Zuckerman: "Why the Jobs Situation Is Worse Than It Looks"

Tyler Durden's picture

From Mort Zuckerman, originally posted in Forbes

Why the Jobs Situation Is Worse Than It Looks

The Great Recession has now earned the dubious right of being
compared to the Great Depression. In the face of the most stimulative
fiscal and monetary policies in our history, we have experienced the
loss of over 7 million jobs,
wiping out every job gained since the year 2000. From the moment the
Obama administration came into office, there have been no net increases
in full-time jobs, only in part-time jobs. This is contrary to all
previous recessions. Employers are not recalling the workers they laid
off from full-time employment.

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The real job losses are greater than the estimate of 7.5 million.
They are closer to 10.5 million, as 3 million people have stopped
looking for work. Equally troublesome is the lower labor participation
rate; some 5 million jobs have vanished from manufacturing, long
America's greatest strength. Just think: Total payrolls today amount to
131 million, but this figure is lower than it was at the beginning of
the year 2000, even though our population has grown by nearly 30

The most recent statistics are unsettling and dismaying, despite the
increase of 54,000 jobs in the May numbers. Nonagricultural full-time
employment actually fell by 142,000, on top of the 291,000 decline the
preceding month. Half of the new jobs created are in temporary help
agencies, as firms resist hiring full-time workers.

Today, over 14 million people are unemployed. We now have more idle
men and women than at any time since the Great Depression. Nearly seven
people in the labor pool compete for every job opening. Hiring
announcements have plunged to 10,248 in May, down from 59,648 in April.
Hiring is now 17 percent lower than the lowest level in the 2001-02
downturn. One fifth of all men of prime working age are not getting up
and going to work. Equally disturbing is that the number of people
unemployed for six months or longer grew 361,000 to 6.2 million,
increasing their share of the unemployed to 45.1 percent. We face the
specter that long-term unemployment is becoming structural and not just
cyclical, raising the risk that the jobless will lose their skills and
become permanently unemployable. 

Don't pay too much attention to the headline unemployment rate of 9.1
percent. It is scary enough, but it is a gloss on the reality. These
numbers do not include the millions who have stopped looking for a job
or who are working part time but would work full time if a position were
available. And they count only those people who have actively applied
for a job within the last four weeks.

Include those others and the real number is a nasty 16 percent. The
16 percent includes 8.5 million part-timers who want to work full time
(which is double the historical norm) and those who have applied for a
job within the last six months, including many of the long-term
unemployed. And this 16 percent does not take into account the
discouraged workers who have left the labor force. The fact is that the
longer duration of six months is the more relevant testing period since
the mean duration of unemployment is now 39.7 weeks, an increase from
37.1 weeks in February. 

The inescapable bottom line is an unprecedented slack in the U.S.
labor market. Labor's share of national income has fallen to the lowest
level in modern history, down to 57.5 percent in the first quarter as
compared to 59.8 percent when the so-called recovery began. This
reflects not only the 7 million fewer workers but the fact that wages
for part-time workers now average $19,000—less than half the median

Just to illustrate how insecure the labor movement is, there is
nobody on strike in the United States today, according to David
Rosenberg of wealth management firm Gluskin Sheff. Back in the 1970s, it
was common in any given month to see as many as 30,000 workers on the
picket line, and there were typically 300 work stoppages at any given
time. Last year there were a grand total of 11. There are other indirect
consequences. The number of people who have applied for permanent
disability benefits has soared. Ten years ago, 5 million people were
collecting federal disability payments; now 8 million are on the rolls,
at a cost to taxpayers of approximately $120 billion a year. The states
today owe the federal insurance fund an astonishing $90 billion to
cover unemployment benefits. 

In past recessions, the economy recovered lost jobs within 13 months,
on average, after the trough. Twenty-three months into a recovery,
employment typically increases by around 174,000 jobs monthly, compared
to 54,000 this time around. In a typical recovery, we would have had
several hundred thousand more hires per month than we are seeing
now—this despite unprecedented fiscal and monetary stimulus (including
the rescue of the automobile industry, whose collapse would likely have
lost a million jobs). Businesses do not seem to have the confidence or
the incentive to add staff but prefer to continue the deep cost-cutting
they undertook from the onset of the recession.

