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Welcome To The McJobs Recovery. Do You Want Fries With That?


Naomi Klein in 2000, talking about attempts to organize McDonald's workers.

I know a lot of media people read our site, so I wonder why they seem so oblivious to the ongoing economic pain suffered by so many through this recession. Do they know how clueless they sound? The middle class is being systematically hollowed out of our country, pushing people to the margins and leaving nothing but the economic extremes. From Andy Kroll at TomDispatch:

Think of it as a parable for these grim economic times. On April 19th, McDonald's launched its first-ever national hiring day, signing up 62,000 new workers at stores throughout the country. For some context, that's more jobs created by one company in a single day than the net job creation of the entire U.S. economy in 2009. And if that boggles the mind, consider how many workers applied to local McDonald's franchises that day and left empty-handed: 938,000 of them. With a 6.2% acceptance rate in its spring hiring blitz, McDonald’s was more selective than the Princeton, Stanford, or Yale University admission offices.

It shouldn’t be surprising that a million souls flocked to McDonald's hoping for a steady paycheck, when nearly 14 million Americans are out of work and nearly a million more are too discouraged even to look for a job. At this point, it apparently made no difference to them that the fast-food industry pays some of the lowest wages around: on average, $8.89 an hour, or barely half the $15.95 hourly average across all American industries.

On an annual basis, the average fast-food worker takes home $20,800, less than half the national average of $43,400. McDonald's appears to pay even worse, at least with its newest hires. In the press release for its national hiring day, the multi-billion-dollar company said it would spend $518 million on the newest round of hires, or $8,354 a head. Hence the Oxford English Dictionary’s definition of "McJob" as "a low-paying job that requires little skill and provides little opportunity for advancement."

Of course, if you read only the headlines, you might think that the jobs picture was improving. The economy added 1.3 million private-sector jobs between February 2010 and January 2011, and the headline unemployment rate edged downward, from 9.8% to 8.8%, between November of last year and March. It inched upwardin April, to 9%, but tempering that increase was the news that the economy added 244,000 jobs last month (not including those 62,000 McJobs), beating economists' expectations.

Under this somewhat sunnier news, however, runs a far darker undercurrent. Yes, jobs are being created, but what kinds of jobs paying what kinds of wages? Can those jobs sustain a modest lifestyle and pay the bills? Or are we living through a McJobs recovery?

The evidence points to the latter. According to a recent analysis by the National Employment Law Project (NELP), the biggest growth in private-sector job creation in the past year occurred in positions in the low-wage retail, administrative, and food service sectors of the economy. While 23% of the jobs lost in the Great Recession that followed the economic meltdown of 2008 were “low-wage” (those paying $9-$13 an hour), 49% of new jobs added in the sluggish “recovery” are in those same low-wage industries. On the other end of the spectrum, 40% of the jobs lost paid high wages ($19-$31 an hour), while a mere 14% of new jobs pay similarly high wages.As a point of comparison, that's much worse than in the recession of 2001 after the high-tech bubble burst. Then, higher wage jobs made up almost a third of all new jobs in the first year after the crisis.

The hardest hit industries in terms of employment now are finance, manufacturing, and especially construction, which was decimated when the housing bubble burst in 2007 and has yet to recover. Meanwhile, NELP found that hiring for temporary administrative and waste-management jobs, health-care jobs, and of course those fast-food restaurants has surged.

Indeed in 2010, one in four jobs added by private employers was a temporary job, which usually provides workers with few benefits and even less job security. It's not surprising that employers would first rely on temporary hires as they regained their footing after a colossal financial crisis. But this time around, companies have taken on temp workers in far greater numbers than after previous downturns. Where 26% of hires in 2010 were temporary, the figure was 11% after the early-1990s recession and only 7% after the downturn of 2001.As many labor economists have begun to point out, we're witnessing an increasing polarization of the U.S. economy over the past three decades. More and more, we're seeing labor growth largely at opposite ends of the skills-and-wages spectrum -- among, that is, the best and the worst kinds of jobs.



Getting Laid Off Is Not The Same As Being Fired

Fred Clark from Slacktivist points out something that should be obvious to anyone with an ounce of empathy -- or intelligence:

The confused conservatives seem to mistakenly believe that during the Great Recession those 8 million workers were simply fired.

