October unemployment figures will matter little, at least as far as the health of the economy. Job losses in 2009 ranged over 500,000 some months. More than 14 million Americans are unemployed, and over half of those have been out of work for more than 26 weeks. Those marginally attached to the workforce or who work part time while looking for full-time work number seven to eight million more.
The typical job growth per month, based on official federal figures, in the past six has been about 100,00o. This improvement still may be undermined by the public sector reductions. Austerity has taken part of its toll. The decisions by the congressional Super Committee could result in government cuts. State and municipal tax receipts remain at levels lower than they were in 2007.
The private sector’s employment picture does not look much better. Large companies continue to cut workers. AMD (NYSE: AMD), a relatively healthy company financially, just said it will fire 10% of its work force. And it wants to drop business lines that are not highly profitable. Corporations increasingly have sharpened knives to keep costs low. That should be no surprise. Many S&P 500 companies have forecast weak fourth-quarter earnings.
The Labor Department recently said national productivity rose at a 3.1% annual rate last quarter. Normally, this would cause a tightening of the workforce and employees could demand higher wages. It is more likely that businesses continue to get a better yield from people who cannot find other jobs. Productivity should be another word for “working harder for the same paycheck.”
Monthly unemployment numbers will not matter until the economy starts to add 300,000 or more people each month for several months. That is the only way economists can forecast that the jobless slump will reverse itself. That is the only way it will be evident that a significant portion of the 14 million people out of work have begun to find relief.
Douglas A. McIntyre
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