But hang on. Even to come up with the 54,000 new jobs, the Bureau of
Labor Statistics assumed that 206,000 jobs were created by newly formed
companies that its analysts believe—but can't prove—were, in effect,
born in May under the so-called birth/death model, which relies
primarily on historical extrapolations. Without this generous assumption
in the face of a slowing economy, the United States would have lost
jobs in May. Last year the bureau assumed that 192,000 jobs were created
through new start-ups in the comparable month, but on review most of
them eventually had to be taken out, as start-ups have been
distressingly weak given the lack of financing from their traditional
sources such as bank loans, home equity loans, and credit card lines. 

Where are we today? We have seemingly added jobs, but it is not
because hiring has increased. In February 2009 there were 4.7 million
separations—that is, jobs lost—but by March 2011 this had fallen to 3.8
million. In other words, the pace of layoffs has diminished, but that is
not the same thing as more hiring. The employment numbers look better
than they really are because of the aggressive layoffs in the early part
of this recession and the reluctance of American business to rehire
workers. In fact, the apparent improvement in job numbers has been made
up of one part extra hiring and two parts reduced firing.

Even during past recessions, American firms still hired large numbers
of workers as part of the continual cycle of replacing employees. Of
the 150 million workers or job seekers in America, about one third turn
over in a typical year, leaving their old jobs to take new ones. High
labor "churn" is characteristic of our economy, reflecting workers
moving to better jobs and higher wages and away from declining sectors.
As Stanford business professor Edward Lazear explains so clearly in the Wall Street Journal,
the increase in job growth over the past two years is attributable to a
decline in the number of layoffs, not from increased hiring. Typically,
when the labor market creates 200,000 jobs, it has been because 5
million were hired and 4.8 million were separated, not just because
there were 200,000 hires and no job losses. But when an economy has
bottomed out, it has already shed much of its excess labor, as
illustrated by the decline in layoffs—from approximately 2.5 million in
February 2009 to 1.5 million this April. In a healthy labor market like
the one that prevailed in 2006 and into 2007, American firms hired about
5.5 million workers per month. This is now down to about 4 million a
month. Quite simply, businesses have been very disciplined in their
hiring practices.

We are nowhere near the old normal. Throughout this fragile recovery,
over 90 percent of the growth in output has come from productivity
gains. But typically at this stage of the cycle, labor has already taken
over from productivity as the major contributor of growth. That is why
we generally saw nonfarm payroll gains exceeding 300,000 per month with
relative ease. This time we have recouped only 17 percent of the job
losses 23 months after the recession began, as compared to 207 percent
of the jobs lost from previous recessions (with the exception of 2001).
There is no comfort either in two leading indicators of employment, with
no growth in the workweek or in factory overtime.

Clearly, the Great American Job Machine is breaking down, and
roadside assistance is not on the horizon. In the second half of this
year (and thereafter?), we will be without the monetary and fiscal
steroids. Nor does anyone know what will happen to long-term interest
rates when the Federal Reserve ends its $600 billion quantitative easing
support of the capital markets. Inventory levels are at their highest
since September 2006; new order bookings are at the lowest levels since
September 2009. Since home equity has long been the largest asset on the
balance sheet of the average American family, all home­owners are
suffering from housing prices that have, on average, declined 33 percent
(compare that to the Great Depression drop of 31 percent).

No wonder the general economic mood is one of alarm. The Conference
Board measure of U.S. consumer confidence slumped to 60.8 percent in
May, down from 66 percent in April and well below the average of 73 in
past recessions, never mind the 100-plus numbers in good times. Never
before has confidence been this low in the 23rd month of a recovery.
Gluskin Sheff's Rosenberg captured it perfectly: We may well be in the
midst of a "modern depression."

Our political leadership in both Congress and the White House will
surely bear the political costs of a failure to work out short- and
long-term programs to fix the job shortage. The stakes are too high to
play political games.

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Caviar Emptor's picture

For a long time I've called it The Downsizing of America

Mercury's picture

Well, the population and the government are still growing.  It's more like the downsizing of the middle class and upward economic mobility.

Caviar Emptor's picture

First of all gov jobs are shrinking. 

