The missing million

September 06, 2004

LAST LABOR DAY, we took note of the jobless recovery. At that time, almost two years after the relatively short 2001 recession had been declared over, the American economy still was losing jobs. But this Labor Day, the problem of missing jobs has evolved into the problem of missing workers.

Yes, the latest employment data, released Friday, signal improvement. August's unemployment rate was 5.4 percent, compared with 6.1 percent a year earlier.

Trouble is, the U.S. economy right now still has a million fewer people working than at the start of the recession in March 2001. And millions of discouraged workers have been leaving the job market or have become mired in underemployment.

As a result, the labor force participation rate this summer fell to the lowest point in almost 13 years. Economists at the Economic Policy Institute, a labor-oriented think tank, figure that translates to more than two million missing workers.

These are workers so discouraged that they've given up looking for work, and thus they're not factored into the official unemployment rate calculation. If they were -- and there's a good argument for that -- the true unemployment rate would be more like 6.4 percent.

Then there are those who would like to be working more than they are, the underemployed and involuntary part-time workers. If they also were counted in the unemployment rate calculation, the rate rises to 9.5 percent -- up from 7.3 percent for the same group at the start of the 2001 recession.

These numbers speak to a peculiarly anemic economic recovery for American workers, one in which the weakness in the job market is hitting hard even those at higher educational levels. Earlier this summer, for example, the employment rate for college graduates fell to an almost 25-year low.

At the Republican National Convention last week, speaker after speaker -- from President Bush down -- tried to convince the nation that his administration, having been dealt bad economic cards, is well into getting workers back on their feet. But to the extent that the economy has stopped shedding jobs, that has been more the product of the Federal Reserve's sustained low interest rates -- not of the president's economic policies, largely composed of tax cuts constructed to benefit the rich rather than efficiently stimulate economic growth.

Indeed, corporate profits are up. But in contrast to past recoveries, a smaller share of these profits is going toward worker compensation. Median household income is down. So is employer-provided health insurance coverage. So is pension plan coverage.

And one of the top industries adding jobs to the economy is the temporary employment industry -- accounting for about six percent of all new jobs over the last year.

This Labor Day, more of the American workforce has become just-in-time workers. They're expected to come and go in direct response to market demands, in just the way that many companies no longer spend money on keeping inventories on hand but rely instead on commodities being delivered as needed. All of this -- rising ranks of part-time workers and of workers who have gone missing full-time -- adds up to lost labor and human potential power that this nation can ill afford.

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