U.S. manufacturing jobs lost or displaced between 2001 and 2011. [...]

But the jobs impact of the China trade deficit is not restricted to job loss and displacement. Competition with low-wage workers from less-developed countries such as China has driven down wages for workers in U.S. manufacturing and reduced the wages and bargaining power of similar, non-college-educated workers throughout the economy. The affected population includes essentially all workers with less than a four-year college degree'roughly 70 percent of the workforce, or about 100 million workers (U.S. Census Bureau 2012b).

Put another way, for a typical full-time median-wage earner, earnings losses due to globalization totaled approximately $1,400 per year as of 2006 (Bivens 2008a).

Until recently, as Edward Alden has pointed out, only the most iconoclastic economists took the view that globalization was having more than a modest impact on jobs and wages despite the widespread evidence to the contrary related by non-economists. That is changing.

One example comes from Nobel laureate Michael Spence and Sandile Hlatshwayo
in their The Evolving Structure of the American Economy and the Employment Challenge. They found that 97.7 percent of job growth in the United States occurred in the "non-tradable" sector, arenas like health care and government, with huge losses in manufacturing.

Other studies have shown that sectors of the U.S. economy most exposed to low-wage competition, much of it from China, have seen wages fall. Matthew Slaughter concluded in U.S. Trade and Investment Policy [$15 download fee] that in the decade ending in 1999, multinational companies headquartered in the United States created 4.4 million jobs here and 2.7 million abroad. For the decade ending in 2009, however, those same companies got rid of nearly 3 million jobs in the United States and added 2.4 million jobs abroad.

Whether they have taken the route Mitt Romney and other finance capitalists have chosen or gone for something marginally more traditional, the buccaneers of our economy benefit at everyone else's expense from the destruction in the factors I have described. It's crucial to remember that this Friday when the Bureau of Labor Statistics makes its announcement of the latest job numbers and the media begin discussing what they think it all means. Because you can be sure they won't be discussing what it all means.