U.S. Economic/Financial News
L.A. Times Calls Jobless Stats 'Artificially Rosy'
A Los Angeles Times analysis Dec. 29 found that, since the bubble burst, many of the former dot.com high-flyers are not unemployed, but have been living hand-to-mouth as members of the growing ranks of the underemployed. They are one element in the Times' refutation, weakly echoing EIR's analysis, of the "official" national jobless rate of 5.9%, as an "artificially rosy" picture of the labor market.
In addition to the 8.7 million officially unemployed (jobless who are actively looking for work), there are 4.9 million part-time workers who say they would rather be working full-timethe highest number in a decade, the article notes. In addition, about 1.5 million people who want a job, gave up looking for one in the last month; of these people who have been dropped from the labor force, nearly a third are officially classified as "discouraged"up 20% from a year ago. Combined, this gives the jobless total for the U.S. of 9.7%. EIR has estimated there are 19.5 million unemployed, and an unemployment rate of 13%.
The official jobless number should have jumped after the stock-market bubble burst in April 2000, but didn't, the article says, because many of the 5 million people thrown out of work reported themselves as "out of the labor force," rather than unemployed. This category means a person is not working for even one hour per week.
Other signs of the destruction of the labor force: The number of those unemployed for more than 15 weeks has risen nearly 150% since 2000to the highest level since the early 1990s; nearly 25% of the jobless have been unemployed for longer than six months.
Overall, the U.S. economy has degenerated into "a nation of burger flippers, temps and Wal-Mart clerks," the article notes, as manufacturing has collapsed. Companies continue to eliminate jobs faster than they create them.
Pittsburgh Declared 'Financially Distressed'
The state of Pennsylvania will appoint an economic recovery coordinator for the city within 30 days, and draft a recovery plan within four months. To be declared distressed, a city must meet at least one criterion under the 1987 Municipalities Financial Recovery Act ("Act 47"); Pittsburgh meets three criteria, according to the Pennsylvania Department of Community and Economic Development. Despite layoffs and service cutbacks, the city's spending exceeded revenues for at least three years, it had a 5% deficit for two successive years, and it had at least a 1% deficit for three years.
"Act 47 is not a state takeover," Dennis Yablonsky, secretary of the department, said in a statement. Rather, the state will provide oversight, ensuring that residents receive vital services. The designation "is a decisive determination that this city simply cannot cut its way to solvency," Pittsburgh Mayor Tom Murphy declared in a statement.
Like other former industrial cities such as Buffalo, Pittsburgh's major steel mills have shut down, depriving it of a primary source of taxes.
Since Act 47 was enacted in 1987, more than a dozen communities in Pennsylvania have been declared "financially distressed."
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