How Low Can the Jobs Market Go? Don’t Ask

By Joe Guzzardi
December 2, 2011

The Labor Department’s press release indicating that unemployment insurance claims rose last week by 6,000 to a seasonally adjusted 402,000 returns the total above the psychologically significant 400,000 level.

The White House, grasping at straws for anything that resembles good economic news, points to the unemployment rate drop to 8.6 percent, the lowest level in two and half years. But the main reason for the decline was simply that hundreds of thousands of people had stopped looking for work. The DOL report showed that in November 487,000 people left the labor force and were therefore not counted as unemployed.

At the same time, the administration’s economic team tries to milk as much as possible out of the projected lame job “growth”—a meager 125,000 but higher than October’s 80,000.

The inconvenient truth is that job creation is nowhere close to keeping up with population growth—a situation that’s exacerbated by the federal government’s policy of issuing approximately 1 million work permits to newly-arrived legal immigrants. The obvious solution—-and one that’s reasonably easy to enact—is to limit immigration until the nation’s unemployment rate dipped to the historically acceptable 5 percent benchmark.

Of course, even the most modest immigration restrictions aren’t in the cards. President Obama is going full-bore in the opposite direction by granting administrative amnesty to about 300,000 illegal aliens, then issuing them work permits after their pardon becomes official. Homeland Security Department Secretary Janet Napolitano recently indicated that in January, more aliens would be pardoned which translates into more work permits and thus fewer jobs for Americans.

Each month, the Labor Department’s monthly statistics repeat themselves monotonously—and depressingly. Even though there’s always a dim ray of light somewhere in the dark tunnel like November’s stronger-than-anticipated retail sales, the fundamental problem remains unchanged. Over the last two decades, America has shifted its manufacturing base off shore while legal immigration has remained at persistently high levels. Good jobs that were once readily available and that offered medical insurance, paid vacation and a solid pension are very few and far between. Americans must compete for them with newly arrived immigrants.

The mounting concern is how bad the jobs market may get. Joe Quinlan, U.S. Trust’s chief economic market strategist and a Capitol Hill advisor, sees doom and gloom ahead.

Quinlan assess the current situation as one of insufficient demand, excess labor, “bulging” numbers of new workers and productivity-enhancing techniques that substitute capital for labor. Referencing a study by the International Labor Organization, Quinlan cited the world’s need to add 80 million jobs over 2012 and 2013 just to return to 2007 employment levels. Developed nations must generate 27.2 million jobs during the next two years. But Quinlan’s charts indicate that only 2.5 million will materialize an insurmountable 25 million fewer than required.

As a result, Quinlan concluded that both developed and emerging nations are on the verge of, as he puts it, “a jobs crisis that could spawn just as much volatility, uncertainty and damage in the financial markets as the European sovereign-debt crisis”.

Quinlan’s view is by far the most pessimistic I’ve ever read. But the inverted relationship between jobs and population is undeniable. While it’s late in the game for an American jobs turn around, whatever steps that can be taken to reverse the trend should be taken.

A federal policy that restricts immigration would be free, fast and effective.

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Joe Guzzardi is a Senior Writing Fellow at Californians for Population Stabilization. His columns about immigration and other social issues have been syndicated since 1986. Contact him at [email protected]