On Dec. 6, The Associated Press (AP) reported that the number of laid-off workers had dropped and “the number of Americans receiving unemployment benefits plunged by 349,000 in November,” indications that “the current recession may be bottoming out.”
The next day, another AP dispatch was headlined “Unemployment Rate Climbs to 5.7 percent as economy continues to shed jobs.” The story said this “represented a dash of cold water over hopes … that [an economic recovery] was under way.” The story continued, “Economists fear that thousands more will be thrown out of work even if the economy is able to mount a sustainable recovery.”
These two AP dispatches seem to tell widely different stories. What’s going on here? Fewer laid-off workers but higher unemployment. Not as strange as it sounds. The pace of layoffs has slowed a little since the massive layoffs in the transportation and hospitality industries following Sept. 11. But there are still more people being laid off than new jobs created, so unemployment rises.
Fewer are collecting unemployment compensation, but more are unemployed. In November, actual unemployment rose by 400,000 people compared with October, and by 2.5 million compared with last year. The “drop” in people getting jobless benefits the last week in November results partly from the way the Labor Department applies “seasonal adjustments” to their figures – the number will probably rise again in coming weeks. But there is a more sinister reason for the drop.
There is a big increase in the number of workers exhausting their 6-month unemployment benefits. In September, about 250,000 people exhausted their benefits – a 54-percent increase over September 2000, and there was another big jump in November. So even though more people are unemployed, fewer are collecting compensation.
Economists expect a speedy recovery, then they don’t expect a speedy recovery. The anonymous economists quoted in the mainstream media have consistently misjudged the economy for the past year. Most American workers knew the economy was in trouble a long time before the economists would admit it. Any economist whose optimism was based on the Dec. 6 “drop” in unemployment didn’t look at the numbers very carefully.
The economy will recover next year, but unemployment will continue to rise. Recovery for big business (and their economists) is different from recovery for you and me. For them, recovery means they are selling more products and making more profits. It is possible (but far from certain) that will start to happen sometime next year. For us, recovery means we get jobs, at good pay, with good benefits. This doesn’t happen automatically.
After all, one way that business restores their profits is by laying off workers, and getting the same amount of work out of those who are left. That’s good for them, but bad for us.
The last recession started in 1990. It only took a year for production and profits to recover, but it was five years before employment returned to its pre-recession levels, and six years for workers’ income to recover.
The situation is serious now, and for workers, it is going to get worse. In past recessions, unemployment compensation was extended for an extra six months in many states. This time, there have been no extensions to date. And while total unemployment is about 50 percent higher than a year ago, the number of workers exhausting benefits has nearly doubled. Even optimistic economists predict “official” unemployment will reach 6.5 percent next year (it is now at 5.7 percent).
What can we do? It’s not enough for us to hope for a business recovery. We need an economic recovery that helps working people. There are two key parts to this:
• Aid to the unemployed by extending compensation to everyone who is looking for work, for as long as they are unemployed. Substantially increase the level of benefits.
• Put people back to work at union wages with a large-scale program for infrastructure, education, environment. Federal aid to states and cities to preserve and expand their programs and services.
These measures are included in the economic proposals of the AFL-CIO, and legislation introduced by the Congressional Progressive Caucus. But, so far, the Republicans have blocked even the more modest proposals of the Senate Democrats. It will take a lot of people power to win a pro-worker stimulus package
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