The unemployment crisis, I’m sorry to say, is finally over. Not because the unemployment rate has fallen in any meaningful way—in fact it has dropped less than a percentage point since 2011, with much of that drop attributable to a shrinking labor force—but because mass unemployment no longer fits the description. A crisis, by definition, is the decisive point during the destabilization of a complex system in which that system either collapses or recovers. (The Chinese word for “crisis,” 危机, is famously composed of the characters for “danger” and “opportunity.”) But lawmakers in Washington have long since abandoned any bipartisan effort to stimulate the economy or create jobs. The Federal Reserve, despite its dual mandate to maintain prices and employment, continues to demonstrate it prefers the former. The message is clear: mass unemployment, which has held relatively stable since mid-2009, is the new normal.
To get a sense of just how little has changed since the recession officially ended in June 2009, I graphed the employment-population ratio of prime-age workers (age 25-54) over the last ten years, which allows you to analyze trends in unemployment without any demographic distortions (such as from retiring Baby-Boomers). It’s not a pretty picture: the percentage holding any kind of job has barely moved outside of the 75-76 percent range and there are over 11 million fewer workers than there were five years ago. That number is probably optimistic, too: the U.S. Department of Labor counts as employed anyone who did any work at all (even as little as one hour) as a paid employee.
The complete failure to address this situation (a crisis by any other name) is not for lack of ideas. There are plenty of policies Washington could pursue that most economists agree would reduce unemployment, including monetary and fiscal stimulus, principal reductions for underwater homeowners and long-term investments in infrastructure and education. (Century Foundation fellows Daniel Alpert and Robert Hockett, along with Nouriel Roubini, discuss several of these ideas in depth in The Way Forward: Moving from the Post-Bubble, Post-Bust Economy to Renewed Growth and Competitiveness.) Yet not one of these proposals has moved beyond a symbolic vote in Congress. Jonathan Chait, growing frustrated, accuses D.C. elites of “detached complacency”:
To those directly impacted, the economic crisis is an emergency, a life-altering disaster the damage from which will endure for years. But most of those in a position to address it simply have not seen it in such terms. […] For affluent people, there is essentially no recession. Unemployment for workers with a bachelors degree is 4 percent — boom times. Unemployment is also unusually low in the Washington, D.C., area, owing to our economy’s reliance on federal spending, which has not had to impose the punishing austerity of so many state and local governments.
I live in a Washington neighborhood almost entirely filled with college-educated professionals, and it occurred to me not long ago that, when my children grow up, they’ll have no personal memory of having lived through the greatest economic crisis in eighty years. It is more akin to a famine in Africa. For millions and millions of Americans, the economic crisis is the worst event of their lives. They have lost jobs, homes, health insurance, opportunities for their children, seen their skills deteriorate, and lost their sense of self-worth. But from the perspective of those in a position to alleviate their suffering, the crisis is merely a sad and distant tragedy.
I agree that most lawmakers are almost certainly out of touch with the reality of unemployment in this country. But Washington centrists and Tea Party politicians don’t exist in a vacuum: they are elected by vocal constituencies that sincerely believe in the power of austerity to boost job creation, despite the failure of similar programs in Europe and the damage such cuts would do to their own economic well-being. The consequent ”partisan gridlock” (read: intransigent Republican opposition) is now commonly accepted as an insurmountable obstacle to further economic stimulus. But when the “single most important thing we [Republicans] want to achieve is for President Obama to be a one-term president,” as Senate Minority Leader Mitch McConnell revealed, it’s no wonder so little has been done to help the unemployed.