At a Labor Day extravaganza on St. Paul’s Harriet Island today, a group of Minnesota union activists will celebrate this old-fashioned holiday with music, food and a cast of populist stem-winders including Texas barnstormer Jim Hightower and the political reformer known as Granny D.
But for many Americans, this will be a subdued holiday, a time for staying close to home and counting modest blessings. War and terrorism in far-off places explain much of this somber mood. But for an explanation that lies closer to home, one need look no further than the latest employment data. For today is a Labor Day without labor, celebrated in an economy that cannot seem to create jobs.
During the last two economic rebounds, in 1983 and 1993, Americans became acquainted with the phrase “jobless recovery.” This describes the sensible tendency of employers, in the early months of an expansion, to book new orders and ramp up production before actually putting new employees on the payroll.
But the current expansion defies all precedents. Since the economic recovery started in November 2001, the economy has actually lost 1 million jobs, a development that appears unprecedented. The nation’s unemployment rate, though low by historical measures, is still rising after 20 months of economic growth, another economic anomaly. The average spell of unemployment has reached a 21-year high, and some 2 million Americans have exhausted their government unemployment benefits. The government reported Friday that the economy grew a solid 3.1 percent in the spring quarter, but economists say it must grow much faster to draw down the pool of jobless workers.
Experts say there is some good news buried in these numbers. Steven Cochrane of Economy.com says that employers who invested billions of dollars in computer technology during the 1990s have finally harnessed it in ways that allow them to produce more goods without hiring more workers, a fact that explains the nation’s strong productivity performance in the last three years. Over the long haul, that should bode well for the competitiveness of the American economy.
But another explanation has to do with simple caution: Americans who have endured the terrorist attacks of September 2001, a wave of corporate scandals in 2002 and now a grueling conflict in Iraq are simply not feeling especially bullish. “What you expect in the early stages of an expansion is a growth spurt, where the economy makes up its lost ground,” says University of Minnesota economist Tim Kehoe. “This time we have not had that.”
This has been a good summer for those in a position to take money out of the stock market and for families with children, who got hefty federal tax refunds in recent weeks. But with millions of workers sitting on the economy’s sidelines, this is a Labor Day to be observed rather than celebrated.
Well, anyway, happy Labor Day all! We’ll have to make the best of it for another year or so until we can get the Republicans out of office. And to those of us seeking employment… Good Luck!