For Millions, Unemployment Crisis is a Life Crisis

We don't just have an unemployment crisis. We have a livelihood crisis too.

As Washington begins to take on unemployment it needs to realize that the larger economic problem is that the demand for labor is too low. This lack of demand is not manifest in unemployment alone, but also in fewer hours worked, stagnant or falling wages, and the lack of job mobility. These are important economic problems, but they're also psychological troubles because work is a defining aspect of life.

When we hear that the unemployment rate is 9.8 percent and destined for 10 percent it can be hard to know just how bad this is. After all, a pop quiz would reveal few people accurately know how many Americas work. So picture it this way: 9.8 percent is more than 15 million people. In other words, as many people in America are unemployed as live in Illinois -- if Illinois added another Chicago to its population. The average worker of the 15 million has been out of a job for six months, and 5.4 million of them have been looking even longer.

About 9.2 million people are underemployed. They're working part time in lieu of a full-time job or because their full-time hours were cut back. This is greater than the population of New Jersey.

For those who are lucky to still be working full time, their wages have been essentially flat, rising just two-tenths of a percent. Paul Krugman expects wages will actually fall in the later portion of 2009.

For each six people unemployed there is one job opening, which is sharply worse than the 2-to-1 ratio at the beginning of the recession in December 2007.

What we don't know is how many people are looking for work but have not lost their jobs. The scarcity of job openings is not just keeping people unemployed; it's keeping people from entering the labor force or moving around within it, such as college students who are working on grad school applications instead of resumes and those who have to stay in jobs they hate instead of working elsewhere.

While their circumstances don't look as harrowing as those of the jobless, they're still bad. Grad students take on (more) debt when they could be earning a paycheck. Disgruntled workers may not be as productive as they would be in a position more to their liking and skills. That would be good for them and the economy because human capital would be better allocated.

After considering these additional dimensions of the recession it should be clear that unemployment is just the most salient aspect, but not its only aspect.

The present problems are not just economic, but also emotional. Unemployment is not the subtraction of work, but rather it's the replacement of work and all that comes with it. Hours formerly spent at a job are spent at home looking for work. They're punctuated with ambivalence at searching for a position, anger over unanswered applications, and humiliation for being rejected by employers. Paychecks give way to an ersatz income of unemployment benefits.

The unemployed, underemployed, and disgruntled all feel powerless because they can't better their lives through their labor. Whatever solution Washington settles on must be broad enough to restore power to their lives through work.