Nov. 19—While the Bush administration touts increases in new jobs, several recent reports show the nation's job crisis is deeply entrenched as millions of workers remain unemployed longer and the nation continues to lose manufacturing jobs.
The official unemployment rate for the third quarter of 2004—5.5 percent—significantly understates the severity of the jobs crisis. The rate ignores millions of Americans who either have lost their jobs and given up on finding new ones or who want to join the workforce but are too discouraged to try because the job situation remains so bleak. If these workers were include, the unemployment rate would be 7.5 percent.
The official unemployment rate also masks the rising number of long-term unemployed workers, according to the nonprofit Economic Policy Institute (EPI). Some 1.2 million workers, or 14.5 percent of unemployed workers, have been out of work for 39 weeks or more, EPI found. Historically, a long-term jobless rate this high has been associated with much higher unemployment rates.
When Congress enacted the Temporary Extended Unemployment Compensation (TEUC) program in 2002, the jobless rate was 5.7 percent, with some 700,000 workers among the long-term jobless. Last year, before Christmas, congressional Republican leaders refused to renew the TEUC program, which provides additional unemployment benefits when workers' benefits expire in high unemployment states. Workers received their last checks in March. The Center on Budget and Policy Priorities reports that since the TEUC program expired, a record-setting 3 million long-term unemployed workers have exhausted their regular unemployment benefits without finding jobs and with no federal benefits to fall back on.
"The unemployment rate is not representative of the real struggles and woes of workers in the economy," says EPI Economist Sylvia Allegretto, who co-authored the long-term jobless report.
More and More Good Jobs Replaced by Low-Paying Jobs
The nation also continues to lose good jobs in manufacturing and information services, many of which are being replaced with low-paying service jobs. Despite job gains in some industries, the nation lost 5,000 manufacturing jobs in October, the Bureau of Labor Statistics reported. The nation has lost 2.7 million manufacturing jobs and 850,000 professional service and information jobs since President George W. Bush took office in 2001.
"After four years of massive job loss, sagging wages and rising health care costs, workers deserve economic policies that will improve their standard of living and provide sufficient time with their families," says AFL-CIO President John Sweeney.
Many of those jobs were lost due to Bush administration tax and trade policies that encourage companies to move jobs overseas, union leaders say. U.S. companies will ship some 406,000 American jobs overseas this year compared with 204,000 jobs three years ago, according to a new government report. The Changing Nature of Corporate Global Restructuring: The Impact of Production Shifts on Jobs in the U.S., China and Around the Globe, released last month, was prepared for the U.S.-China Economic and Security Review Commission, a bipartisan congressional panel.
The number of U.S. jobs corporations are sending overseas is accelerating, says Stephanie Luce, research director and assistant professor at the Labor Center at the University of Massachusetts at Amherst, one of the study's authors. Jobs exports are up in every category, she says, from 2001 to 2004. Luce says she was surprised manufacturing jobs were still moving at a higher rate today than three years ago.
"With all the media focus on white-collar jobs leaving, it's as if they forgot about manufacturing," she says. "The real sad thing is that 39 percent of all the jobs moving abroad are union jobs," she says. Luce prepared the study along with Kate Bronfenbrenner, director of labor education research at Cornell University's School of Industrial and Labor Relations. The report will be presented to the commission at a hearing in Seattle in January 2005.
The report supports the findings in recently released studies by the AFL-CIO Industrial Union Council (IUC) which examine the role trade has played in manufacturing job losses in several key states. The AFL-CIO reports document more than 115,000 manufacturing jobs lost due to trade in five states—Ohio, Minnesota, Pennsylvania, Washington and Wisconsin—between January 2001 and August 2004.
Job Tracker, a new online interactive database service by WORKING AMERICA, a community affiliate of the AFL-CIO, enables visitors to access information on more than 200,000 U.S. corporations and their subsidiaries reported to have moved jobs overseas.
Workers Experiencing a 'Wageless' Recovery
Meanwhile, average wages for workers grew at the slowest rate on record between July and September, according to Bureau of Labor Statistics. A recent EPI study showed in industries where jobs are growing, mainly in the service sector, total annual wages and benefits for workers averaged $35,546 between November 2001 and June 2004, compared with $61,983 in industries that are shrinking. "The recovery is no longer jobless, but it is beginning to look " 'wageless,' " said Jared Bernstein, senior economist for EPI.
The slow growth in income could have a harmful effect in the near future on the nation's economy, EPI found. Consumer spending has been the driving force behind recent economic growth. Americans spent a record 88.8 percent of their pretax income last quarter, EPI reports, compared with an average 81 percent between 1960 and 2000. The spending has come at the expense of savings. Total personal savings last quarter—0.4 percent of pre tax income—sunk to the lowest rate since the Great Depression of the 1930s, meaning millions of Americans risk having no financial cushion if they lose their jobs or retire. Between 1960 and 2000, savings averaged 7 percent of pretax income.
Economists warn that if all working Americans began to save at once, it would reduce consumption enough to cause a loss of jobs and income, says Lee Price, EPI's research director. The only way to continue to grow the economy is to increase income, but with wages growing slowly, total consumption will not be able to continue to grow the economy indefinitely, Price says.
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