Yves Smith — Martin Wolf on the Low Labor Participation as the Result of the Crapification of Jobs

The underlying pathology is not hard to describe: employers (enabled by the Fed which has since the 1980s been only too wiling to provide for higher levels of unemployment so as to curb labor bargaining power to keep inflation tame) have succeeded in eliminating labor bargaining power. That program has been aided and abetted by the popularization of libertarian ideologies, which encourage many to see themselves as more in charge of their destiny than they are and thus see success and failure as the result of talent and work, as opposed to circumstance.…

More on precarity and the Anne Case and Angus Deaton study, too.

Naked Capitalism
Martin Wolf on the Low Labor Participation as the Result of the Crapification of Jobs
Yves Smith

David Spencer — Underemployment As A Challenge To Orthodox Economics

The constraint on work hours raises important issues for economic theory in the sense that it implies that the labour market is not an idyll of free choice. Orthodox neoclassical economics assumes that workers "choose" the hours they desire based on their preferences. If workers want to work more they can do so. They will also be rewarded for the disutility of longer work hours with higher wages.

This fantasy world of free choice runs contrary to the reality of the labour market that exists in the UK and elsewhere. Workers are not “free to choose" the work they want but instead confront constraints both on their ability to secure paid work and when in work on their ability to work the hours they need and desire. Employers set work hours not workers and often employers will deny workers the work hours they need and desire. Workers can suffer not just involuntary unemployment but also involuntary underemployment.

Neoclassical economics fails to recognise and indeed denies the unequal bargaining power between capital and labour and its influence on labour market outcomes. Contrary to what neoclassical economics assumes, in the real world, workers are not able to realise their preferences at will; rather they face having to take jobs on a take-it-or-leave-it basis. In work, workers must settle for hours decided upon by employers. Employers will not accede to the demands of workers for longer work hours unless they stand to gain higher profits from doing so. They will also be liable to impose longer work hours against the will of workers if they find it profitable to do so. While some workers will be denied longer work hours, others will face being overworked.

Just as involuntary unemployment poses a challenge to neoclassical economics so too does involuntary underemployment. The latter exposes the fiction of neoclassical economics in relation to its depiction of workers as "free agents" who are able to decide their work hours at will. As a tool for understanding how the labour market operates including the creation and reproduction of involuntary underemployment, neoclassical economics is dangerously mistaken.

Mistaken or disingenuous? Is neoclassical economics designed as propaganda for vested interests allied against labor? See Michal Kalecki, Political Aspects of Full Employment.

When it comes to choosing between ignorance and complicity when vested interests and large sums of money are involved and the people involved are very smart, the rational choice is to prefer complicity unless shown otherwise. The conventional economics profession looks to be in bed with the money, and everyone knows what this is called. It's the "oldest profession in the world." Neoliberalism raising its ugly head out of the swamp of cronyism and corruption.

Pieria
Underemployment As A Challenge To Orthodox Economics
David Spencer | Professor of Economics and Political Economy, Leeds University Business School, University of Leeds

Jim Clifton, Gallup CEO — The New Normal: Big Unemployment

Think Big Data is the buzz now? At least one CEO thinks it is Big Unemployment.

LinkedIn
The New Normal: Big Unemployment
Jim Clifton | CEO at Gallup
(h/t Clonal in the comments)

Jeff Cox — Why Underemployment May Be Worse Than It Looks

But what often doesn't get as much attention [as the BLS report] is the monthly labor count that the experts at Gallup conduct.

Gallup reports that 17.2 percent of the workforce is underemployed, a startling number compounded by its divergence from the government's count. While the rate is down from the 20.3 percent peak in March 2010, it has remained maddeningly high over the past three years even as economists tout the strength of the U.S. economic recovery.

From a broader perspective, the Gallup measure actually has increased from its 15.9 percent multi-year low in October 2012.

CNBC NetNet
Why Underemployment May Be Worse Than It Looks
Jeff Cox | Senior Writer

See also Ashe Schow, Recovery woes: America's second-largest employer is a temp agency at the Washington Examiner.

Behind Wal-Mart, the second-largest employer in America is Kelly Services, a temporary work provider.