All part of the planned obsolescence of most of the US middle class

subqtaneous's picture

and while they wither on the vine, 19K a year buys all the cheap, plastic ephemera they could possibly need in their toothless, disease infested squalor.


Misstrial's picture

Its a mistake to think that the Obama is exercising leadership to ameliorate unemployment.

Au contraire, his mission is to manage America's downward trajectory, not work to resolve it or solve it.

All of these talking heads on TV are missing the point: the guy doesn't give a damn. 

Maya Angelou: "When a person shows you who they are, believe them the first time."


Bobbyrib's picture

The only thing most politicians care about is getting re-elected. These people are a sick joke on the rest of us.

TheMerryPrankster's picture


Your empathy is touching. You should be a banker.

Is that you Dick Cheney?

mayhem_korner's picture

In 2006, Dick Cheney gave $6.9M of his $8.8M in income to charity.

TheMerryPrankster's picture

Yeah but his net worth is around a 100 million dollars, so he ain't exactly divesting himself of all worldly goods. How many of those charities did he have an interest in?

Dick Cheney has been called by many who know him, as being one of the coldest most self centered individuals they have ever known. I don't know Dick Cheney and would like to keep it that way.

He is an equal opportunity psychopath willing to destroy anything between him and his goal, even if it is only that last cookie on the silver tray next to the fireplace in the study.

The only people who defend him are relatives or employees, so which are you, Scooter?

mayhem_korner's picture

Brilliant call, my Canadian amigo.  Sorry about your hockey team, dude.

mayhem_korner's picture

I don't know him either, and I neither defend nor persecute him.  I was just pointing out a fact to provide some texture to your inference that he is not empathetic.

Bobbyrib's picture

He is only mostly a psychopath. Happy now?

I hope the charities he supported had to do with supporting veterans of  the US invasion of Iraq.

XRAYD's picture

You mean his Halliburton goodies?

mayhem_korner's picture

Tell us all you know about Halliburton other than what you were told by the MSM about contracts in the Middle East.


mayhem_korner's picture

Nice try at being clever.  FAIL. 

We're supposed to be anonymous here, right?

TheMerryPrankster's picture

DICK CHENEY AND HALLIBURTON: In this week's New Yorker, Jane Mayer details Dick Cheney's controversial history with Halliburton, beginning with Cheney's privatization initiatives in the early 90s when he was Defense Secretary which led to a huge Halliburton outsourcing contract for the military. Cheney then became CEO of Halliburton after leaving the government, using his connections to expand their public contracts and earning $44 million for himself in the process. The article also details how Halliburton did business with Iraq, Iran and Libya during Cheney's tenure through foreign subsidiaries, contradicting Cheney statements on the subject. Mayer also explains how Cheney's policies have set up Halliburton as one of the few companies that can handle many of the military's outsourcing needs, leading to it's huge role in today's military operations. Finally, Mayer describes the current feeding frenzy for Iraq contracts, and how Bush/Cheney cronies are angling to cash in.

Since there are no criminals in the empire, he must be accused only of showing poor judgement in allowing himself to be portrayed in a negative light.

mayhem_korner's picture

Maybe you missed this part, MP...

Tell us all you know about Halliburton other than what you were told by the MSM about contracts in the Middle East.

Bad enough that you couldn't come up with something, but making my point via direct quote of an MSM rag makes my day!  Well, I'm off to buy some gold...happy hunting (w/Dick of course)!

TheMerryPrankster's picture

He favors brown socks. Likes to eat cheerios in his underwear, literally, not a bowl, in his underwear. Favorite color brown, no blue, no brown, oh dear.

Was tasked by G.W. Bush to head his committee to choose a vice presidental candidate, chose himself. Drinks excessively, has a bad heart and a brain to match, is in the final stage of cardiac failure and must soon decide on a transplant or death.

Likes to wear women's clothing and hang around in bars, I heard that from a lumberjack who said he was 'okay', so that may be open to conjecture.

Enjoys pointless faceless exchanges with internet trolls.

Has a pair of girl scouts in leg irons in his basement.

Okay I'm really scraping the barrel here, but the only other thing I know is he enjoys picking his nose while driving and likes the little woman to address him as Dr. Cuddles when he is feeling frisky.

