Today’s employment report, showing that employers cut 533,000 jobs in November, 320,000 in October, and 403,000 in September — for a total of over 1.2 million over the last three months — begs the question of whether the meltdown we’re experiencing should be called a Depression.
We are falling off a cliff. To put these numbers into some perspective, the November losses alone are the worst in 34 years. A significant percentage of Americans are now jobless or underemployed — far higher than the official rate of 6.7 percent. Simply in order to keep up with population growth, employment needs to increase by 125,000 jobs per month.
Note also that the length of the typical workweek dropped to 33.5 hours. That’s the shortest number of hours since the Department of Labor began keeping records on hours worked, back in 1964. A significant number of people are working part-time who’d rather be working full time. Coupled with those who are too discouraged even to look for work, I’d estimate that the percentage of Americans who need work right now is approaching 11 percent of the workforce. And that percent is likely to raise.
When FDR took office in 1933, one out of four American workers was jobless. We’re not there yet, but we’re trending in that direction.
Consumers will tighten their belts even further. Even if they have a full-time job, they’re witnessing these job losses or hourly declines all around them and wondering if their job could be next on the chopping block. Their indebtedness is still high, by historic standards. And many are worried as well about their mortgage payments. So consumer spending is also falling off a cliff.
Two things are needed: First, the massive Treasury bailout of the financial industry must be redirected toward Main Street — loans to small businesses, distressed homeowners, and individuals who are still good credit risks. Second, a stimulus package must be enacted right away. It needs to be more than $600 billion — which is 4 percent of the national product. It should be focused on job creation in the United States — infrastructure projects as well as services. Construction jobs are critical but so are elder care, hospital, child care, welfare, and countless other services that are getting clobbered. Service businesses accounted for two-thirds of the job cuts in November, meaning that the weakness in labor markets has shifted from the goods-producing sector of the economy to the far larger services sector.