Friday's disappointing jobs report showed that part-time jobs are at an all-time high, with 28 million Americans now working part-time. The report also showed another disturbing fact: There are now a record number of Americans with temporary jobs.

Approximately 2.7 million, in fact. And the trend has been growing.

No benefits. No unions. No bargaining power. Labor at the beck and call of capital. The neoliberal dream is replacing the American dream and becoming the American nightmare.

Lynn Stuart Parramore — Half Lives: Why the Part-time Economy Is Bad for Everyone

Between late 2007 and May 2013, the number of part-timers jumped from 24.7 million to 27.5 million. A 2013 Gallup poll shows that one in every five workers is now part-time. Some folks, like students, work part-time because they want to. Nothing wrong with that. But involuntary part-time employment is not a choice, it’s a burden. Often it means substandard jobs with crazy schedules that don’t pay nearly enough. According to the Labor Department, as many as a third of all part-timers fall into the involuntary category....

Part-time workers are far more likely to be paid minimum wage than full-time workers (13 percent v. 2 percent). As they struggle to make ends meet, many will take on multiple part-time jobs to compensate for indadequate hours and pay. Involuntary part-time employment stigmatizes workers, attacking their self-esteem and diminishing their expectations for the future. It disproportionately impacts women, younger workers and minorities....

In the past, research on employment usually focused on only two categories of people: the employed and the unemployed. But in the last decade or so, more studies have devoted attention to the plight of the forced part-time worker and the underemployed. The findings are alarming.

The American Psychological Association reports a variety of ailments associated with underemployment, including depression, anxiety, psychosomatic symptoms, low subjective well-being and poor self-esteem. Researchers have found that full-time work is critical not only to the mental well-being of workers, but to their physical health as well. An increase in chronic disease is but one of the ways that forced part-time workers suffer.

On a macroeconomic level, plenty of negative effects pile up when people face the kind of insecurity that forced part-time work often brings. They may squirrel away every penny to cover surprise medical expenses, for example, which hinders the whole economy: When people don't have money to spend, businesses can’t sell products and services. Part-time workers become increasingly dependent on public services, which strains state and municipal budgets.

AlterNet
Half Lives: Why the Part-time Economy Is Bad for Everyone
Lynn Stuart Parramore

284,000 College Graduates Had Minimum-Wage Jobs Last Year

About 284,000 Americans with college degrees were working minimum wage jobs last year, according to the Wall Street Journal. That’s 70 percent more college grads working for the minimum wage than 10 years ago. Still, the number is down from its 2010 high of 327,000.

As unemployment skyrocketed during the economic downturn, job opportunities for everyone -- including college graduates -- narrowed and low-wage work began to replace steady middle-class jobs. Three-fifths of the jobs lost during the recession paid middle-income wages, while the same share of the jobs created during the recovery are low-wage work, according to an August study from the National Employment Law Project.

The result: Nearly half of the college graduates in the class of 2010 are working in jobs that don’t require a bachelor’s degree and 38 percent have jobs that don’t even require a high school diploma, according to a January report from the Center for College Affordability and Productivity.

The kicker:

The report called into question whether too much public money is being spent on providing students with degrees that make them overqualified for the only jobs that are available.

The Huffington Post
284,000 College Graduates Had Minimum-Wage Jobs Last Year

Real wages fall in Q4. So does saving.

On the whole, wages for workers aren't keeping up with the inflation rate, causing them to fork out more just to afford the basics. Median weekly wages rose just 1.6 percent in the fourth quarter over that quarter in 2010. In contrast, prices rose 3.3 percent, according to the Bureau of Labor Statistics. As a result, consumers dipped more into their savings: The annual personal saving rate plunged 29 percent in the fourth quarter (compared with that stretch of 2010), to 3.7 percent. This is the lowest saving rate since 2007's fourth quarter, according to the Bureau of Economic Analysis.

