Matt Yglesias

The Bleak Jobs Outlook

David Madland’s analysis of the latest jobs numbers reflects the fact that notwithstanding improvements in the rate of change the situation is still very bad and this chart remains alarming:

Of course for people who haven’t lost their jobs, 401(k)s look a lot better than they did in January, and thanks to declining energy prices real wages have actually risen for those who remain employed. What’s more, Social Security checks got a big boost thanks to last year’s high oil prices. But it’s not really clear that this good-news-within-bad-news can hold up with energy prices back on the rise. Which leaves us with the bad news.

15 Responses to “The Bleak Jobs Outlook”

1. 24AheadDotCom Says:
   June 5th, 2009 at 2:59 pm

   Given that chart, why does John Podesta – head of the group MattY works for – want to let tens of thousands or hundreds of thousands of higher-skilled workers join the workforce? Does he figure that making things bad for tens of thousands or hundreds of thousands of Americans will work out OK once he has more power or something?

2. DTM Says:
   June 5th, 2009 at 3:01 pm

   One bit of what I think is likely lasting good news within bad news is that the savings rate is WAY up. This is bad news in the short term because that means less personal consumption expenditures, which typically help lead the way out of recessions. But the good news is that hopefully people are not only getting into more sustainable spending habits, but also building up a reserve to help fund the transition to an economy less sensitive to oil prices.

3. Brad Says:
   June 5th, 2009 at 3:02 pm

   Matt,

   I love it when you post about the bleak jobs picture and yet, simultaneously continue to support free-trade (which Dean Baker would be happy to debate how free the current paradigm really is).

   Eliot Spitzer had a terrific article pointing to the fact we have lost 1/3 of all manufacturing jobs in the last 10 years essentially. We all cannot be Ivy league elites, and for those of us who are not, we kind of well….depend on these jobs you are so willing to ship to the 3rd World.

4. DTM Says:
   June 5th, 2009 at 3:21 pm

   Eliot Spitzer had a terrific article pointing to the fact we have lost 1/3 of all manufacturing jobs in the last 10 years essentially.

   But at the same time, U.S. manufacturing output was also increasing (prior to the recession, at least). The reason U.S. manufacturing output could be increasing while the number of U.S. manufacturing jobs was decreasing is productivity gains. Here is a BLS report on the subject:

   Manufacturing Productivity and Labor Trends

   As indicated in Table B, from 1979 to 2007, U.S. manufacturing output increased by an average annual rate of 2.9% a year. However, manufacturing output per hour increased at a rate of 4.0% per year. Therefore, hours of manufacturing decreased at a rate of 1.1% a year, and manufacturing employment decreased at a rate of 1.2% a year.

   And I don’t see any way around this problem–you can’t ask U.S. manufacturers to ignore the benefits of increasing productivity. The only silver lining is that from 1979 to 2007, total manufacturing compensation rose by an annual average of 3.5%, and compensation per hour rose by 4.6%. So while there are fewer and fewer manufacturing jobs, the jobs that remain are getting better and better. But the days of manufacturing being a mass employment sector are receding, and it is because of productivity, not trade.

5. chappy Says:
   June 5th, 2009 at 3:49 pm

   401(k)s look a lot better than they did in January

   I’m not sure I’d agree with that. There have been a number of large firms that have stopped the employee match. I might also bet that a lot of people may have moved into more bond heavy portfolio, which might not have been the best ideas. Anyway, I realize you said this as a throwaway statement, but whay not just say something like: “well at least the stock market has improved”.

6. rapier Says:
   June 5th, 2009 at 5:40 pm

   Inadvertently perhaps one of MY’s worst posts ever. 401K’s and the like are irrelevant to 80% of households. Essentially it is a non sequitur. Without meaning to the majority of households whose primary asset, and I use the term asset loosely since for many it’s a liability, their home has fallen and continues to fall.

   The valuation and inflation of financial assets benefits only the top decile and the achievement of it became the be all and end all of policy for 30 years.

   The majority of Americans are now debt slaves which was the inevitable outcome of the credit bubble. For many of those at the very top it was the planned outcome. Disbelieve this if you must.

