533,000 Jobs Lost Last Month
By Justin Gardner | Related entries in Business, Economy, Jobs
It’s the worst one month loss in 34 years.
The decline, the largest one-month loss since December 1974, was fresh evidence that the economic contraction accelerated in November, promising to make the current recession, already 12 months old, the longest since the Great Depression. The previous record was 16 months, in the severe recessions of the mid-1970s and early 1980s.The alarming job decline suggests that consumers and businesses have pulled back sharply on spending in response to the worsening credit crisis. That has put pressure on Congress and the White House to come up with a stimulus package that would substitute for the missing private-sector outlays.
Over all, the losses since January now total more than 1.9 million, with most coming in the last three months.
“We have gone from recession into something that looks more like collapse,†said Ian Shepherdson, chief domestic economist at High Frequency Economics, referring to the accelerating job losses in recent months.
And yet many are still clamoring to let the car companies fail?
Do know that I’ve heard dozens of reasons why people want these companies to fail, but I simply think they’re not considering the actual impact on the individual lives that had nothing to do with the bad decisions made by CEOs and legislators.
Simply put, a handful of companies acting irresponsibly should not send our economy into a tailspin, and just allowing that to happen because we’re “letting the market work” seems to me to be an ideologically bankrupt stance, especially when you consider how many lives will be affected.
And let’s not forget…all of these people who lost their jobs or will lose their jobs will be applying for unemployment benefits and won’t have health insurance anymore. And guess who’ll be paying for it? It makes more sense for the government to help keep these companies afloat so they can renegotiate contracts, cut costs where they need to and minimize job losses.
But hey, maybe the upside will be that the nation will clamor for universal healthcare since so many people are out of work.
This entry was posted on Friday, December 5th, 2008 and is filed under Business, Economy, Jobs. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.
December 5th, 2008 at 11:58 am
Justin,
Just because I am opposed to a government-financed bailout of the Big Three (and note that the Big Three are NOT the entire auto industry), that doesn’t mean I want them to fail.
To the contrary, I think that avoiding a bailout and going the Prepacked Chapter 11 route is the only thing that can save these companies. Although I do think it’s rather apparent that one of those companies — Chrysler — cannot survive as an independent company in the long run.
Wasting billions of dollars of taxpayer dollars, which is precisely what I think we’d be doing, would do far more harm to the economy in the long run than letting these companies face the day of reckoning they’ve been putting off for 30 years or more would.
December 5th, 2008 at 1:16 pm
Intellectually dishonest. “Chapter 11 restructuring” does not equal “let companies fail” (see DM commment)
Intellectually dishonest. “Chapter 11 restructuring” does not equal “want these companies to fail” (see DM comment)
This is a rationale that can be used to keep every single company propped up with taxpayer dollars for now and all time regardless of industry in order to keep the worker who had nothing to do with the bad decisions employed. Is that what you are advocating Justin? If not where do you draw the line? At what point do you let any worker ever be layed off ever?
Pretending that these workers are not going to lose their jobs in all cases, when the “Detroit 3″ are carrying manufacturing capacity overhead somewhere between 30-50% beyond their actual sales seems to me to be an intellectually bankrupt stance. If they get the bailout, those workers must be fired for the companies to be viable. Under a structured chapter 11 those workers must be fired for the companies to be viable. The simple fact is that those workers must be fired for these companies to survive.Reducing the workforce is part of all of the plans that the Detroit 3 submitted to Congress. This not a choice between Detroit 3 workers being fired or not. They are getting fired regardless. It’ll be cheaper to use the social safety net for those workers now, rather than spend $50B to slow the process but then spend it anyway when the inevitable happens anyway.
The alternative is to 1) Pay the workers for doing nothing or 2) Pay the workers to build cars far in excess of demand.
BTW – With gas under $2/gallon – and likely to stay there for years, who do you think is going to buy the underpowered overpriced green cars that Congress is going to force the Detroit 3 to build as a condition of this bailout? I’m not saying people shouldn’t buy them. I am saying that when the government designs the cars that the Detroit 3 build, you are like to decrease not increase demand. Of course, I for one, can’t wait to buy a Pelosi-Reid Designer Car – I’m just not sure how many others will.
