Unemployment Numbers May Put Democrats out of Work

In recent weeks, senior Obama administration officials have suggested that historically high levels of unemployment could persist for many years. Indeed, the most recent OMB projections show unemployment remaining above 7 percent until 2012, and above 5 percent through at least 2019.

There are good reasons to take these warnings seriously, even if the economic recovery is more vigorous than the current consensus suggests. Since the recession began, the number of unemployed persons has risen by 7.4 million (4.8. percentage points), and a look beneath the official unemployment statistics reveals even worse news. The number of people who want full-time jobs but have been forced to settle for part-time work has risen from 5.9 million a year ago to 9.1 million today. The number of discouraged workers—people who would like to work but aren’t looking because they believe that no jobs are available—has nearly doubled. It’s not hard to see why: The long-term unemployed (those out of work for more than six months), who constituted less than one-fifth of all the jobless a year ago, now account for fully one-third.

New entrants into the labor force have been hit especially hard. During the past year, the unemployment rate among 20 to 24 year-olds has surged from an already high 10.7 percent to 15.1 percent, and from 11.7 to 16.8 percent among young men in this age bracket. By contrast, despite numerous heartbreaking anecdotes, older workers have fared better: Among 45 to 54 year-olds, unemployment rose from 4.4 to 7.7 percent; among those 55 and older, from 4.1 to 6.8 percent.

In part, the squeeze at the bottom of the age range reflects a growing tendency among older Americans to work later into their lives. The recession is boosting their labor force participation rate, which fell steadily from the end of World War Two until the mid-1980s before beginning a slow rise. Sixty-three percent of workers ages 50 to 61 say they may have to delay their retirement because of the effects of the recession, and a stunning 38 percent of workers 62 and over report that they already have put their retirement plans on hold. Although economists rightly warn against the “lump of labor” fallacy (the proposition that the number of jobs is fixed and that one person’s job comes at another’s expense), what holds true in the long run may not apply in the short term. In times of high unemployment and weak job generation, a slowdown in those leaving their jobs at the end of their careers is bound to have ripple effects throughout the rest of the system.

If OMB’s projections are correct, unemployment will average 9.8 percent during 2010 and will likely stand above 9 percent on the day of the mid-term election. After the health care debate ends, and whatever its outcome may be, the administration and congressional Democrats would be well advised to turn their attention back to the economy and ask themselves whether there is anything more to be done to jumpstart job creation. If current trends continue unaltered, the American people will suffer—and so too will the Democratic Party.