Open thread for night owls: First order of business'jobs

According to the Bureau of Labor Statistics, the official, seasonally adjusted unemployed rate for August was 8.1 percent, a drop of 0.2 percent from July. But the gain came about because of the number of people who dropped out of the labor force, 368,000 of them. If they hadn't, the official rate would have been 8.4 percent. According to the BLS's Current Population Survey, there were actually 119,000 fewer Americans employed in August than in July. Again, that's seasonally adjusted.

But that's not the worst of it. In addition to the 12,544,000 officially unemployed, there were, in August, 8 million Americans working part-time jobs for, as the BLS puts it, "economic reasons." That is, they were working shorter hours because of slack business conditions in their industry or could only find part-time work, even though they wanted full-time positions. In other words, 8 million underemployed people. (Many people work part time because they want to; they are not included in these numbers.

On top this, there were 6.975 million Americans who were no longer included in the labor force but who wanted a job. No longer counted because they have given up looking.

If you include that latter group, you get 12.6 percent unemployment. If you include the part-timers, you get 17.8 percent un/underemployment. That totals 27.5 million Americans out of a job or working at a part-time job but wanting or needing a full-time one. That is the reality of the situation. A whole bunch of pain.

It was worse not so long ago. But, thanks in great part to Republican obstructionism in Congress, even the comparatively modest post-stimulus fiscal action proposed by the Obama administration has been blocked as some kind of socialist plot. And the job situation, the entire economic situation, has been stalled in a slow-growth mode. Which is why Ben Bernanke and all but one member of the Federal Reserve board chose last week to run a third round of "quantitative easing" until the economy shows definite improvement and unemployment numbers drop significantly. Despite Mitt Romney's talk of a "sugar high," the Fed's effort is actually weak tea compared with what is needed:

At the Campaign for America's Future, Bob Borosage writes Bernanke's Wake Up Call: It's A Jobs Cliff:

[I]nstead of focusing on steps needed to generate jobs, Washington is mired in a debate about austerity'about how to put the squeeze on, not how to get the economy going. Bernanke's action was a cry for the villagers to wake up.

Republican Vice Presidential nominee Paul Ryan recently scorned the president for not embracing the recommendations of the co-chairs of the Simpson-Bowles Commission (neglecting to note that his vote against the recommendations helped block their adoption by the Commission). At the Democratic convention, both Bill Clinton and the president suggested that deficit reduction should follow the principles of the Simpson-Bowles recommendations.

Many of these recommendations are wrong-headed, but Simpson and Bowles got one thing right: they concluded that long term deficit reduction should be implemented only after the economy recovered.

Bob Borosage 'Don't disrupt the fragile economic recovery. We need a comprehensive plan now to reduce the debt over the long term. But budget cuts should start gradually so they don't interfere with the ongoing economic recovery. Growth is essential to restoring fiscal strength and balance.'

Similarly, the much touted Rivlin-Domenici report also called for recovery first. As do recent studies on the deficits by former IMF Chief economist Simon Johnson and James Kwak (White House Burning: The Founding Fathers, Our National Debt and Why it Matters to You ) and Wall Street Journal columnist David Wessel (Red Ink: Inside the High Stakes Politics of the Federal Budget).

Jobs first. The reason all agree is simple'but seems to have been lost in the current debate: putting people back to work is the first and necessary step for deficit reduction. As people go from collecting unemployment and food stamps to working and paying taxes, spending goes down and revenues go up. All of the deficit reduction plans ASSUME a growing economy with reduced unemployment. None of them work without it.

Hysteria over America turning into Greece has driven the austerity crowd. But Europe, in fact, is a case study in the danger of inflicting austerity on economies in trouble ' as Britain and the European Union descend back into recession, with increasing misery, declining revenues and rising social expenditures and increasing debt burdens.

Good jobs first. What is needed now is action on jobs: passage of the President's American Jobs Act would be a good start. The US should be taking advantage of record low interest rates and an idle construction industry to finance a major, long-term program to rebuild America's decrepit infrastructure. The sequester should simply be repealed; it is a ridiculous way to run a country.

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