Thursday, August 2, 2012

It's A Depression

Al Lewis at Market Watch observes that what has been called a "jobless recover" is actually a depression.
The precise definition of a depression, of course, remains as debatable as anything else in the field of economics. By some definitions, it is a long-term slump in economic activity, often characterized by unusually high unemployment, a banking crisis, a sovereign-debt crisis, surprising bankruptcies and other horrible symptoms we can find in the headlines almost every day.

It is easy to avoid seeing all of these events as constituting a depression if you somehow have kept your livelihood intact all this time. But it’s important to remember that not everyone has to stand in a bread line during a depression.

Nearly one out of seven Americans receives food stamps, according to the U.S. Department of Agriculture. That’s more than 44 million people. If they all stood in a line and someone photographed them using black-and-white film, they easily could be mistaken for people from the 1930s. Instead, they go to a grocery store and spend their credits like money. There isn’t even a social stigma to make them stand out as any more glum or destitute than anybody else.

Last week, the Associated Press reported that America’s poverty rate likely has hit levels not seen since the 1960s. Surveying several economists and academicians, the wire service predicted the official poverty rate would come in as high as 15.7% when the Census Bureau releases it in September. That would wipe out all the gains of President Lyndon Johnson’s War on Poverty.

Poverty is another word for joblessness, and our economy hasn’t been generating enough decent-paying jobs for many years. Globalization, technology, outsourcing, immigration and the schemes of financiers have taken their toll. No one is certain when jobs will come back, and many of the jobs that remain don’t pay anywhere near what, say, your average failing CEO gets paid.

“Half the jobs in the nation pay less than $34,000 a year,” noted Peter Edelman, author of “So Rich, So Poor: Why It’s So Hard to End Poverty in America” in a recent New York Times piece. “We’ve been drowning in a flood of low-wage jobs for the last 40 years.”

If you don’t want to call this epidemic of rising poverty an invisible depression, call it the golden age of unemployment. Today’s laid-off workers can collect unemployment benefits for up to 99 weeks, staying off the public’s radar as an economic distress signal. Over that time, they often lose confidence, their skills degrade, and they can slip into the ranks of America’s chronically unemployed — where they no longer will be counted in the nation’s official unemployment rate, now at 8.2%.
Read the whole thing . . . and weep.

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