The Department of Labor's Bureau of Labor Statistics (BLS) has reported that the latest unemployment rate is 10.2%. This represents the highest unemployment rate since the early eighties when the rate hit 10.8%. The unemployment rate since 1995 has consistently been below 6% (except for a period after 9/11) and Americans have come to expect those types of unemployment rates. Economists consider a 0% unemployment rate unattainable; rates of 4% to 6% are considered full employment due to worker transition between jobs. Rates since the end of World War II has been consistently lower that 7.5%.
This low rate has been caused by a number of factors. After World War II the majority of the world's industrial and manufacturing bases were destroyed and the United States provided the products and manufacturing capacity to undertake the massive worldwide rebuilding efforts. The economy of the United States has been climbing since that time, but after the 1960s cracks started to appear. Europe and Japan were on the verge of competing with our companies, but the oil crisis struck and slowed the world economy 'til the 1980s. However, at the same time the Japanese were able to create inroads into the American automotive market with their reliable, inexpensive, and fuel efficient autos.
The 1980's saw the world economy grow again but American manufacturers were now forced to deal with foreign competition for the first time and the results were not good. American steel gave way to the Japanese and Chinese who could do it cheaper and more efficiently. Unemployment began to rise again till 1992 but then the information technology boom came along. Suddenly IT jobs were springing up and the economy was roaring till the Dot.com bust in the late 1990s and early 2000s but the recent housing boom again revved up job growth.
We all know what happened with the housing bust but where will we go from here? The American automotive companies are only just beginning to realize they need to change their ways but for some it may be too late. Green jobs are a hope but will it be enough. Consumer spending is down as more families are beginning to save more and the Baby Boomers are now retiring so their spending will also be limited. This means less available capital and a smaller customer base for product to compete for. I am afraid that for the foreseeable future we may have to live with unemployment rates that are around 9%, even in good times.
Turtles, I completely agree with your thoughts. The Dems will be blamed as we are in for the long haul on unemployment. This is not an easy fix for the country or the economy, sadly.
Such a very long way to go...
Thank you AstrosGirlKiel that is a kind compliment.
As for the societal implications, I see more stagnant wages, less job security (especially low skilled workers), and more companies passing a greater share of benefit costs to employees. This in turn will limit the group of the economy and the cycle will continue to feed itself. As we get weaker the nations of the world could possibly get stronger economically.
Politically, this will help the GOP since the Democrats will be blamed for the economy in the 2010 & 2012 elections.
Forty years ago, I learned in economics class that an unemployment rate of 4% was considered "full employment". Nine percent ought to be morally unacceptable to our society. The federal government, over the objections of the teabaggers, needs to become "the employer of last resort" once again.
Democrats will lose power, as we should, unless we are willing to directly address the major issues of the day. The GOP, of course, has zero solutions to offer - only more tax cuts for the wealthy. We've seen how well that worked. Former Texas Senator and now UBS executive Phil Gramm and his wife Wendy, ex-Enron board member, are doing just fine. I suspect most Americans would disagree with rewarding corporate criminals.
Turtles,
First of all - it's wonderful to see you contributing to the Hurricane. I'm happy to be in your 'league'.
Fantastic question you ask - what, in theory, are the societal implications of a perpetual 9% employment rate?