Unemployment rose to 9.5 percent of the workforce according to the BLS. But, the effective jobless rate is 18.7 percent, if we use more exacting data formulated by Leo Hindery, chair of the Smart Globalization Initiative at the New America Foundation, with more than 30 million of us out of work or forced into part time work because of the lack of jobs.
We got into this mess because of a gigantic failed experiment that began in the late 1970s. The idea was to deregulate the financial sector and cut taxes on the super-wealthy. The sales pitch in favor of these changes was that we'd create an investment boom and improve jobs and incomes for everyone. Part of the experiment worked: Money gushed to the top fraction of one percent and certain kinds of investing did increase. But average wages after inflation actually declined so that today they are 18 percent lower in buying power than in 1973.
Instead of creating more and more investments in the real economy--the kind of investments that actually promote improvements in living standards--the money accumulated by the super-rich flowed into Wall Street and fueled an enormous fantasy finance bubble. Wall Street created synthetic derivative securities, often based on junk debt, that sucked up the wealth and added little or nothing to the real economy. But the bubble made Wall Street filthy rich. When markets finally realized how hollow the bubble was, prices collapsed and the banking sector froze. The real economy was starved for credit and pushed into a free-fall unseen since the 1930s. (See The Looting of America).
Not only did all boats fail to rise on the way up, but all boats are not sinking as fast on the way down. Contrary to media portrayals, Wall Street is still doing quite well compared to other sectors. We all know about the million-dollar bonuses financial management is paying itself out of taxpayer bailouts, but also consider the unemployment situation. According to the latest BLS data, the unemployment rate for "Financial Activities" was only 5.5 percent--that's the kind of unemployment rate most of us associate with boom times, not deep recessions. Meanwhile, construction workers face a 17.4 percent unemployment rate (and this is the building season), while 12.6 percent of all manufacturing workers were out of jobs. Even the "information" sector is suffering with a 11.1 percent unemployment rate. (Table A-11, http://www.bls.gov/news.release/pdf/empsit.pdf)
So why hasn't the crash devastated employment in the financial sector? One big reason is that we put the entire sector on welfare. We pumped in several trillion dollars of cash and asset guarantees to keep the entire sector afloat. You would think Wall Street would be thanking us all for taking the hit while they roll along. Nope. Instead they are doing all they can to gut each and every regulation that might protect us against their fantasy finance schemes. They are even mounting a full scale attack (using our resources) against the proposed Financial Consumer Protection Agency. (See "Redefining Chutzpah: Wall Street Uses Bailout Money to Kill Financial Consumer Protection Agency" at http://www.huffingtonpost.com/les-leopold/redefining-chutzpah-wall_b_224493.html)
When you step back and look at the arc of this, it makes you wonder about what our nation has become. We give the financial sector the keys to our economy, and they literally crash it so badly that we start to slide into a depression. Our real economy collapses and nearly 30 million workers suffer joblessness to greater and lesser degrees. We then are forced to bail out the financial sector and they are spared not just the worst of the suffering, but almost any degree of suffering at all. Then they take our money and fight against regulations that might protect us.
And yet the biggest protests we've seen so far come from the tea-bagger's brigade, shrilly decrying miniscule tax increases on the very, very rich. What's wrong with this picture?
Les Leopold is the author of The Looting of America: How Wall Street's Game of Fantasy Finance destroyed our Jobs, Pensions and Prosperity, and What We Can Do About It, Chelsea Green Publishing, June 2009.