Bobbyrib's picture

He said Halliburton, not Dick Cheney. Whatever information you get from our liberal media is not good enough to be considered facts. Oh and they never moved their headquarters to Dubai (all the information I need to know).

TimmyB's picture

In 2006, Cheney was our Vice-President.  Do you mean to tell me that while he was serving as our nation's VP he was on Halliburton's payroll to the tune of $8.8 million? 

I don't think your comment about how Cheney gave away millions in 2006 shows anything other than how completely corrupt our country has become.  The fact that you are touting it as if its a good thing makes it all the worse.    

mayhem_korner's picture

Wasn't touting it as good or bad.  Simply presenting a fact.  BTW, the $8.8M came from Halliburton stock options and royalties from his wife's books (the income is combined).

Your comment is proof positive that you (and others) read into things that aren't there.

Bobbyrib's picture

Unfortunately the country can't afford to keep as many Federal employees on its payroll as when the country was "prosperous." There needs to be a downsizing in the public sector. Of course that will add to the unemployment rate, but it needs to be done. Most of us on this website believe the dollar is heading towards collapse. Not reducing government spending will only accelerate the process.

FreedomGuy's picture

I call this the dismal economy. Everyone in my family minus retirees has been laid off, downsized, part timed or taken pay reductions, often more than once. Not one, including me is making what we made a few years ago. I have not had one friend over 50 years old get reemployed at more than half their old wages...if employed at all. (BTW, none of us work in banking or Wall Street or government.)

Meanwhile, Washington chatters on, the central planners dream and plan and even the Republicans apart from Ron Paul do not really propose to change a single thing. They just propose to do all the same things cheaper than the Democrats.

Our current economy is the direct result of the leviathan state. The statist-collectivist-socialist planners have won and this is what winning actually looks like. We are not any smarter or better than Europeans and others who practice the same things. We are just adopting their ideas later and more slowly but with the same results.

The other aspect as I watch oil and all commodities plummet is that we live in a political economy. Nothing depends on business anymore. Everything depends on what the central planners do. They dump oil on the market and every commoditiy plummets. They create money and monetize t-bills, interest rates stay artificially low and money is improperly priced. Change a tariff, a tax break, a subsidy, a regulation, an EPA standard...these are the stupid things that drive economies, now. Making good products, good management, invention, good business models...those are distant seconds compared to what the government does.

Does anyone else realized what drooling idiots we have as central planners and leaders by and large? This is the economy you get, a political economy with powerful central governments. Everyone enjoy and plan your future accordingly.

RunningMan's picture

I have yet to see any sign that suggests we are in anything but a nosedive in the global economy. Germany seems to be busy, but is lashed to the euro and surrounded by PIIGS. US is in retreat. Little work here (already worse than 2008), gas prices outrageous. 

Of course it is a depression. Masked by economic repression. Cloaked by academic regression. And clouded by clever expressions.

Freddie's picture

Zuckerman is another a*s s**ker who voted for Hussein in 2008. 

Freddie's picture

Hilarious seeing all these people getting junked by scumbag Obama voters who post here.  Scum like Zuckerman Bilderberger who voted for the Kenyan.

Terminus C's picture

They junk you for falling into the "blues" vs. "greens" hype...

Oh wait, its repubs vs demos.

Got mixed up there, thought we were talking about Constantinople.

Stax Edwards's picture

Even more hiliarious when someone like Freddie forgets he is not posting on a Fox News site and reveals how far his head is up his ass.  Go back to your seat and shut your mouth unless you have something intelligent to say.

Freddie's picture

You are a bigger fool for thinking ANY media is different. Fox is with the elites like the rest. All hollywood, all tv, all newspapers.  Go wipe your chin because it has hope & change all over it.  Those hope & change STDs must hurt.

I love the Dem scum who voted the islamo in and now say they are all the same.  F off.

Bush sucked and is another one worlder but he was heaven compared to this.

knowless's picture

you are an extreme douche.


that being said, the potus is not the head of the current world hierarchy, and if you honestly think mccain would have been better, than please explain, what would he have done differently.

seriously, I want to know what mccain would have done? he's a republican, the party of tarp, dont blame me, i voted for kodos.


or we could just not act like retarded children arguing about whose daddy has the biggest cock or what the fuck ever it is you're trying to do.

your faith in the omnipotence of the president (reference to heaven whhhaaa?) is why i think you are unfixable, no real debate can occur.


good day.

