New unemployment data released September 3 by the Bureau of Labor Statistics showed the official jobless rate rising slightly to 9.6% in August, while the private sector added 67,000 jobs. Despite the news of larger-than-expected private-sector job growth in what was the eighth straight month of job creation, the job creation seen was not nearly sufficient to bring unemployment down.
Employment-to-population ratio needs to improve
EPI Economist Heidi Shierholz, in her analysis of the latest report, noted that while the unemployment rate has fallen from a peak of 10.1% last October, the drop does not reflect an increase in the share of people who are employed. Rather, the decline in the unemployment rate since then is largely due to people dropping out of – or not entering the labor market – because of a lack of jobs. While the U.S. labor force should have increased by about 3.7 million workers between the start of the recession in December 2007 and August of this year, it has actually grown by just 241,000, which means there are about 3.5 million missing workers who are not reflected in official unemployment rates. The actual employment-to-population ratio over this period has remained steady but needs to improve.
“For a falling unemployment rate to be good news, the labor market also needs to see an increase in the share of people who are actually employed,” Shierholz said. In another indication of the ongoing weakness in the job market, new data from the Bureau of Labor Statistics on September 8 showed there were 4.8 unemployed workers for each job opening in July.
Making the case against raising the retirement age
On September 9, Economist Monique Morrissey told a Senate briefing that raising the retirement age beyond 67 was the wrong approach for bolstering Social Security, since Social Security’s projected long-term shortfalls are driven not by rising life expectancy, but rather, falling birthrates. “The normal retirement age has roughly kept up with life expectancy since the system was last restored to balance in 1983,” Morrissey said in written comments prepared for the briefing, which was organized by the National Council of Women’s Organizations.
Morrissey pointed out that increases in life expectancy had been concentrated among those with higher incomes and more education. Meanwhile, rising income inequality has meant that a growing share of earnings is above the taxable earnings cap, which is currently set at $106,800. Efforts to restore the system to long-range balance should therefore focus on ensuring that high-income workers pay their share, not raising the normal retirement age or other forms of benefit cuts.
Still waiting for Chinese currency revaluation
In a September 8 op-ed in The Huffington Post, International Economist Robert Scott noted that in the three months since China said it would allow its currency to fluctuate, the value of the Chinese yuan has gained less than one half of one percent. Scott, whose research has extensively shown how Chinese currency manipulation has made Chinese goods artificially cheap and difficult for American manufacturers to compete with, argued that “the failure of negotiations to bring about a significant revaluation of (China’s currency) demonstrates that China will not change its policy unless and until it is confronted with the threat of real trade sanctions.”
Separately, Scott also challenged a New York Times op-ed that claimed that a revaluation of the Chinese yuan would “barely make a dent in America’s trade deficit. Again writing in The Huffington Post, Scott stressed that the U.S. trade deficit with China has displaced 2.4 million American jobs between 2001 and 2008 alone. “Chinese currency manipulation is a disease that is eating away at the core of the U.S. economy, and threatens the nascent global recovery,” he wrote. “We need to demonstrate to China that we have the strength and resolve to address this issue directly.” Scott also said that the United States needed to rebuild its manufacturing base by investing in R&D, clean energy, infrastructure, and workforce development.
EPI in the news
The Nation cited EPI research about the damage caused by China’s currency manipulation. MSNBC cited EPI’s analysis of employment data showing there were 4.8 unemployed workers for every job opening. EPI’s analysis of the monthly unemployment data was cited by many sources, including Reuters, Business Week, and the Pittsburgh Post-Gazette.