Fiddling While the Labor Market Burns

The U.S. Bureau of Labor Statistics reported this morning that employers across the country eliminated another 598,000 positions in January. Since the recession’s start in December 20007, 3.6 million jobs, on net, have been eliminated with losses occurring in most every major industry. Moreover, half of those losses have occurred since November.

The loss of jobs is fueling a surge in unemployment. In January, 11.6 million Americans — 7.6 percent of the labor force — were unemployed. This is the highest monthly unemployment rate recorded since late 1992. Since the recession’s onset, unemployment has risen for every major population group. For example, 14.1 percent of all African-American men over the age of 20 were jobless in January 2009, up 5.8 percentage points from a year ago. Additionally, 13.9 percent of all Americans now are underemployed.

Today’s employment report point to an economy in free fall. Demand for goods and services has collapsed, thereby pushing the economy into a self-reinforcing downward spiral. Currently, only the federal government has the ability and resources to spend at the levels needed to bolster demand, which explains why the pending recovery package in Washington is so critical.

Yet Congress appears to have missed the message. Rather than working to quickly address a serious problem, the legislature has become paralyzed by a stale, tired debate centered on old paradigms, discredited ideas and counterproductive solutions. Absent quick action, future employment reports also will be bleak ones.