If that had been the case, the economy would have greeted those 8 million newly unemployed workers with 8 million newly vacant job openings. The relocations, retrainings and logistics of rearranging all of those workers back into the assorted job openings created by their firings would have been unpleasant in the short term, but wouldn't have created an insurmountable long-term problem for either those 8 million people or for the economy as a whole. That sort of churning and rearranging goes on all the time, which is why economists regard something like a 4 percent unemployment rate as "full employment."

If those workers had all simply been fired, the scenario would have played out as something like the economic equivalent of a Chinese fire drill -- everyone get up and find a new seat. That would have been disruptive, but still possible because there would still have been one seat for every displaced worker.

But that is not what happened during the Great Recession. Those 8 million workers were not fired, they were laid off.

Getting laid off is not the same as getting fired.

Those 8 million workers got up and their seats were taken away. They cannot find new seats because there are not nearly enough seats to go around. Those 8 million or so workers cannot simply find new jobs because there are 8 million fewer jobs to be found.

The most recent figures, if you want to be precise: 14.2 million looking for work; 3.4 million job openings. That means 10.8 million Americans right now, today, are royally, epically screwed.

That means it wouldn't matter if every unemployed American followed all the advice for what job-seekers are supposed to do. If every single one of them keeps a positive attitude while still being willing to settle for less, if each and every one of them takes classes and volunteers to keep their skills sharp, if each and every one networks furiously, gets up every morning, showers, shaves and gets dressed for the office before sending out dozens of perfect, enticingly crafted résumés all day, every day, then 10.8 million of them will still not find jobs because there are 10.8 million fewer jobs than there are job seekers.

That is the situation. That is what we are up against.

Millions of people got laid off. They weren't fired -- they were laid off. Their jobs are gone and now there aren't enough jobs.

Getting laid off is not the same as getting fired.



chart-unemployment.gif

I read yesterday that our actual unemployment rate is 22 percent. That's right, more than one in five Americans is out of work, yet for some odd reason, our political class and the Villagers are completely obsessed with the idea that our single most pressing issue is the federal deficit. Steve Benen at the Washington Monthly is puzzled, too:

CBS News sent around a press release yesterday afternoon about a special "In Focus: Debt and Deficit," hosted by Katie Couric.The release noted, "With this year's record-breaking deficit of $1.5 trillion -- the biggest ever in U.S. history -- and the national debt reaching a whopping $14 trillion, Americans are now faced with making tough choices in order for the country to dig itself out of its national financial mess."

The press release happened to be wrong. The deficit isn't $1.5 trillion; it's $1.29 trillion. The deficit also isn't "the biggest ever in U.S. history," neither in real terms nor in percentage of GDP. The national debt hasn't reached a "whopping $14 trillion" yet, either. All of these errors were in the first paragraph.

But while the mistakes were glaring and important, I was more troubled by the basis of the report itself. The deficit matters, but not nearly as much as the ongoing employment crisis. Where's our "In Focus: Jobs and Economic Growth"?

The media/political establishment keeps asking the wrong question. Even Fareed Zakaria has fallen for it, arguing this week that "the fate" of the United States is dependent on policymakers tackling deficit reduction.The establishment tends to ignore liberal hippies on this, but maybe they'll listen to Time's Joe Klein, an establishment member in good standing, who asks this week, "Why are we spending so much time and effort bloviating about long-term deficits and so little trying to untangle the immediate economic mess that we're in?"Ezra Klein emphasized a similar point the other day.

This is partly why I consider the cramped focus of the deficit commission a mistake. We should've had a broader commission looking at getting the economy back on track. Then there could've been recommendations to accelerate short-term growth (like the stimulus proposals that have appeared in the fiscal plans from both Rep. Jan Schakowsky and the Bipartisan Policy Center), reduce the deficit and put us on sustainable long-term footing (think tax reform, education reform, basic-research funding, etc).

It may not have worked, or passed. But then, you can say much the same for the Simpson-Bowles commission, which looks unlikely to report out a consensus proposal, much less pass it through Congress. And the reality is that liberals would be more likely to sign on to long-term austerity if it were paired with short-term stimulus.

Poll after poll lately has shown the same, consistent result: the public wants policymakers to focus on jobs and the economy, not deficits and the debt.



Employers: We Just Can't Fill Our Underpaid Job Openings!

This appeared in the Wall Street Journal, so the article's very sympathetic to employers who say they can't fill job openings. First, let me wipe the tears from my eyes, and then let me suggest a couple of free-market solutions.

As one company mentioned in the article did, employers should set up their own job-training programs. Hire some good people, and teach them. I know you're used to us paying to train ourselves, but hey, that's the way the cookie crumbles these days.

