This election is supposed to be all about jobs and the economy. But judging from the news coverage, those words may be important in the context of the campaigns, but they aren’t important enough to actually talk about meaningfully. So, what say we catch up on how we’re doing.

The unemployment rate has been slowly coming down, in fits and starts. In December, it hit 8.5%.

Unemployment rate for the last 12 months

Unfortunately, there is a long way to go.

Unemployment rate for the last 5 years

There is particularly a long way to go when you get past some of the nuanced definitions that go into the “unemployment rate” and consider how much of the population is employed now compared to how much was employed before the collapse. What this shows is that what little employment growth there has been, has barely kept up with population growth, if at all. It may also show that a whole, huge wave of baby-boomers have exited the workforce permanently, due to the recession. Whatever the detailed causes… this is one of the most horrifying tidbits of data you’ve never seen in the news.

More bad news on the unemployment front. The length of time people who lose their jobs remain unemployed, has continued to increase over the years since the recession. Which means job losses have not been temporary. They have, to a large degree, been permanent. This should be, basically, considered to be such a disaster as to push everything else off the front pages until it is fixed.

Average weeks the unemployed stay unemployed

What is terrifying about that graph isn’t so much the increase in average length of unemployment from about 17 weeks before the recession to 40 weeks now. What is terrifying is how it compares to anything we’ve ever experienced in our recorded history.

Unemployed people stay unemployed longer, by a catastrophic amount, than ever.

Not quite as catastrophic, but certainly not good, is that new unemployment claims have jumped in the last few weeks.

New unemployment claims

As you can see, this number bounces a lot, and it comes out weekly. To smooth it and take some of the noise out, we usually like to look at a four week “moving average.” The increase has been enough to raise that too. Despite the alarming increase, it is still at a lower rate than it has been all year. We’d like to think this is temporary.

New unemployment claims, 4 week moving average

Put in context of the last five years, new unemployment claims are still higher than they were before the collapse, but the overall trend is improving. Slowly.

New unemployment claims, last 5 years, 4 week moving average

An alarming possibility, however, is that this recent uptick in unemployment claims it a symptom of an unfortunate turn on the global scene. If you think it has been a while since you’ve heard blood curdling shrieks from the Ron Paul / inflation panic people, there’s a good reason. The dollar has been gaining strength since last summer.

Trade weighted dollar index, last 12 months

This is the main reason gas prices came down this Fall. Global oil markets have been trading based on the Euro for several years, so when the dollar falls against the Euro, gas prices go up. When the dollar strengthens, gas prices go down. Until we start poking Iran with a stick, anyway.

Gas prices, last 12 months

Since what matters is how the dollar and the Euro (and other major currencies) compare to each other, strengthening in one is indistinguishable from weakening in another. The strength in the dollar since last summer has more to do with the Euro collapsing because of Europe’s sovereign debt crisis, than any particular US economic improvement.

Anyway, while the inflation hawks like to see a strengthening dollar, it makes imports more attractive compared to our domestic production, and our exports less attractive to the rest of the world. We’d expect to see a stronger dollar result in a slowing of export growth and a widening trade deficit. And that’s exactly what we’re seeing.

Exports are weakening with the strengthening dollar.

As the dollar has gained strength, exports that had been growing nicely have levelled off and even pulled back a little. And the trade deficit, which had shown improvement for five months, reversed course and grew.

Trade deficit grew in November, more even than was forecast.

None of this bodes well for jobs in the near future.

Of course, if we’ve seen anything since the crash, it is that economic growth and American jobs are no longer as tied together as they used to be. Our gross domestic product [GDP] continues to be positive, although extremely slow, at well less than 2%.

GDP growth is positive, but very low

For what it’s worth, the leading indicators show more of the same. Slow economic growth, enough to hopefully keep us from sliding back into recession… but not enough to fix our devastating unemployment crisis.

Leading indicators show continued positive, but very sluggish, economic growth

Mitch McConnell talks about the lack of improvement in unemployment as if he had no role in it. But the reality is that despite his claims that uncertainty and regulation are preventing employers from hiring, the private sector has, slowly, started hiring. It is the collapse of local government that has kept the unemployment rate up.

http://www.louisville.com/content/what-mcconnell-wont-tell-you-about-unemployment-part-3-government-does-create-jobs-arena

One thing that needs to be noted, and which makes it easier to understand McConnell’s utter lack of concern for the unemployed, is that unemployment has not been distributed equally throughout the economy. The unemployed didn’t vote Republican even before they were unemployed.

http://www.louisville.com/content/what-mcconnell-wont-tell-you-about-unemployment-part-2-whos-unemployed-arena

Mitch McConnell said this week that America has lost 1.5 million jobs since the first stimulus bill was passed. That is not true.

