One Third of a Nation?
"The Crusade That’s Killing Prosperity" by Lester Thurow, in The American Prospect (Mar.–Apr. 1996), New Prospect Inc., P.O. Box 383080, Cambridge, Mass. 02238.
Nearly eight million Americans were officially out of work last fall—5.7 percent of the labor force—but they were only a small part of the vast, hidden army of the unemployed and underemployed in the United States, contends Thurow, an economist at the Massachusetts Institute of Technology. Add to the officially jobless the five to six million not counted because they are not actively seeking work (perhaps having become discouraged), and the 4.5 million part-time workers who would prefer full-time work—and the total number of unemployed reaches 17 to 18.5 million, or almost 14 percent of the labor force. Then add the more than 18 million underemployed: 8.1 million workers in temporary jobs, two million who work "on call," and 8.5 million self-employed "independent contractors," many of whom, Thurow says, are downsized professionals "too proud to admit that they are unemployed." Finally, add the 5.8 million "missing males," 25 to 60 years old, who show up in census figures but not in labor statistics; some of these men are homeless, others are in the illegal underground economy. All told, Thurow calculates, "about one-third of the American workforce is potentially looking for more work." "No wonder workers have no bargaining power," Thurow writes. The labor surpluses of the past quarter-century have prevented workers from claiming their fair share of the nation’s growing wealth, which went disproportionately to the more educated and highly skilled. These labor surpluses accelerated the rise of income inequality and the fall of real wages. "Today’s slack labor markets were produced by the war against inflation" begun in the early 1970s, Thurow says. Although inflation has been defeated—the Consumer Price Index was down to 2.5 percent last year—the Federal Reserve Bank continues to pursue a tight money policy that restricts economic growth. It is time to declare victory over inflation, he concludes, and begin to put the many millions of unemployed and underemployed Americans back to work.