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More on the False Economy

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Building on yesterday’s post about how despite the low unemployment numbers, people’s lived economy is basically terrible, Jacob Hacker has a very useful op-ed in the Times on the same issue.

Even with unemployment at a 50-year low, the job market is failing to reach millions of potential workers. That’s because those who aren’t working or looking for work are left out of the unemployment statistics. And the number of such workers has been growing: When unemployment was last down near 3.5 percent, in 1969, virtually all men ages 25 to 54 were in the work force. Today, the proportion is below 90 percent, the result of a long-term decline in work force participation that has hit men most severely, but has recently affected women, too.

Other rich countries haven’t seen this troubling fall, in part because they have policies that help workers find jobs, keep their skills up-to-date and balance work and family. Unfortunately, the United States hasn’t done much on any of these fronts. It once nearly led the world in levels of work force participation; now it’s toward the back of the pack.

This reversal has had many bad effects. It’s reduced the incentive to bid up wages, which used to be seen as the inevitable consequence of tight labor markets. It’s also made unemployment less and less useful as a measure of job security.

The basic problem is that most of the jobs offered today don’t provide the guarantees that workers once expected. This transformation is obvious in “gig economy” jobs like driving for Uber. But the gig economy is still pretty small; for most Americans, the problem is that their work has been gig-ified. Corporations used to pool major economic risks within their labor forces. They did so because they could — the pressures of financial markets and global competition were less constraining. And they did so because they thought they had to if labor unions were to remain satisfied. Now those risks are mostly on workers alone.

You have a job (or 2 or 3 jobs) but your job is terrible is not the sign of a good economy. It’s the sign of a New Gilded Age, where a few people are making unbelievable amounts of money and the vast majority are just holding on with their fingertips. Given how much worse this has all gotten since 2008, with a “recovery” that basically served the top 5 percent of earners, I am deeply fearful of what happens in the next recession.

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