Sep 27 2013
WASHINGTON—U.S. Sen. Jeff Sessions (R-AL), Ranking Member of the Senate Budget Committee, delivered the following speech today as the second in a series of addresses analyzing the state of the American economy:
“Last Thursday I delivered the first in a series of speeches looking at the state of our economy. I have directed my staff on the Budget Committee to specifically analyze the conditions facing working Americans so that I could share those findings directly with this chamber. Both parties must focus their efforts on defending working Americans from Washington policies that damage their wellbeing.
Last week, I discussed the falling incomes and social challenges eroding the security of middle class households. Today I will focus on the jobless recovery and the general problem of unemployment.
Few things matter more to a working family than the pace of the economy, especially after a hard recession. If, on the one hand, it’s a rapid, strong recovery, jobs will return quickly, people will return the workforce, and a great deal of social suffering will be averted.
If, on the other hand, it’s a slow recovery, then businesses don’t create many new jobs, wages stagnate or fall, and the families continue to borrow from their savings to pay their bills. Life is spent wondering and worrying about the future.
We live today in the slowest “economic recovery” since the end of World War II. I’ll say that again: no recovery from a recession since the end of World War II has been as slow as this one. Not counting the Great Recession, we’ve had 11 recessions since 1945. All had faster, stronger recoveries than this last one.
Just how slow is this economic recovery? It has been nearly six years since the recession began in December of 2007. We still have not returned to the number of jobs we had six years ago. We are 1,988,000 jobs short of the 146,273,000 jobs we had when the recession began.
Let’s compare that with the other two, really bad post-war recessions: the contractions of 1973 through 1975 and 1981 through 1982. The recession of 1973 lasted 16 months, the 1981 collapse lasted 16 months, and the recession of 2007 lasted until June of 2009, or 18 months.
Working people were hit hard by these two earlier recessions. The unemployment rate rose to 9 percent in 1975 and 10.8 percent in 1982. The highest, monthly unemployment rate for the Great Recession of 2007–2009 was 10 percent. Not much difference in the severity and length of these recessions.
Even so, total jobs had recovered by 25 months after the start of the 1973 recession and 28 months after the 1981 recession. It has been 70 months since the start of the 2007 recession, and employment has not yet recovered.
Lost hours of work is another and better way to gauge the failure of the current recovery. It is not simply the number of jobs in any economy but the number of hours worked that strongly influences the pace of economic activity.
In the fourth quarter of 2007, just as the recession was starting, Americans worked about 236.4 billion hours. We still have not returned to this level: in the third quarter of 2013, the Labor Department estimated that Americans only worked 232.9 billion hours. That’s a shortfall of 3.5 billion hours. This decline is greater per worker since the population of available workers has increased by 9 million.
Still another way to show the slowness of this recovery is to measure how much higher GDP is today compared to the start of the recession. It turns out that economic output is 4.4 percent higher. Compare this with the 1973 and 1981 recessions. By this time after the 1973 recession, GDP was 17.9 percent higher and GDP after the 1981 recession was 20 percent higher. That is, the economy was 20 percent bigger by this time in the 1981 recovery. Our current economy is only 4.4 percent larger. The 1981 economic gains were five times as great.
These are the top line numbers. What does it mean to real people? Below this surface we find extensive economic suffering.
· There are 25 percent more discouraged workers today—988,000 vs. 793,000—than there were in June of 2009, when the recession ended. We had 363,000 discouraged workers when the recession started in 2007, which means, we’ve had an increase of 172 percent in this sad number in just six years.
· One of the most stunning developments of this recovery has been the decline in the labor force participation rate. This is a fundamental indicator of the breadth and depth of a recovery—and of an economy. Today, 58.7 percent of the non-institutionalized population 16 years of age and older are working. In 2007 that percentage stood at 62.7 percent. The current rate of labor force participation is the lowest since 1978.
o This decline is due to two factors: increased unemployment and increased labor force drop-outs—discouraged people who are no longer looking for work at all. How many people are we talking about?
