It wasn’t great, good or, depending on whether your glass is always half full or empty, even that encouraging. But there was nothing in the latest US jobs report that has had anyone borrowing the doom-laden language that Europe has had a recent monopoly on.
80,000 jobs were created in October, and the tally for August and September was revised upwards by a total of 102,000. According to the Bureau of Labor, people have been hired at a rate of 125,000 a month for the last year. There was a decline, too, in the long-term unemployed – a group you belong to in the US if you’ve been without work for more than six months. That figure fell 366,000 to 5.9m.
But don’t expect Americans to be celebrating. That’s not only because October’s figures don’t immediately change an extremely difficult jobs market. 13.9m people are still unemployed and a further 8.9m are having to settle for part-time work. It runs deeper.
The high level of unemployment America has had since the financial crisis is a wound to its self-esteem. This is a country that built itself on being able to offer work to those who can’t find it where they’re from. And if they do have it, there's always been the promise of better paid and more interesting work on offer in the US.
I was talking to a businessman this week who had built a company that now employs more than 20,000 people. The mention of the unemployment rate prompted an almost physical reaction in him as if a bad smell had entered the room. And nowhere is the assault on the US psyche stronger than in the scale of long-term unemployed this downturn has created.
A report published this week by the Pew Trust, a bipartisan research group, underlines what a new problem it is. Before spiking to its current level of 42.2pc of the total number of unemployed, the highest it reached since the 1960s was just under 15pc following the recession of the early 1980s.
In its analysis of long-term unemployment in the third quarter of this year – July to September – The Pew Trust report found that older workers were hit particularly hard. 43pc of those without work over the age of 55 had been for more than six months. A university degree did not offer that much protection – 34pc of the unemployed with a degree were long-term casualties, while almost every industry had 20pc long-term unemployment.
Because it’s a new phenomenon, it’s bringing new headaches for America’s policymakers.
The safety net for those who can’t get work was strengthened in 2009, when the period people can claim unemployment benefits for was extended from 26 weeks to up to 99 weeks. That has come at a cost. The Congressional Budget Office estimates that $160bn was spent on unemployment benefits in 2010 compared with $33bn in 2007. The 99 week extension is due to expire in January, and despite the fierce political debate the issue provokes, it would be a surprise if Congress does not extend it for 2012.
The far more testing issue is how to unwind the problem. America has barely started. The state of Georgia has pioneered a programme in which the long-term unemployed continue to receive benefits while working at a company for a while in the hope that they will be hired on a permanent basis. Though it’s had mixed results, President Barack Obama is pushing for a nationwide variation as part of his $447bn American Jobs Act.
Meanwhile, Federal Reserve chairman Ben Bernanke has consistently voiced his anxiety about the problem. But much of the central bank’s ammunition has been fired and there’s a limited amount that monetary policy can do on its own to address the long-term unemployed. Although October’s figures recorded a decline in their numbers, the danger and greater risk is that the problem deepens.
The consensus among economists is that the majority of unemployment is what they describe as cyclical. In other words, as the economy recovers companies will hire more aggressively and those without work will find it. But at an otherwise dull press conference on Wednesday, Bernanke remarked that: “cyclical unemployment left untreated can, so to speak, become structural.”
The implication is worrying: a period out of work can turn a previously employable worker into one that will find it much harder to get a job. Skills atrophy, confidence plummets and the needs of companies
move on.
Precisely because long-term unemployment is such an affront to America’s self-image, it’s one that the country surely needs to put more energy into understanding and trying to solve.
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