A little over a month ago, this nation began a long overdue discussion about jobs and the crisis of unemployment for the first time in over two years. But since we have to have this discussion with people with no aversion to just making stuff up, we would be wise to bone up. Some stuff has changed in the last two and a half years.

http://www.louisville.com/content/what-mcconnell-wont-tell-you-about-unemployment-part-1-numbers-arena

An economic tsunami washed over the economy in 2008.  We should have all been standing in a foot of water in 2009 and 2010.  Instead, 90.4% of us are cozy and dry while 9.6% of us are drowning in water that is hundreds of feet deep.  Several million people are carrying our load for us, and it is killing them.

Of course I am speaking of those who are unemployed as a direct result of the financial collapse and ensuing recession.

To understand why, realize that unemployment is deflation in disguise.

“Huh”, you ask?

Think about it.  What happens when the overall demand for goods and services is greater than the economy’s ability to create them?  As in all shortages, the goods and services get more expensive.  There is inflation.

We hear all the time how terrible inflation is.  In reality, inflation isn’t terrible for everybody.  High rates of inflation take money from people with cash savings and fixed incomes and puts it in the pockets of people who have borrowed money or who make fixed payments.  So while inflation is terrible for people who are well off it can be quite lovely for people with mortgage payments, car payments, student loan payments, and other payments for fixed amounts.

Deflation is just the opposite.  Deflation is awesome for savers and people on fixed incomes because their money goes further as prices fall.  Deflation is terrible for borrowers who end up paying off loans of cheap money with payments of expensive money.

You might expect that as the business cycle rolls along sometimes we would have inflation and sometimes we would have deflation.  Sometimes savers would win and borrowers would lose, then later savers would lose and borrowers would win.  But it doesn’t work that way, does it?

Some amount of inflation is accepted as a fact of modern life but we very rarely have any deflation.  We never seem to find ourselves in a vicious cycle of going to the store week after week only to find lower prices every time.  There is a reason for this.

It is much easier to produce less than to produce more.  In order to increase supply factories need to be built, ships need to be commissioned, employees need to be trained, raw materials have to be acquired… a lot goes into growth and it takes time.  It is easy to produce less. Factories are shuttered, stores are closed, ships are docked, employees are laid off and voilà!  Overnight supply comes crashing down to meet demand.

Since supply rarely exceeds demand for very long, prices never fall very much.  We rarely experience much deflation.  We get unemployment instead.  All those laid off people, shuttered factories, and docked ships — all those unemployed resources are great holding tanks of deflation.

This is where the unfairness of unemployment rears its ugly head.  During inflationary times everybody with cash loses a little.  Almost all of us lose at least a little.  During deflationary times everybody with debt loses.  Almost all of have some debt.  But we rarely have deflation because we put it into these holding tanks called unemployment.  Instead of all of us losing a little, those few who end up unemployed lose a lot!  The rest of us just “ride it out”.

While this unfairness cannot be blamed on us as individuals, it also cannot be blamed on those who are forced to carry our burden.  We can’t believe that we, the strong, are surviving while they, the weak, are dying.  It’s not like we swam and they sank.  The water just went around us and hit them.  It could as easily have gone around them and hit us.

Some people, however, are to blame for at least some of the unfairness.

Our deflationary period that has become a period of high unemployment didn’t happen because supply suddenly zoomed out ahead of demand and had to be cut.  The financial collapse caused demand to plummet overnight. When that happened prices of everything should have collapsed, but they didn’t.  They don’t.  Instead, supply decreased to meet it the new, lower level of demand.  Millions of people lost their jobs.  Mothballed cargo ships lined both sides of some rivers for miles.  Tens of thousands of businesses ceased to exist.

It didn’t have to be this way.  Crashing supply to meet demand was not our only choice.

We can build demand up and limit unemployment by having the government buy things when no one else will.  If we choose what it buys wisely, such as having government invest heavily in infrastructure that will benefit our entire economy for a hundred years like programs such as the Tennessee Valley Authority did, we can limit the destruction caused by unemployment while getting something useful in the process.

To be fair, the Obama administration’s $780 billion stimulus package was intended to do just that.  And it did.  Without the stimulus package unemployment would have been even higher.  At the same time, the administration, fearing the reaction of conservatives, did not ask for enough money to avoid millions of people becoming unemployed and being drowned in the pain that should have been all of ours.  Then as the plan made its way through Congress, conservatives cut it by hundreds of billions of dollars more.

At the heart of both the administration’s timid request and the conservative cuts were a concern over inflation.

Remember that unemployment is a holding tank for deflation.  There are still enormous deflationary pressures out there and we know this for the very reason that we can see the unemployment!  The amount of stimulus it would take to increase demand so much that this massive deflationary pressure actually became inflationary pressure would be huge almost beyond comprehension.  More to the point… so what if it did create some inflation?

The few million people who are carrying our entire collective burden are drowning!  They are being destroyed!  They are literally dying.  Neither inflation nor deflation is fair, but converting deflation that should be shared among all of us to unemployment for a few of us and life as usual for the rest is beyond unfair.  It’s diabolical.