Spending failed to keep up with the production of goods at the end of 2011 because most newly created jobs paid close to the minimum wage, Vitner said. Seventy-seven percent of the jobs created since the end of the recession are in the low-paying sectors of retail, leisure and hospitality, home health care and temporary staffing, according to Vitner. With credit still tight and wages falling (once adjusted for inflation), Americans aren't boosting their spending, he said

Read it at The Huffington Post

As Real Wages Fall In Fourth Quarter, Americans Save Less

by Bonnie Kavoussi

There Are 5,000 Janitors in the U.S. with PhDs

There are 18,000 parking lot attendants in the U.S. with college degrees. There are 5,000 janitors in the U.S. with PhDs. In all, some 17 million college-educated Americans have jobs that don't require their level of education. Why?

The data comes from a the Bureau of Labor Statistics, and can be seen here in handy, depressing chart form:

Read the rest at Gizmodo
There Are 5,000 Janitors in the U.S. with PhDs 

by Kyle VanHemert

Mike Konczal on actual unemeployment

Mike Konczal ask about the actual reate of unemployment in light of the rather unusual conditions surrounding this recession — persistent high unemployment and underemployment, with a bulging drop in participation rate.

RortyBomb
What is the Real Unemployment Rate, and How Could We Tell?

by Mike Konczal

This is doubly a disaster in that it is not only actual, in spite of widespread lack of recognition in the media, but it is also completely unnecessary, as MMT shows. The sectoral balance approach predicts unemployment when the combined saving desire of the domestic private sector and the external sector is not sufficiently offset by a deficit ("dissaving") of the government sector. This is explained by the identity stating that the balances of the government, domestic private, and external sectors sum to zero. Thus, if demand leakage to saving by non-government is not offset by government, then the figures will adjust accordingly, reflecting an output gap as business contracts.

The the sectoral balance approach is a macro approach and does not reveal how this will manifest in the economy wrt those affected. This is not only an economic phenomenon, but also a sociological and demographic one.

As Konczal observes, the present course of events is generational. This has generational implications broader than employment, as we see from restive youth not only in the US but also in various places around the globe. Spain, with youth unemployment above 20%, is a case in point.

The US has the financial capacity to counter its high unemployment by increasing its fiscal deficit in order to achieve a sectoral balance at optimal performance, which implies full employment. The US can do so because it is sovereign in its currency, so that the only contraint is availability of real resources. Availability of real resources is not an issue here, owing to the output gap and high unemployment. Under such conditions, injecting net financial assets into non-government by increasing the government's fiscal deficit in order to increase effective demand, which would spur investment, need not be inflationary.

On the other hand, Spain and the other countries of the EZ, have given up currency sovereignty in adopting the euro. As a result, they are no longer currency issuers but currency users and must obtain funding through revenue or financing.

The US, UK, and EZ are all experiencing generational unrest and restive youth. As currency sovereigns that issue their own currencies, the US and the UK have the means to deal with this issue directly by offsetting demand leakage to saving by increasing their deficits to make up for the leakage by increasing effective demand.

Presently, the EZ has not come up with a strategy for getting around its self-imposed limitations. Meanwhile, its policy of "expansionary fiscal austerity" (an oxymoron) is failing the people of many countries. This does not seem to be sustainable politically, even as TPTB kick the can down the road with temporary monetary fixes but continue to insist on a policy of austerity. Unless they change policy and strategy, their ad hoc tactics will fall short in dealing with the rising political problem. Time is running out for putting together a real fix before there are political explosions in Europe.

The same explosions will also occur in the US and UK unless the governments realize their ability to counter the situation and take steps to implement it. Time is not on the side of the status quo here.

Then there is the question of reform. If reforms are not instituted, another more serious financial crisis awaits. This is the elephant in the room that is being ignored. Another leg down from an already historically low level would be catastrophic economically, politically and socially.

Ignoring the sociological and demographic implications of the present situation is just marching toward the cliff.

The real story on employment is — underemployment

... contrary to simplistic headline charts, the number one data series that pundits should be focusing on, is the subset of persons "who currently want a job." Indicatively, as we showed on Friday, this just hit an all time high... even according to the BLS:

Read it at Zero Hedge

Gallup Finds Recent Job Boost Due To "Temp And Part-Time" Hiring; Underemployment Greater Than Prior Year

by Tyler Durden