The latest employment report from the U.S. Labor Department showed that close to half of all unemployed workers have been looking for work for more than six months. Close to two million of these long-term unemployed workers have lost unemployment insurance benefits because of Congress’ failure to maintain an extension of emergency benefits.
EPI continues to track the number of unemployed workers who have fallen through the safety net and to highlight research showing that providing unemployment compensation is one of the best ways to stimulate spending and create jobs.
The June employment report showed that while the official unemployment rate dipped to 9.5% in June from 9.7% in May, that decline was largely a result of discouraged workers giving up on their job searches. In her analysis of the monthly data, EPI Economist Heidi Shierholz noted that the labor force declined by 652,000 workers in June and that the official unemployment rate would have risen to 9.9% had all those workers remained in the job market and were actively seeking work.
Shierholz noted that although the private sector added 83,000 jobs last month, it was a “glacial” pace of job growth, given that the country needs 10.6 million jobs to return to pre-recession levels of employment.
EPI also published an Economic Snapshot by Shierholz that highlighted how weekly claims for first-time unemployment insurance have changed little over the past four months, after dropping significantly late last year. She noted that a steady decline in weekly jobless claims was one of the best indicators of a recovering job market, but that the current numbers point to a recovery that is “excruciatingly slow.”
“The pace of job creation in recent months, while a dramatic improvement over last year’s job losses, is not nearly sufficient to put America’s 14.6 million unemployed workers back to work in the foreseeable future,” she said.
Austerity will not create growth
EPI President Lawrence Mishel participated in a CNN debate — Does unemployment money help or hurt? – where he stressed that extended unemployment insurance was not only necessary to working families in the most challenging job market in a generation, but that it actually would help create jobs. “Spending on unemployment insurance is the most effective thing you can do to stimulate the economy,” said Mishel, who added that the government recovers at least half of the money invested this way through higher tax revenues.
EPI founder and Distinguished Fellow Jeff Faux also challenged those who are promoting fiscal austerity at a time of such high unemployment. In written testimony to the National Commission on Fiscal Responsibility and Reform, Faux stressed that the economy needs more stimulus, which will require a larger deficit in the short term.
“If no one spends, no one works,” Faux wrote. “Since the financial market crash in late 2008, consumers, businesses, and state and local government have cut back on their spending.” Faux said that when the country has returned to full employment levels the budget should return to balance. The full text of his testimony, Myths about the federal budget deficit, is available on EPI.org, and was also published in The Hill.
EPI cautions Congress about free trade deal with Korea
EPI International Economist Robert Scott, who recently published research warning that a new free trade agreement between the United States and South Korea could be damaging to the U.S. economy, presented his findings at a House of Representatives staff briefing sponsored by Rep. Michael Michaud (Dem., Maine), chair of the House Trade Working Group. Although official estimates from the U.S. International Trade Commission (USITC) project a “minimal or negligible” impact on jobs in the United States, Scott noted that the USITC has a history of underestimating the harm of free trade agreements on the U.S. economy. His presentation reviewed the official forecasts of a free trade agreement with China and showed that the actual impact of China entering the World Trade Organization in 2001 has been far more damaging than predicted.
EPI in the News
EPI’s analysis of the June employment data was widely cited, in The Los Angeles Times, The Seattle Times, The New Republic, and other outlets. The Wall Street Journal cited EPI research showing that wages – for both high school and college graduates – have stagnated over the past decade. The story quoted economist Josh Bivens noting that the research contradicts the popular perception “that college graduates have done well.” Bivens was also quoted in an NPR story about the recent history of weak economic recoveries.