Libertarians for Prosperity's picture

Yes, such a strange reversal of sentiment over the course of 2 years. 

Mortimer is just feeling a little verklempft since Goldman's Real Estate Opportunities Fund convinced him to pay $2.9B - the loftiest price ever paid for an American office building - mere months before the world cracked in half. 

The largest tenet in the building is General Motors with over 100,000 sq.ft of leased space. When Obama orchestrated the GM bankruptcy, it allowed GM to void its lease contract in the GM building. So now, not only did the building loose ~30%-40% of its value in 18 months, a 100,000sqft tenant is threatening to leave in the middle of the worst slowdown in real estate history. Rumor has it, he offered GM 6 months of free rent to stay.

Mortimer is just redirecting his own incompetence and folly at Obama.    


TruthInSunshine's picture

I didn't know this about Mort & his GM lease loss.

Thank you for that news that one would think the Lame Ass Stream Media would have bothered to report.

sgt_doom's picture

Yup, old Morty is an American Media Corporation scumbag from waaaay back, including all those planted stories in his now non-mainstream US News & World Report claptrap (many especially liked his "tough guy Cheney piece -- just kidding!).

Morty, a longtime member of the lobbyist group for the international ultra-rich, the Bretton Woods Committee (brettonwoods.org), always gets it wrong, even when he's really trying!

America lost 15 million jobs in the meltdown -- officially 11 million offshored, but they don't count the smaller numbers -- so it really works out to 15 mil, plus there's that 22 million jobs forecast back in 1999, and they were created after all, just created overseas by American-based multinationals and corporations, not in America!

That works out to 37 million lost jobs, a much larger number -- which correlates to hugh jumps in poverty, homelessness, increases in food stamps, etc.

And that's not EVEN counting the de-multiplier effect....

trav7777's picture

Cokzuckerman is just another triber in the clan whose shenanigans have bled a once-great nation totally dry.

The nations that haven't made the devil's bargain with the "financiers" have never needed gigantic armies or to experience orgies of booms and busts

john39's picture

funny, I always thought that the Pentagon just did the bidding of the banker clans.  so, in fact, they do use vast armies.  they just don't pay for it.

trav7777's picture

? not reading for comprehension?  There are quite a few nations that did not welcome the chosen and their financial ponzis.  They have never needed to engage empire tactics or run ponzis

Libertarians for Prosperity's picture


Hell hath no fury like a pickle-nose'd, potato pancake eater who makes a bad financial move.

Picklemer Buttercakeman is not an innovator. Picklemer is not a creator. Picklemer hasn't furthered society. All he's done is collected rent and flipped buildings for ever higher prices, based on the bubble economics crafted by his fellow clansmen. He's just another parasite sitting behind a $10,000 desk collecting real estate usury. 



Freddie's picture

They love their little islamic who's records are totally sealed.  A lot of their stooges post here as well. All hussein boot lickers.

Seasmoke's picture

this is bad news for the public employee leeches , who are they going to get to pay for their lifetime benefits

Iam_Silverman's picture

"who are they going to get to pay for their lifetime benefits" ?

Don't you see the classic Ponzi mentality in that situation?  If you have X number of government retirees depleting a fund that is filled from taxpayers pockets, then you need 2X current taxpayers.  If the public sector won't provide them, then the governmanet can.  Voila', problem solved (in theory)....

Iam_Silverman's picture

Now for a quick edit to disguise an errant double-post...


I just wanted to say that not ALL government employees are leeches.  Some of them do perform necessary tasks that benefit the rest of us.  I was a government "leech" for six years (all active duty).

MachoMan's picture

Necessary in the sense that it is demanded or necessary in the sense that it must be performed by a public actor?  Big distinction...

Iam_Silverman's picture

Well, would a privately owned defense force or tax collecting agency be more to your liking?  How about if they're both one and the same (or at least under the same corporate umbrella)?

Crisismode's picture

That day is coming, and a lot sooner than most people think.