Economic Recovery, Always Just Around the Corner
Herbert Hoover, the Republican president of the United States during the beginning of the Great Depression, seems to have set a style of coping with economic disaster that is now being copied by our modern “Hoovers.” As the worst depression ever experienced in the United States deepened, Hoover decided that what was needed was to lift the spirits of the American people. So he assured the nation that “prosperity is around the corner.”
But the awaited “corner” never came. And when the election took place in 1932, Hoover was resoundingly defeated by Franklin Roosevelt — not because FDR, prior to his election and the New Deal, offered any meaningful alternative, but because the people wanted Hoover out.
While every election has its own dynamics, in anticipation of the election of 2004, the Bushies are behaving as if they are aping the strategy of Hoover, although in a more sophisticated way. For instance, The Wall Street Journal reported recently on Page One: “Initial jobless claims fell 22,000 last week to 53,000, a sign the jobless market continues to improve.”
But does a decline in jobless claims really prove that the job market is improving? Or is this a modern version of “prosperity is around the corner”?
Let’s take a closer look at what is happening. Apparently, the previous week, the jobless claims were 75,000. That means that this sizable number of workers lost their jobs. As a consequence, the total number of workers left in the job market fell. Which means that in the next round, there were fewer workers available to lose jobs. That being so, it is to be expected that if there were fewer eligible to lose jobs, the number of jobs lost would be smaller.
To carry the reckoning to a reductio ad absurdum, suppose we reached a ridiculous situation wherein everybody was without a job and, at one time or other, had each filed a claim for jobless pay. The following week, the official count would show that there were no claims for jobless pay. Would that mean that the job market was improving? Hardly! What it means is a jobless economy.
A much more accurate way to measure what is happening is not to report the number of claims filed but to note what percentage of workers previously employed were now filing claims.
There is another factor that is not adequately handled in measuring trends in the job market — namely, the loss of jobs that do not show up in jobless claims. For instance: If a worker who held three part-time jobs lost two of those jobs, the one job remaining would be a part-time job. Such facts are not reflected in the number of claims because as long as a worker meets the tiny minimum to be counted as “employed,” that person is not listed as “unemployed.”
On the same day that The Wall Street Journal ran the short report on the decline in jobless claims, it ran another significant report that really gets to the heart of what is happening to people in our cities, saying that “U.S. mayors’ reported requests for emergency food assistance rose 17 percent this year and shelter applications by 13 percent, a trend, they say is continuing.”
And if it continues, what’s “around the corner” is misery — not “prosperity.”