Clause 61: The Pushback Blog

Because ideas have consequences

What Unemployment Looks Like

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During the Great Depression, historical data show unemployment exceeding 15% in 1931 and peaking close to 25% in several subsequent years. Unemployment as a percentage of the labor force stayed consistently above 14% until 1941, when war production increased the demand for labor. The Great Depression is regarded as a searing national catastrophe that changed the way we look at the economy and the role of government, resulting in a new social contract.

When one walked around cities during the Great Depression, the effects were hard not to see. There were padlocked factories. There were people lined up for work or assistance. There were people with nothing to do.

Line of unemployed at soup kitchen, Chicago, 1931

Line of unemployed at soup kitchen, Chicago, 1931

Most of the unemployed at that time were unskilled and semi-skilled laborers. They were renting their living spaces and had little or no savings to fall back on. Loss of income was swiftly followed by eviction. Many of the unemployed had nowhere to go. They started living rough. squatting on open land and constructing shacks out of discarded materials. Most American cities had a section of these shacks, which were commonly called Hoovervilles.

Hooverville in Sacramento, CA, early 1930s.

Hooverville in Sacramento, CA, early 1930s.

In the current economy, as of this writing (data for July 2013), the news headline measure of unemployment is 7.4%. This measure is U3, and includes only people who are collecting unemployment and have actively looked for work within the past four weeks (although anyone collecting unemployment is required to be actively looking for work, so why would anyone report otherwise?).

Other measures exist, but are more difficult to collect. U6 includes all the unemployed from U3, plus those who have run out of unemployment, become discouraged or are underemployed: workers who cannot obtain full-time work for which they are qualified. U6 is currently estimated at 14.0%, although it may well be higher. Even U6 does not include people who cannot get full-time permanent employment and are making do with contract work which may be at the same overall compensation level as before, but does not include benefits and transfers business risk to the worker.

Our unemployed are much less visible. One no longer searches for work by “pounding the pavement,” but by using the internet and the phone. When unemployed and underemployed gather, it is typically indoors, at state agencies or independent job search clubs, out of sight of working people.

A job search group meeting, 2009.

A job search group meeting, 2009.

Many of the people who are out of work have specialized skills. They often own their homes, and do everything possible to hang on to them — who wouldn’t? They’re doing everything they can think of to hang on, but insolvency hovers close.

Can you spot the home of the unemployed person? Can you tell who is behind on their mortgage?

Affluent suburb, 2012

Affluent suburb, 2012

Driving around during the work day, you can’t tell whether the owner of the house is off at a job, working from home or unemployed and rooting through the job boards.

Taking U6, 14% is about one person in seven. Do you think unemployment is something that can’t happen to you? Think again. Working hard and being competent won’t protect you if you are in the wrong place at the wrong time.

What’s the point? We are in an economic crisis in the same class as the Great Depression, only if you’re working, you can avoid seeing it.

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Written by srojak

August 3, 2013 at 2:49 pm

Posted in Economics, Winter is Coming

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