The thought that solving the problem might cause a hundred million of us or more to stand in that foot of water is very unpleasant.  But we should be demanding to have that unpleasantness thrust upon us to save our friends and neighbors from drowning.  A foot of water won’t kill us.  The hundreds of feet of our water the unemployed are drowning in will kill them.

We think of unemployment as a phenomenon that happens to people, but in economics the labor that people can provide is an capital asset just like a machine or a vehicle. Unemployment means that there is more capital than is needed to create the goods and services being demanded by the market. Therefor some of that capital doesn’t get employed. It is “unemployed.”. We see it in people, but also in shuttered factories, estuaries lined with mothballed container ships… and excess savings sloshing around the global markets looking for a place that needs it just as desperately as the people looking for jobs.

Inflation is the opposite phenomenon, when the demand for goods and services outstrips their supply.

If there is more supply than there is demand, we have two choices. The ugly one is to reduce supply. That is exactly what unemployment is. The other is to increase demand. Keynesian economics tells us that we can use short term government investment in our economic infrastructure and other government spending to increase demand. But there is another option.

The other option is that we can do things like increasing the minimum wage, strengthen unions and other collective bargaining forces, and make other moves that increase demand and reduce supply at the same time. Money doesn’t HAVE to flow through government to become demand.

Once government is fully funding our infrastructure needs (which admittedly, it isn’t) then any more that it spends on infrastructure will end up exasperating future problems by, actually, making the supply process even more efficient, requiring even less resources, etc.

Given this, it is extraordinary that as unemployment gets worse and worse, so many people start to fear inflation… which at this point we should only be so lucky as to have!  Inflation would mean that money and labor are both being so much utilized that they can’t keep up with demand.  That would be a welcome problem to have right now.

This chart is from the Bureau of Labor Statistics.

Source: U.S. Bureau of Labor Statistics

This chart almost needs no explanation.  This recession has increased the number of unemployed people trying to get each job from an average between one and three over the last decade to six now.  And that improvement you see leading into April is almost entirely due to temporary Census Bureau hiring.  The census push being over, some 700,000 of those people are re-entering the rolls of the unemployed, so this ratio is heading right back up.

When there are six times as many people wanting work as there are jobs it is unspeakable for Republicans like Orrin Hatch to accuse them of being on drugs or lazy.  Does this bastard not understand the nature of the crisis this country is in?  Does he have no freaking idea of how much damage his party has done to the American people?

Glenn Beck cries on TV that he’s had it and he can’t wait for his crazies on the right to take him up on his plea to start shooting.  Lets hope that when they do, they have some sense and target people like Hatch.

Since 1960, Republicans have held the White House 28 years, while Democrats have held the White House 21 years.

In 15 of the years the Republicans held the White House the unemployment rate got better while in 13 years it got worse.  In other words, 54% of the time Republicans were in office the unemployment rate got better and it got worse 46% of the time.

In 17 of the years Democrats held the White House the unemployment rate got better while in 4 years it got worse.  In other words, 81% of the time Democrats were in office the unemployement rate got better and it got worse 19% of the time.

Says volumes.

Employers say the Obama administration is leaving them short of labor for some low-wage work, conducting silent raids but offering no new legal immigrant laborers in occupations, like farm work, that Americans continue to shun despite the recession. Federal labor officials estimate that more than 60 percent of farm workers in the United States are illegal immigrants.

via Illegal Workers Swept From Jobs in ‘Silent Raids’ – NYTimes.com.

This is the whole goddamn point!  Americans work in mines.  Americans work in fields.  Americans work in chicken processing plants.  Americans work in textile mills.  Americans work in dumps, and sewers, and subway tunnels, in floating sardine processing plants… Americans will work anywhere, just like anybody else!  The key, and infuriating, part of this paragraph is the phrase “low-wage jobs”!  What the hell is a low wage job?  Why is the market supposed to obey all the laws when we’re negotiating with farmers over what to buy their produce for but they don’t have to obey the laws when they are negotiating what to pay people to grow it and pick it!

I mean, this is the whole fucking point!  It is the whole point.  The flood of illegal immigration hasn’t just happened.  The government has deliberately turned a blind eye to it for decades, at the behest of farmers and other unscrupulous business people, because politicians don’t mind 10% American unemployment when 100% of Americans benefit from the lower prices on produce we can have when it is grown by, essentially, slave labor!!

We have laws about minimum wages, and worker protections, and social security, and benefits, and overtime, because we think they are the right thing to do!  But we turn around and ignore them if it means we can buy lettuce for $.25 a head less!

I’m fine with providing the illegals with a path to citizenship if we actually seal the border.  And when they become citizens they can work in the fields if they want, protected by all the laws that protect every other American worker and when we go to the grocery store we will pay for our food what it costs to grow it without treating people like animals!