   Taken to it’s logical conclusion, the reflation of stocks on the back of taxpayer bailouts, as virtually all the gains in the averages have been of companies getting bailouts, will lead to DOW 36,000, or pick your silly number, and millions of homeless wandering the land.

7. JonF Says:
   June 5th, 2009 at 6:16 pm

   Re: But it’s not really clear that this good-news-within-bad-news can hold up with energy prices back on the rise.

   The rise will be temporary. By late summer the price of oil (and gas) will be headed back down again.

   Re: Eliot Spitzer had a terrific article pointing to the fact we have lost 1/3 of all manufacturing jobs in the last 10 years essentially.

   Most manufacturing jobs have been lost to automation and better productivity. Even China is losing manufacturing jobs. The labor-intensive assembly lines of yore are no more going to come back than share-cropping and plantation agriculture will. The labor movement needs to accept that fact and move on– and focus instead on making sure that the jobs we do have pay a decent income and provide good benefits.

8. howard Says:
   June 5th, 2009 at 6:27 pm

   the economy is at the very earliest stage of a wrenching transition from a high-consumption model to a higher-savings model: it will take years and labor markets, in particular, will remain weak in most sectors for quite a while.

   not only, as DTM points out, are savings rates up, but people are paying down consumer debt at an extraordinary level, and thus we see the paradox of thrift in action: household balance sheets are improving, but aggregate demand is woeful.

9. nbt Says:
   June 5th, 2009 at 8:05 pm

   I don’t own a car or a house. So I don’t see how falling energy prices have helped me much.

   Have food prices dropped much in the last six months due to dropping energy costs? (This is not a rhetorical question; I don’t know, and am too lazy to look it up)

10. tomj Says:
    June 5th, 2009 at 8:33 pm

    Wait! I thought that there would be no COLA for Social Security this year, due to the cost of living not going up. I think it will not go up next year either.

11. Kevin Hayden Says:
    June 5th, 2009 at 11:45 pm

    It’s pretty common to see those who remain employed during this time to continue to do better. Happened even in the Great Depression, I think. And eventually, many of the employed are likely to develop compassion fatigue, looking at the long term unemployed as ‘lazy’ rather than as macroeconomic victims.

    There’s another silver lining from the perspective of business executive boards, as well. That large available labor pool keeps downward pressure on wages which will result in cheaper labor costs for several years (also helping offset the post-recovery inflation, keeping it manageable).

    But it still looks bleak for millions of Americans and despite the slowing pace of unemployment increases, I still anticipate your chart will look much grimmer over the next three quarters.

    10% unemployment is a given, per consensus opinion, but I suspect we’ll ultimately see a number above 11. I’m not a pessimist, just seeing parallels to other past awful economic times. The stimulus will work, but just not as fast as political leaders hope for. The only real bull market near term will be for those who can find a way to profit off of the ugly ripples of the crunch (for example, off of foreclosures, debt consolidation, etc.)

    (If I were truly pessimistic, I’d say calculate the added impact if we actually get a flu pandemic next year.)

12. The Strata-Sphere » Obama’s Change: A Recession Much Worse Than The Carter Years Says:
    June 6th, 2009 at 9:33 am

    [...] (H/T Mathew Yglesias) The crashing red line is the current situation, which was promised to be avoided by the dems when they passed their risky, liberal, economic stimulus experiment back in February. [...]

13. Mark E Says:
    June 6th, 2009 at 12:24 pm

    So people like Matthew (an open liberal) can be intellectually honest about the jobs report but the press who pretends to be non partisan spins it pro Obama? Utterly pathetic they are in their dishonesty about partisanship. Just admit it already. Don’t they feel dirty being so dishonest?

14. Ed Marshall Says:
    June 6th, 2009 at 1:40 pm

    You are a damn moron, Mark.

    The press is pro-business, the press is pro-stock market, the press is going to happy talk the economy and they have been doing this since the advent of the advertising as revenue model of journalism has existed. Your stupid partisan fetish has built a model of the world that is risible, stupid, and is rendering you incapable of understanding what is going on around you.

15. Ollie Says:
    June 10th, 2009 at 6:17 pm

    Good post. I think it is possible to recover from depression, but it takes time and patience. I can’t find any good message boards on the net, can you recommend any?