Scott Sumner at the Money Illusion has three posts (here, here and here) on the August employment report issued by BLS last week.

Though one of the posts is sort of long, I am still struggling to understand the theme because if I am not mistaken, overall, they appear to have the tone that we have reached a milestone in recovery and the employment market has healed, or at least as healed as we can get. Discouraged workers are gone. What we have is what we get, etc…

On one hand, if I have not mistaken the meaning of the posts, I agree we have what we have and that’s all we’re getting. But I don’t necessarily agree that we’re at potential. And since UI is back to “normal,” I am having a bit of trouble swallowing references to it increasing headline employment on behavioral grounds. There aren’t enough jobs to replace what was lost and accommodate population growth. And the current state of LFPR proves my point that people were cut off with nowhere to go, which in all likelihood is the expression in its most human form of the opportunity cost of bad monetary policy that throws the baby out with the bath water, then subsequently doesn’t rescue it.

After all of the bankruptcies have been declared and the foreclosures foreclosed, people adjust and learn to live with less. And really, while I was unemployed, for what felt like an eternity, there was a peculiar aura of happiness and freedom I felt not having office politics or a boss to deal with. Of course, this was with the tradeoff of not having as much freedom in the sense of being able to pay for things I wanted to do, like travel to political events and protests. I was hungry and had lots of unmet needs, but studying and writing full time was something I was happy doing as an alternative to sitting around as a waste of oxygen waiting for death. I am not sure anyone can understand this, but I suppose I synthesized happiness from an appreciation of what I had left: my family, a roof over my head, just enough to eat and two cars that were paid for. I mentally made lemonade out of the lemons life handed me and, as lemonade is, it was sweet and sour.

Though there wasn’t any question or resistance as to whether I should return to work when finally offered a job, I was internally conflicted. I had to do the right thing for my family, especially my husband who was exhausted from the ordeal, and my son who needed to go to college. But I questioned whether I could deal with the social situation after being out of it for so long, and whether I could focus on the task. Truth be told, I had forgotten so much about my field that the thought of being thrown into a professional setting with people who hadn’t been on ‘hiatus’ was rather terrifying, partly because I had been rejected once and it felt like a stigma.

Then, there are some directional realizations I faced before I found new employment, like what am I going to do with myself, who is going to pay me what I used to make when I can’t remember much, is all the time I spent building up my skills and establishing myself in my profession wasted, etc… Do I resign myself to flipping burgers or call center work, or do I go out and try to get what I want? Do I even know what I want? Avoiding starvation and homelessness is a start, but if that issue has been dealt with by rooming in, it provides time to explore options.

This is a long way around speculating that discouraged workers probably have themselves taken care of, either by SSI, general public assistance or family and friends. They probably don’t remember much about what they used to do and they may not have to make choices so they don’t. At least from my point of view, if my family did not need me to go back to work, I likely would not have. The massive cyclical unemployment problem from the Great Recession turned into a structural one. The labor market has healed by definition, perhaps. But these people, they simply haven’t.

And of course, I don’t have any intention of shooting the messenger, and mean no disrespect to Scott Sumner. But it would be nice to not get the feeling that he’s letting the Fed-borg off the hook, couching it in what I suppose was meant to be humor – the picture of a dead parrot. This kind of waste of human potential simply cannot be allowed to happen again.

Advertisements