Job Cuts Outpace Economic Decline

[question everything]

JULY 23, 2009

Job Cuts Outpace Economic Decline

By JON HILSENRATH and DEBORAH SOLOMON
WSJ

WASHINGTON -- The job market is doing even worse than the overall economy, prompting concern inside and outside the government that deeper-than-expected joblessness could persist once the recession ends. Breaking from historical patterns, the unemployment rate -- currently at 9.5% -- is 1 to 1.5 percentage points higher than would be expected under one economic rule of thumb, says Lawrence Summers, President Barack Obama's top economic adviser. Since the recession began in December 2007, the economy has lost 6.5 million jobs, 4.7% of total employment. The unemployment rate has jumped five percentage points, while the economy has contracted by roughly 2.5%.

(snip)

Though today's disparity between growth and jobs is especially stark, a jobless recovery wouldn't be new: The last two recessions were marked by firms reluctant to resume hiring right away after demand recovered. The current disconnect between growth and employment could reflect an unanticipated surge in productivity -- companies finding ways to increase output with fewer workers. That could set up the economy to grow rapidly in future years. Rising productivity is the linchpin of economic growth and rising living standards. But there are darker scenarios. Struggling workers, whose wages also are being squeezed, could drag a fragile economy back into deep recession.

(snip)

The latest data imply productivity is pushing higher. Macroeconomic Advisers, a St. Louis forecaster, estimates productivity grew at a rapid 5% annual rate in the second quarter. While painful for workers who lose jobs, advances in productivity could help get the economy on steadier footing. When productivity rose in the 1990s -- thanks partly to technological advances -- the economy boomed, lifting wages... Some companies are reaping gains as they clamp down on labor costs. While corporate profits are down from a year ago, many of the biggest companies reporting income figures for the second quarter are ahead of expectations because they've cut costs so aggressively.


(snip)

For now, administration officials are taking a wait-and-see approach, and insist they have no plans to push new measures to counteract job losses. Officials say the $787 billion economic-stimulus package will have a bigger impact over the next six months.. The disparity between the job market and economic growth has other important implications. For Fed officials, it implies that there will be little upward pressure on prices and wages -- in other words, little inflationary pressure -- giving officials reason to hold off on raising interest rates any time soon.

(snip)



The Fed's semiannual report to Congress this week pointed to another possible explanation for the rising unemployment rate. In past recessions, discouraged workers stopped looking for jobs or went back to school (which means they didn't count as unemployed). By contrast, in the past few months, workers have been flocking back to the labor force in search of jobs -- pushes up the jobless rate. This could reflect the availability of unemployment benefits that keep people in the work force, or a reluctance to retire after a hit to retirement savings, or other phenomena.

http://online.wsj.com/article/SB124830700226074069.html (subscription)

[texastoast]

1. I see the corporatists taking full advantage of the "economic downturn"

We are super busy at work, and the layoffs have begun, with the goldhats doubling and tripling the workload of the more skilled staff.

[question everything]

2. And all are afraid to complain or to ask the bosses

to set priorities, afraid that such comments would lead to job loss.

[texastoast]

3. Everything is

"Sure, I'll do that for ya. You want it in ten minutes? Sure . . . no problem. You want me to stay late?"

Low profile, closed lips. They got us where they want us and are just loving it. I'm exhausted when I get home. The younger folks with little kids must be stressed to the max.

Still, they have money for their luncheons and celebrations (not for the staff, you see). Hmm.

[CoffeeCat]

4. This is happening at my husband's job...

The small company for which he works has had three rounds of layoffs. Employees
are doing double or triple their normal workload. The company is still firing people
to cut costs. There are not enough people to do the work that needs to be done.

You can't complain though. Then, you're out on the streets.

Everyone here is right--they've got us right where they want us. Terrified and
putting up with abuse.

[AdHocSolver]

5. The job market is part of the economy. The assumption is that the economy is only about profit.

There were plenty of corporations who made profit during the Great Depression. Corporate profits do NOT define an economy.

The economic model they are using implies that there can be mass unemployment and people homeless and starving in the streets and that is alright so long as company XYZ has been able to show a profit because they have laid off half their work force and have turned their remaining employees into low-wage slaves. This produces a "surge" in "productivity". This is the situation a "jobless recovery" refers to.

The administration better change the trade laws like NAFTA, the WTO, MFN trading status with countries such as China, and the tax laws to bring jobs back to the U.S. or this economy is going to PERMANENTLY IMPLODE. The corporations don't care as they merely import cheap products from China, increase their prices to increase profits, and sell the products they produce overseas, and can't sell here, somewhere else.

The corporations can make profit in the U.S. by selling to a reduced U.S. buying public at higher prices, as they pay ever lower wages to American employees.

Countries can have a small, elite, highly paid work force along with a large, poor, unemployed mass of people for many years. Those coutries are called banana republics. The corporate economic model is perfectly content with that.

[snot]

6. reluctance to retire after having life's savings looted -- uh, check.