VIEWPOINTS: Expectations of plentiful jobs based on faulty assumptions

Steffen Schmidt

One of the most urgent responsibilities of politicians and leaders is to see that the economy functions properly and that people have jobs. In some places, the government actually runs the economy and hires people.

In the Soviet Union, there was a 100 percent employment rate because the government gave everyone a job although some, like the old women sweeping streets with brooms made from branches, were, at best, marginal jobs.

In other countries, the government is charged with managing sound fiscal and monetary policy and with securing law and order so that private business can flourish and create those jobs.

This year we have seen further discouraging news that the United States continues to lose jobs. Non-farm payroll employment continued to decline in August, with 216,000 jobs lost, and the unemployment rate rose to 9.7 percent.

There is a new way of describing employment with calculations that the “real” unemployment rate — people looking for jobs, who have given up on finding a job and are seriously underemployed — is more like 16 percent than the 9.8 percent reported.

We hear unemployment is expected to rise above 10 percent in 2010 and that it will take a decade to recover jobs lost in the “Great Recession.” The unemployment trajectory can be appreciated in this table from the U.S. Department of Labor.

I have been watching the unemployment numbers in Germany because I have lots of relatives there. One of my cousins lost his job in the steel industry 25 years ago, when that sector started moving to Korea. He is still only marginally employed.

German unemployment has hovered at about 10 percent for a long time, although it is now at a low 7 percent because of underreporting. In Germany, a big government “safety net” takes good care of people who lose their jobs with health and housing subsidies, retraining programs and other benefits. That’s one benefit of the European welfare state.

The CIA analysis shows that the world as a whole has a serious unemployment problem — Nauru with 90 percent, Liberia with 85 percent, Afghanistan with 40 percent, Spain with 18.50 percent and the world unemployment average is 30 percent. Monaco, on the other hand, had 0 percent unemployment, and Denmark 1.90 percent, although the European Union rate is 9.5 percent and rising.

The truth is we have no reliable statistics on world unemployment, as many numbers are old and highly suspect.

My projection is that in most countries, real unemployment levels are much higher than they are willing to report — Bangladesh was reported to have an unemployment rate of 2.5 percent in 2007 — is utterly ridiculous by anybody’s estimate.

The number for Japan — 3.8 percent — is also not believable, because we know from qualitative research that the 10-year recession has taken a terrible toll on employment.

I was recently in Cuba on a State Department study trip, and I can attest from personal research to the fact that Cuba has a huge un- and underemployment rate, so the official rate of 1.9 percent is suspect. The high unemployment table seems more accurate and represents a very sorry state of affairs.

Why do we think any economy can produce good jobs for every adult plus part-time jobs for teenagers, often on a seasonal basis?

The answer: We cannot accept that there may be more people in most countries than good jobs, except for short periods in artificially stimulated economies fueled by war, unusual dominance of the world economy [after World War II in the United States and Europe], or personal and government overspending, such as the American and most European economies in the 1990s up to 2007.

In Europe there are 21.794 million unemployed people — not counting the underemployed and those who have dropped out of looking. That’s the entire population of Denmark, Switzerland, and Austria unemployed. That’s like everyone in Pennsylvania and Ohio or everyone in New York state being without a job. Now do you want the really bad news from the Australian Broadcasting Corporation?

“In its best case scenario, the ILO says global unemployment could increase by 18 million this year to a total of 200 million people [equal to two-thirds of the U.S. population].

In its worst case, if there’s no sign of economic recovery this year, the jobless numbers could balloon by an extra 50 million globally, almost half in Asia. The report notes a third of Asia’s population still lives on little more than one U.S. dollar a day, and the cost of living isn’t coming down, even as recession spreads.”

What is the “law” of society that says that every man and woman who wants to work will find a job? Is that just a social wishful thinking? Is it a political ploy or necessity to say that every person will be employed, or is it realistic?

Moreover, is it realistic to expect every job to carry medical insurance, retirement benefits and the other expectations [or legal mandates] to which a country such as the United States aspires?

So, as we are agonizing over the slow recovery process of the American economy and the continued loss of jobs, I am agonizing over the fact that maybe there are more people than good jobs in the world.

Steffen Schmidt is a Professor of Political Science at Iowa State University. Reprinted with permission from syndication at insideriowa.com, Iowa’s internet magazine.