Economic Notes

Unemployment in USA and EU

Deepankar Basu. Jan 11 2010

In a sign of the continuing economic problems in the heartland of world capitalism, the unemployment rate in both USA and Europe displayed disturbing trends. According to data released by the Bureau of Labour Statistics (BLS) on Friday (January 8, 2010), the US economy lost 85,000 jobs in the month of December 2009. While the official unemployment rate remained unchanged from the previous month at 10 per cent, this was because the number of workers in the labour force declined by a whopping 661,000; at the beginning of the current recession in December 2007, the official unemployment rate had stood at half the current figure at 5 per cent. Unemployment rates for blacks was 16.2 per cent while the corresponding figure for teenagers stood at 27.1 per cent.

What is especially worrisome is the continual growth of unemployed workers who have been unemployed for very long periods of time. According to the BLS: “Among the unemployed, the number of long-term unemployed (those jobless for 27 weeks and over) continued to trend up, reaching 6.1 million. In December [2009], 4 in 10 unemployed workers were jobless for 27 weeks or longer.”

While the unemployed workers comprise one part of the broader “reserve army of labour”, another part is composed of those who have dropped out of the labour force. In BLS parlance, they are referred to as “marginally attached workers”. According to the BLS: “About 2.5 million persons were marginally attached to the labor force in December [2009], an increase of 578,000 from a year earlier.”

A part of the “marginally attached workers” had not looked for work over the last 4 weeks (preceeding the monthly survey by the BLS), but wanted a job and had looked for work sometime during the past 12 months. The other part of the “marginally attached workers” are those who have stopped looking for work altogether “because they believe no jobs are available for them”; they are referred to as “discouraged workers” by the BLS. How did they fare? “Among the marginally attached, there were 929,000 discouraged workers in December [2009], up from 642,000 a year earlier.”

When a broader measure of labour underutilization, what the BLS calls the U-6, is used, it is seen that labour market conditions in the US worsened: the U-6 measure of labour underutilization incresed from 17.2 per cent in Novermber to 17.3 per cent in December.

Just like in the US, the unemployment sitiuation in the EU area continued its dismal spell too. According to data released by the EUROSTAT, the statistical agency of the European Union, all member states witnessed an increase in unemployment rates compared to an year ago. Unemployment rates in some of the larger EU members states in November 2009 were as follows: Spain (19 per cent), France (10 per cent), Italy (8.3 per cent) and Germany (7.6 per cent). Compared to October 2009, the number of unemployed persons increased by 102,000 in the Euro area in November.

As always, the lion’s share of the burden of the downturn in economic activity is being borne by the working people in terms of job loss, longer duration of unemployment, underemployment, and worse conditions of employment (when it is available).


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