Free Markets, Free People

Depression-Era Unemployment Looms

Since the Great Depression, the peak unemployment rate was 10.8% in November, 1982.  We will, in all likelihood, set a significantly higher record for the unemployment rate in the next 12 months. Here are 12 reasons why the unemployment rate will reach at least 12%.

I would also remind you that if we currently reported the unemployment rate as they did in the 1930’s, our current rate of unemployment would be around 17.2%  In any event, here are just two of the most compelling reasons why the job picture is going to remain very cloudy:

For the first time in at least six decades, private sector employment is negative on a 10-year basis (first turned negative in August). Hence, the changes are not merely cyclical or short-term in nature. Many of the jobs created between the 2001 and 2008 recessions were related either directly or indirectly to the parabolic extension of credit…

But when we do start to see the economic clouds part in a more decisive fashion, what are employers likely to do first? Well, naturally they will begin to boost the workweek and just getting back to pre-recession levels would be the same as hiring more than two million people. Then there are the record number of people who got furloughed into part-time work and again, they total over nine million, and these folks are not counted as unemployed even if they are working considerably fewer days than they were before the credit crunch began…So the business sector has a vast pool of resources to draw from before they start tapping into the ranks of the unemployed or the typical 100,000-125,000 new entrants into the labour force when the economy turns the corner. Hence the unemployment rate is going to very likely be making new highs long after the recession is over — perhaps even years.

There are other compelling reasons at the link, but the two above are enough to ensure that the unemployment rate will remain high for quite some time.

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11 Responses to Depression-Era Unemployment Looms

  • if we currently reported the unemployment rate as they did in the 1930’s, our current rate of unemployment would be around 17.2%

    What was the highest rate during the Great Depression, 25%?  Doesn’t that mean that we’re going to come pretty close to those levels before this is all over?  That is staggering to consider.

  • But… but… but…

    President Imeme tells us that he’s created or saved a million jobs in the past nine months or so!

    And… and… and…

    GDP grew a bit last quarter.  The recession is over!

    And… and… and…

    The AP assures us (categorically, comrades, categorically!) just this morning that the job market is healing because jobless claims fell more than expected!

    Jobless claims fall more than expected to 502K

    New claims for unemployment insurance fell more than expected last week, evidence the job market is slowly healing as the economy recovers.  [emphasis mine – dj505]

    Are you saying that these people are not telling the truth???

    / SARC

  • Our President, who is in Washington
    Imeme is his name.
    His will be done, his Presidency come,
    soon earth will be as heaven.
    He gives us each day, our daily rent, and money for gas
    and forgives those who speak harshly against him
    and leads us to service and delivers us from the temptations of market capitalism
    for his is the Presidency, the power, and the glory
    and he may do whatever he needs to in order to save our land, no matter what the Constitution says.

  • I went to see Paul Krugman speak in Manchester, Vermont in October.  After speaking for an hour, he started taking questions from the audience. A man a few feet away from me stood up and asked him where the jobs were going to come from for his children and grandchildren.

    Paul answered that he didn’t know, but green jobs might be an answer. He also said that something might come along that we haven’t invented yet, that will revolutionize things
    similar to computing and the internet. But, in the end, he just didn’t know from where the jobs were going to come.

    I don’t think we can sit around and wait for something to be invented that doesn’t exist yet and green jobs could put people to work now. Why, as far as I can see, is nothing being done to create green jobs? What about all of the crumbling infrastructure in this country? Roads, bridges, water pipes that are 100 years old and leaking? We spent billions of dollars to save the casinos on wall street. Can’t we spend a few billion to put some people back to work?

    I am extremely disappointed that President Obama is not addressing the unemployment problem.

    As Paul Krugman said, “We need a better government than we’ve got.”