The other free market solution? You're pissing and moaning that you can't fill jobs, but you're obviously not offering enough money for people to live on. In other words, you don't want to pay what the market will bear. Right?

In Bloomington, Ill., machine shop Mechanical Devices can't find the workers it needs to handle a sharp jump in business. Job fairs run by airline Emirates attract fewer applicants in the U.S. than in other countries. Truck-stop operator Pilot Flying J says job postings don't elicit many more applicants than they did when the unemployment rate was below 5%.

With a 9.5% jobless rate and some 15 million Americans looking for work, many employers are inundated with applicants. But a surprising number say they are getting an underwhelming response, and many are having trouble filling open positions.

"This is as bad now as at the height of business back in the 1990s," says Dan Cunningham, chief executive of the Long-Stanton Manufacturing Co., a maker of stamped-metal parts in West Chester, Ohio, that has been struggling to hire a few toolmakers. "It's bizarre. We are just not getting applicants."

Employers and economists point to several explanations. Extending jobless benefits to 99 weeks gives the unemployed less incentive to search out new work. Millions of homeowners are unable to move for a job because the real-estate collapse leaves them owing more on their homes than they are worth.

The job market itself also has changed. During the crisis, companies slashed millions of middle-skill, middle-wage jobs. That has created a glut of people who can't qualify for highly skilled jobs but have a hard time adjusting to low-pay, unskilled work like the food servers that Pilot Flying J seeks for its truck stops.

Don't you just love the way they put this? Jobless benefits give the unemployed "less incentive to search out new work." New work that pays so little, it won't even give them enough to cover their rent and food in the same month. (Isn't America great?)

The difficulty finding workers limits the economy's ability to grow. It is particularly troubling at a time when 4.3% of the labor force has been out of work for more than six months—a level much higher than after any other recession since 1948.

Some economists fear the U.S. could end up with a permanent caste of long-term unemployed, like those that weigh on government budgets in some European countries. "It is a very worrisome development," says Steven Davis, an economist at the University of Chicago's Booth School of Business. "It leads over a long period of time to social alienation as well as economic hardship."

[...] Of course, many jobs remain easy to fill. Companies offering middle-skilled jobs can be flooded with applicants. Laquita Stribling, a senior area vice president in Nashville for staffing firm Randstad, says she received several hundred applications for a branch manager job that might have attracted a few dozen candidates before the recession.

"The talent pool has swollen to the point where it's almost overwhelming," says Ms. Stribling.

But other employers with lots of applicants say the pool of qualified workers is small for specialized jobs. Carolyn Henn, head of hiring at environmental consultancy Apex Companies, says she recently received about 150 applications for an industrial hygienist job paying as much as $47,000 a year, which requires special certifications and expertise to oversee projects such as asbestos cleanups. That is about three times the amount she received for similar jobs before the recession. But she says the number of qualified applicants—about five—is less than she got before.

As I said, Carolyn: Hire people and train them. That's what they did back in the old days, and this is turning out to be an awful lot like them.



Judging from the recent polls, if the Democrats don't figure out a way to either get people employed or at least extend unemployment benefits for the people who can't find jobs, this year's midterms will be a tsunami that washes the Democrats into the sea:

As the nation contends with a long and sustained labor market recession, a new study from the Center for Economic and Policy Research demonstrates that the current unemployment rate is higher than the conventional measure shows.

"An unemployment rate that has hovered above 9 percent for several months is striking, but the jobs picture is even worse than it looks," said report author and CEPR Economist David Rosnick.

The study, "The Adult Recession: Age-Adjusted Unemployment at Post-War Highs," adjusts the current unemployment rate to account for demographic differences and finds that the unemployment rate has not fallen below 10.8 percent in the last 12 months. During the worst episode of the recession of the 1980s -- the second half of 1982 and the first half of 1983 -- unemployment passed 10 percent for 7 months.

The analysis notes that the population is older today than it was in the 1980s, which has the effect of lowering today's unemployment rate relative to the past. Since they change jobs more frequently and are more likely to move in and out of the labor market, Young people have a higher unemployment rate than older workers. Adjusting for this older workforce shows that the United States is experiencing the weakest labor market since the Great Depression.

The severity of the current unemployment situation suggests that policy makers should consider measures that would slow or reverse this trend. Additional stimulus such as work sharing or the extension of unemployment benefits by Congress would go far in addressing the plight of the millions of unemployed Americans suffering as a result of this downturn.