Evidence that the Jobless Recovery is Here

With unemployment likely to hit 10 percent before the end of the year, I've been brainstorming some ideas for jump-starting the job market. To highlight exactly why an employment stimulus is critical, the Atlanta Fed's research director has a blog post counting all the reasons why this is going to be the worst. Recovery. Ever.

How many bad records are being set in this recession?

1) Job opportunities. David Altig writes that job openings account for "only 1.8 percent of the total filled and unfilled positions--a new record low."

2) Hour cuts. We've never seen this many people forced to take hour cuts. That's bad news because when firms begin to see room for increased compensation, they'll start by replenishing the hours of part-time workers, not by scouting out new talent for hires. It's just an extra level of slack.

3) Permanent separations. The share of unemployed who describe their job loss as a "permanent separation" with no hope of being rehired by their former firm is at an all time high. This indicates that the structural changes that contributed to the last two jobless recoveries in the early '90s and early '00s are not only alive and well, but stronger than ever.

Finally Altig makes this interesting observation about how job losses have been concentrated in the small business sector:

Businesses with fewer than 50 employees account for about one third of net employment gains in expansions. They have accounted for about 45 percent of job losses since the beginning of this recession. Given that these are the types of businesses most likely to be dependent on bank lending--and given that bank lending does not appear poised for a rapid return to being robust--the prognosis for an employment recovery in these businesses is a question mark.

There's been a lot of talk about Bank of America and Citi's weak third quarters. They are commercial banks who draw their strength from the general economy, rather than the i-banking world of trades. If the businesses most likely to be in the market for loans are also the businesses most significantly devastated by the recession, this means you're going to see BofA and Citi (with its large taxpayer stake) continue to plod for a long time. The weakness in the job market and the loan market is a vicious cycle. The case for a job stimulus continues to build steam.