§ If the same percentage of the population was working today as was working in 2007, we would have 154,089,000 people in jobs. Since we currently only have 144,285,000 people working, it appears that 9,804,000 people are out of the labor force.
§ Of the 5.7 million who have totally dropped out, more retirements and more disability than in 2007 explains about two-thirds of the drop-outs. But, it cannot be good for America for millions to take Social Security at age 62 rather than later—too often because no work is available.
· More than 4 million unemployed Americans have been out of work for more than 27 weeks. All told, 11.5 million Americans want to work but cannot find jobs.
· The unemployment rate for those between the ages of 16 and 19 who are not in school, in the military, or in prison stands at 24 percent. This is the highest teenage unemployment has ever been this far into a recovery. It is very dangerous for our society to have so many young people—especially males whose rates are even higher than females—out of work.
· At 13 percent, unemployment among African-Americans is about twice the national average of 7.4 percent. Unemployment among Hispanics stands at 9.4 percent.
· Unemployment among those with less than a high school education is 11 percent.
Again, these statistics, as bad as they are, mask the real-life implications of the slow economy. These are young careers that fail to launch when they should, marriages perhaps put off until economic times improve, families not started until couples can afford children, or children arrive out of wedlock. They mean retirements taken too early, loss of homes, older children at home who should be on their own, and lots of part-time, extra jobs at lower pay just to make ends meet.
Indeed, one of the most devastating statistics is the growth in part-time work instead of full-time work. We have 5,188,000 fewer full-time jobs today (August, 2013) than in December of 2007. That equals a decrease in full-time employment of 4.3 percent.
At the same time, part-time employment has grown by 3,085,000 over this same time period. That’s an increase in part-time jobs of 13 percent. Make no mistake, the total number of jobs since 2007 is down, and for the people who are finding work, more are part-time.
Nearly 90 percent of this increase in part-time work represents people who, according to the Labor Department, “could only find part time work.” At the end of 2007, this number stood at 1,198,000. However, the most recent data shows that this population has grown by 127 percent to 2,714,000.
We are becoming a part-time economy. The President’s health care law, without any doubt, is playing a major factor in this shift.
And, as we all know, part-time workers often don’t enjoy the same health, retirement, vacation, and other benefits as full-time workers. Indeed, it is exceedingly hard to succeed in this economy and in a career as only a part-time worker.
We must recognize one of the biggest contributors to the decline in full time jobs: Obamacare. As others have observed, it is destroying the 40 hour workweek. It is an assault on workers. Let me tell you about one constituent who wrote my office. Mrs. Linda Askew, from Sheffield, Alabama, wrote in July asking Congress to do something to help. Mrs. Askew is a small neighborhood business owner. She employs less than 10 people. According to Mrs. Askew:
“We have been here for almost 50 years. We have tried to help our employees have healthcare for over 10 years now… The new premiums are $590.00 per month for single coverage and $1520 for family coverage… These costs are almost becoming unbearable for our company. More troubling than that in the letter [which she received from her insurance company announcing the increase] was that part of the reason for the increase was blamed on the new health care reform fees and taxes that health insurers must pay on behalf of their groups… Small businesses cannot keep up with these increases.”
In the coming days, as I document the conditions facing American workers, I will also address both the many causes of this economic deterioration as well as the steps necessary to reverse this trend. What we are seeing is immensely troubling: as Washington grows larger, wealthier, and more powerful, Americans workers are being impoverished, sidelined, and marginalized. The government class is being enriched at the expense of the middle class. From deficit spending to federal regulation to the immigration bill—Washington is pursuing policies that benefits lobbyists and the well-connected but that reduces wages and job opportunities for everyday workers in the private sector.
Both parties need to shut out the special interests and work to develop policies that will restore our history of dynamic economic growth that benefits all the people of our nation.
The only response we get from the governing class is that we must have more government spending, higher taxes, more regulation, more government, and more debt. Such policies will never ever produce a sound and growing economy. We have got to get back to classical American policies that validate individual responsibility, that allow people to progress and earn more.”
[NOTE: To view video excerpts of Sessions’ remarks, please click here.]