posted on 06/06/2009 @ 06:52am
America already has double-digit unemployment.
In fact, the real unemployment rate, as opposed to the official rate, is well over 15 percent.
That's because the official unemployment rate -- which as of Friday stood at at 9.4 percent, following another leap in jobless claims for May -- is not, as economist John Williams has noted, "figured in the way that that the average person thinks of unemployment, meaning figured the way it was estimated back during the Great Depression."
Then, we start looking not at the unsettling 10 percent figure but the far more frightening 20 percent number.
As economist Howard Rosen told NPR after official unemployment topped 8 percent in February: "Today we learned that there are 12.5 million people who are unemployed, and we have another 8.6 million people who are working part-time because they cannot find full-time jobs. Now, you're talking about 20 million people in this country who are either unemployed or underemployed. I don't want to freak out people, but the unemployed number, we start talking about 15, 16 percent."
These are the numbers that make an urgent social and economic case for the additional stimulus that my wise colleagues and other concerned commentators are suggesting.
But it is the smaller official rate that makes the political case for both more stimulus and a radical rethink of the Obama administration's ill-thought auto bankruptcy and bailout scheme.
When the federal government actually acknowledges that the country has a double-digit unemployment rate, when a figure that is above 10 percent becomes that official number -- something that the trend lines suggest could happen this summer -- the country reaches an emotional and political tipping point.
"Ten is a tangible, very clear reminder that this is a severe recession," explains Ohio State University economics professor Bruce Weinberg. "Ten becomes something psychological. People will say: 'Whoa, we've got a double-digit unemployment rate.'"
Politically, it is the point at which people start looking for someone to blame. Obama and his people will blame the president's predecessor. This is appropriate, as George Bush's economic and regulatory policies were incredibly unsound and destructive.
States that have been especially hard hit by the current recession -- Michigan, Ohio, Indiana, among others -- and urban areas that have been devastated by it (according to the Labor Department, 93 metropolitan areas registering an unemployment rate of at least 10 percent in April) now face the prospect of significant additional job losses in the coming months as a result of the administration's auto bailout scheme.
As the bankruptcy and bailout projects for Chrysler and General Motors now stand, the companies plan to shutter 25 factories and warehouses across the United States (14 factories and three warehouses for GM, eight factories for Chrysler). That will eliminate the jobs of roughly 30,000 auto workers.