The new jobs report is out, the reviews are in, and it seems that even the most bearish of economists sound grudgingly optimistic. “[D]efinitely a better jobs report than we have become used to,” proclaims Paul Krugman. “Not good enough, but ok,” admits Atrios. Even the fiercely skeptical Dean Baker pronounces the report “reasonably good.”
It certainly does look like we’ve turned a corner and that the economy, however slowly and falteringly, is at long last recovering from its doldrums. This is very good news for the country, excellent news for Barack Obama, and pretty terrible news for Mitt Romney. Pretty awesome, right?
Well, call me a Debbie Downer if you will, but I’m not ready to uncork the champagne just yet. Though we are definitely moving in the right direction, there are still some dark clouds on the horizon. For one thing, women’s employment has been much slower to recover than men’s. Although the February report shows that women did gain jobs, the National Women’s Law Center notes that “women have gained less than 12 percent of the nearly 2.2 million net jobs added since the start of the recovery in June 2009,” and that the unemployment rate for women has barely budged since the beginning of the recession.
In addition, long-term unemployment (an unemployment spell of 27 weeks or more) remains a concern; it’s now at a historically high 3.5%. Worryingly, David Leonhardt points out that most forecasters are predicting that job growth will slow, and the forecasting firm Macroeconomic Advisers just reduced its estimate for growth in the current quarter to a pathetic 1.8%, putting us on track for an estimated (and anemic) 2 to 2.5% growth for the rest of the year. Krugman estimates that it will take us “roughly 31 months to [achieve] a reasonable definition of full employment,” which would add up to “almost 7 years of a depressed economy.”
I would also like to point out that if history is any guide, the long-term consequences of an economic downturn will be severely negative for millions of Americans. This paper paper by William T. Dickens and Robert K. Triest from a Federal Reserve Bank of Boston conference last fall, nicely summarizes the research on the long-term labor market effects of economic downturns. A few highlights:
— “[S]tudies often find that spells of unemployment [in a recession] are followed by a medium to long-term reduction in the wages.” One 2009 study “find[s] that workers who were displaced from stable jobs during the 1982 recession suffered earnings losses of approximately 20% even after 15 to 20 year.” A 2011 study finds, unsurprisingly, that “the Great Recession has been accompanied by substantial earnings reductions of job losers.”
— One group that tends to be especially hard hit by recessions is young people. Dickens and Triest cite this paper, which shows that “graduating from college during a recession results in earnings declines lasting ten years.”
— Older people are not off the hook, either. Research suggests that “[o]lder workers have slower rates of reemployment than do younger workers, and suffer much larger reductions in earnings upon reemployment,” and Dickens’ and Triest’s own study finds that “[o]lder displaced workers are at relatively high risk of prolonged spells of unemployment and premature retirement.”
Those are some of the dry, scholarly facts. But behind the numbers, there has been a huge human cost. Lives and families have been shattered. Workers have lost their homes, their health care, their dreams of a better life — or even of a relatively decent life — for themselves and their children. Another distressing but little remarked upon aspect of the human fall-out is that, as Barbara Ehrenreich movingly and enragingly documented in her book Bait and Switch, the unemployed tend to blame themselves for their jobless status, and are encouraged in that view. The men and women she interviews bear their unemployment like a stigma and not infrequently feel a sense of great personal shame and failure.
Clearly, though, the fault lies not in themselves but in our disastrous economy. And let there be no doubt: our economy is a human-made disaster. It didn’t have to be this way. In his post on the jobs report, Paul Krugman referred to the Great Recession as “an immense, disastrous, cruel failure of economic policy.” Indeed. For decades, political and business elites have engaged in a orgy of deregulation that turned our economy into a gigantic casino. They created an atmosphere that enabled crooks and speculators on Wall Street to run wild, wipe out two decades’ worth of economic growth, and leave our country’s — and the world’s — economy a smoking heap of ruins. The bad actors were not held accountable for their actions and by all appearances, the casino is up and running again on Wall Street. But on Main Street, the pain continues, and the human fall-out from the Great Recession will reverbate for years to come.