An ominous rise in unemployment

What happened

Despite official pronouncements that the recession is over, a new monthly jobs report painted a grim picture for American workers, with the unemployment rate reaching 9.8 percent, and little hope for a reversal any time soon. The nation lost 263,000 jobs in September, far better than the 700,000-a-month pace early in the year, but a troubling increase over August, when 201,000 jobs were lost. “This recession is just astounding for the duration of the unemployment,” said Heidi Shierholz, an economist at the Economic Policy Institute. “We are going to see deepening pain in the real economy for a very long time.”

In response to the dismal September jobs data, President Obama vowed to “explore additional options to promote job creation.” One possibility, supported by many Republicans and Democrats, is to offer a temporary tax credit to businesses that hire new workers. Other ideas floated by the White House include extending extra unemployment and health-insurance benefits past their original expiration date of 2010, and extending an $8,000 tax credit for first-time home buyers. About 40 percent of the $787 billion federal stimulus has been spent thus far, and many stimulus-funded road and construction projects will begin in coming months. But the Labor Department says there are six jobless Americans for every job opening, and many economists predict that the unemployment rate will surpass 10 percent in 2010.

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What the editorials said

“Congress and the administration have not done enough to directly create jobs,” said The New York Times. September marked the 21st consecutive month of job losses, leaving a total of 15.1 million Americans out of work. A third of the unemployed have been out of work for more than two years—“the highest percentage of long-term unemployment on record.” Leaders in Washington have multiple policy options on the table; now they must act aggressively—even if they choose to pursue all of them at once. The status quo is intolerable.

It’s actually worse than the official statistics indicate, said The Washington Times. When you add up “the number of people officially considered unemployed, as well as those who have recently given up looking for work and those who have taken low-paying part-time jobs,” you get a real unemployment rate of 17 percent. The White House bobs and weaves, but the grim truth is that 3.2 million jobs have evaporated since President Obama was sworn in.

What the columnists said

It’s important to recognize that this isn’t a “normal downturn,” said Howard Meyerson in The Washington Post. Historically, severe banking crises like the one we’ve just survived depress economies for as long as seven years. Worse, it’s hard to see “where the next wave of American prosperity will come from,” since manufacturing has largely gone abroad, and our last two periods of growth were driven by bubbles in the tech and housing sectors. The conventional wisdom is that Obama “dare not ask Congress for an additional stimulus package,” but only the government is powerful enough to break this cycle of high unemployment. We need a massive public-works program on the scale of FDR’s Work Projects Administration—and fast.

No we don’t, said James Pethokoukis in Reuters.com. “The U.S. economy and its marvelously flexible labor market have shown a knack for dealing with structural change without the government.” Prior to the 2008 financial meltdown, for example, we lost 3.5 million manufacturing jobs to “off-shoring and automation.” Yet unemployment remained below 5 percent due to job creation in more dynamic sectors of the economy. This is an unusually brutal recession. But “the deep resilience of the American economy may surprise the pessimists.”

The U.S. economy may have hidden strengths, said John Harwood in The New York Times, but do the Democrats? As unemployment continues to rise, the majority party will endure “political torture for at least several more months.” Republicans now have more ammunition for saying that the stimulus package was a failure, and the unemployment numbers will “only magnify voters’ doubts about the effectiveness of the administration’s anti-recession policies.” The most potent Republican refrain for 2010 may simply be: “Where are the jobs?”