Labor Day 2010

When I attended college the first time around (1969-1973) I learned about something called, theoretical full employment. At that time theoretical full employment allowed for a 3% unemployment rate. Academic economists noted that there is always some churn in the economy. People get fired or quit their jobs in disgust. Sometimes people just want to leave wherever they live and find someplace better to start over. I wondered what economists might consider theoretical full employment in 2010. I didn’t find much except a book titled, “Full Employment Abandoned: Shifting Sands and Policy Failures” published in 2008. Evidently the concept of theoretical full employment, once given at 2% I discovered, has been replaced by a new concept, structural unemployment. The definition of structural unemployment is given as, “Joblessness caused not by lack of demand, but by changes in demand patterns or obsolescence of technology, and requiring retraining of workers and large investment in new capital equipment,” (BusinessDictionary.com). In recent decades, structural unemployment was expected to run at about 5% as technology and regulation destroyed old jobs and created new jobs. In this model, a constant level of unemployment is primarily generated by a mismatch in workers who lack skills required for new jobs.

In “9% is Now Full Employment in America,” an extremely disturbing article written by Michael James McDonald, the author contends that 20,000,000 U.S. jobs have been exported to foreign countries. Most of these jobs were relatively stable, high paying, wealth producing jobs that provided men and women of average ability a middle class life style. They are gone.

In January of 2006 Warren Buffett said, “The U.S. trade deficit is a bigger threat to the domestic economy than either the federal budget deficit or consumer debt and could lead to ‘political turmoil.’ Pretty soon, I think there will be a big adjustment.”

One year ago on Labor Day, U-3 unemployment stood at 9.7%. Today that measure is 9.6%. The more realistic measure U-6 was 16.8% in 2009. Today it is 16.7%. Approximately 26.3 million Americans are unemployed, marginally attached to the work force, or working less than full time because no full time work is available. These numbers are low because they only include individuals actively seeking employment who are reporting their efforts to a government agency. It does not include many young people who have yet to find their first job, older workers who were forced into early retirement, or the plain discouraged who have just given up.

It isn’t that the government hasn’t tried. Trillions of dollars of borrowed money have been spent on corporate bailouts, stimulus programs, mortgage modifications, and ideas like cash for clunkers and an $8,000 tax credit for first time home buyers. It hasn’t worked. McDonald observes, “Global conditions and factors now control the American economy more than what is happening internally. It also puts in doubt the tried and true, standard solutions the government uses. Stimulation packages no longer work because there is now little to stimulate. They are using old internal solutions to fix an economy now controlled by external conditions. Until the government faces this and begins to solve the real issue – the long term detrimental effects of globalization on the American economy – nothing significant can occur.”

Today, over 26 million Americans are unemployed. 41,275,411 Americans are receiving food stamps, now called the Supplemental Nutrition Assistance Program. As a country, we are facing a very bad situation with no easy solutions. On this Labor Day, let us take at least a moment, look into our own hearts, confess our sins, and ask God to extend his hands in mercy to our Nation. Let us try and understand that when we stand with Christ we can not separate ourselves from our neighbors.

Psalm 70

[1] Make haste, O God, to deliver me; make haste to help me, O LORD.
[2] Let them be ashamed and confounded that seek after my soul: let them be turned backward, and put to confusion, that desire my hurt.
[3] Let them be turned back for a reward of their shame that say, Aha, aha.
[4] Let all those that seek thee rejoice and be glad in thee: and let such as love thy salvation say continually, Let God be magnified.
[5] But I am poor and needy: make haste unto me, O God: thou art my help and my deliverer; O LORD, make no tarrying.