Nobel prize-winning economist Paul Krugman is a Princeton professor and New York Times columnist who reportedly was on President Obama’s short list for Treasury secretary. Krugman is riveted on the jobs problem, something he describes as “the clear and present danger of mass unemployment.” Krugman’s refrain is that creating jobs is far more important as a governmental objective than dealing with long-run debt or cutting entitlements.
In Macon, we know something about what mass unemployment looks like. It’s a persistent, essentially permanent condition for many. On the surface, Macon’s unemployment rate looks pretty good, with an April unemployment rate of 8.2 percent, down from more than 10 percent a couple of years ago, according to the official statistics of the U.S. Bureau of Labor Statistics. Nationally, May’s rate is down to 7.6 percent.
But if you dig deeper, you’ll see that those statistics only count the people actively seeking work in proportion to those employed. The unemployment rate doesn’t account for those who aren’t looking for work. It doesn’t factor in most people who aren’t employed.
How many people are in that category of people who aren’t looking for work, and who aren’t employed?
The disturbing answer: most people. In short, the federal employment and unemployment statistics simply don’t reflect the working status of the absolute majority of people in this country.
Even if we assume that young people and the elderly shouldn’t be counted in the work force, they together only account for a little more than a third of the population. And not all people 65 and older, and young people 17-19, are nonworking. The nonworking share of people 65 and older and youth make up only a third or less.
The population in Macon’s statistical area, comprising Bibb, Jones, Monroe, Crawford and Twiggs counties but excluding Houston, was about 232,000 in 2010. In 2000, Macon’s population was about 222,000.
Only about 42 percent of the Macon area’s population, about 102,000, are working today. Ten years ago, about 101,000 were working, about 45 percent. While the Macon area population as a whole was growing about 10,000 during roughly that same period, only about 1,000 more people are being counted today as being either in the work force or trying to get work. In short, Macon’s work force is shrinking as a proportion of its population.
You might be surprised that the country as a whole is no better off. Nationally, only about 135 of 314 million people are employed, about 43 percent. That compares with 131 million people working 10 years ago, about 45 percent of the population at the time. So during about the same decade that we added more than 20 million people to the national population, we only added 4 million more people to the work force.
Such trends seem unsustainable, both locally and nationally. Can we keep growing the population faster than productive workers? So Krugman seems reasonable to insist that creating jobs should be of keen importance.
Can we create jobs without adjusting our entitlement/consumption mentality?
Krugman seems to think so. I wonder.
Consider entitlements. Nonemployment doesn’t just happen in a vacuum. We facilitate it, little by little, through a host of well-meaning programs. The latest of those, Obamacare, will add yet another disincentive for employers to offer full-time work to entry-level employees and another disincentive for people to take what entry-level employment is left.
It’s on the margins that employment gains are most likely to be made. For the marginal potential employee at the minimum-wage level of employment, it’s not clear that work is worth it. Many would rationally prefer to cobble together some kind of economic existence using elements of the safety net.
The Federal Reserve’s answer has been to pump $85 billion per month into the banking and monetary system, hoping to spin off jobs. While that tactic has inflated asset values, and the official unemployment rate has nudged down, it isn’t generating enough new jobs to keep up with population growth.
There are more creative alternatives. I’ll suggest some in a later column.
David Oedel teaches law at Mercer University.