December 5th, 2008 at 2:33 pm
@Doug –
I didn’t realize you were in favor of that. However, if that wasn’t on the table, you’d be for a protracted bankruptcy, yes? And do you acknowledge that this would essentially mean the end of these companies? Me, I think the prepackaged bankruptcy is compelling, but I still think it would severely damage consumer confidence in these brands.
Also, Chrysler got loan guarantees back in 1979 and they’ve survived nearly three decades without taking any more government money. And the economic situation is as such that they can’t get a loan because the banks don’t have any money to give. I’ve said it once and I’ll say it again…these are not normal circumstances.
One last thing, and forgive me if I’m incorrectly characterizing your stance, but weren’t you against giving the banks any money? I thought you were, so I have a difficult time reconciling what you’ve said above with the idea of you expressing that the market should determine how all this should go, which would have meant a worldwide economic collapse. Also, the net effect of what you proposed is that the biggest, most stable banks would swallow the failed ones and create even bigger institutions…which would set up the same scenario again. And then we run into anti-trust issues.
@mw –
That’s true, but I’m not advocating that.
However, do I think major players in our core industries should fail because a handful of banks screwed up, took on too much debt and don’t have the money to make loans they would in normal conditions? Absolutely not.
Also, much like Doug, you’re now talking about a prepackaged, structured bankruptcy, when before you were talking about just letting them go through a protracted bankruptcy that would kill their brands. And you were also against saving the banks. So, forgive me if I don’t think you have the American workers’ best interests in mind and are more focused on maintaining an ideological stance that is proving to be less and less pragmatic as the weeks go by.
As far as gas being under $2, 1) we don’t know that it will stay there and 2) isn’t this even more of an incentive for people to buy green cars now because their total gas bills would vastly cheaper? Also, I’m not sure why you continue to ignore this but the idea here is to use less oil because it’s in our long term strategic interests. And since the Prius is one of the most in demand, backordered cars in history, I find your characterization of green cars as “underpowered overpriced” to be not only bit self serving but also not even in line with the realities of the current marketplace.
December 5th, 2008 at 2:54 pm
Justin,
Realistically, any bankruptcy that companies like these would file would be pre-packaged to some degree simply because of the DIP financing they’d have to line up, and the supplier relationships that they’d need to keep functioning. None of that is unusual; it’s happened in large corporate bankruptcy before.
I’d prefer to see that happen without government involvement, but if there is going to be any Federal involvement of any kind, then it should be limited to guaranteeing the DIP financing that some have alleged will be hard to get due to tight credit markets.
I was against the financial services bailout and, quite honestly, most of what has happened since it passed has reinforced that opposition.
I didn’t believe the rhetoric that the bailout money, which has been used for it’s intended purpose to begin with, was necessary to “save” the banks and I don’t believe that spending money we don’t have is necessary to “save” the auto companies.
Also, this is a question of what is best for the economy as a whole, not what is best for some subset of workers in the auto industry who, when you add in wages and benefits, are making in excess of $ 70 per hour.
First, that happens all the time. The weak get eaten by the strong. It’s the way the system works. We aren’t doing any good by keeping weak, unprofitable companies alive.
Second, there was and is more to what caused the credit crisis than giving money to the banks. The root causes go all the way to a monetary system that encourages the easy credit that put us in the situation we’re in today, until we address that we’re going to continue down the same path.
December 5th, 2008 at 3:10 pm
[...] more “depressing” statistics come out on the heels of the massive jobless claims last [...]
December 5th, 2008 at 3:30 pm
It’s this preference of yours that I have a problem with since it’s simply not pragmatic
Well, you may not have believed it, but the simple fact of the matter is credit was frozen up. And seriously, what other evidence did you need? Would thousands of companies failing been enough? We’ve already seen, in the months since the bailout, nearly 1 million people losing their jobs. You don’t think the two were connected? You don’t think companies that didn’t have access to credit at the time had to shutter their doors?
Come on…
Of course this happens all the time, but there are also antitrust measures put in place because while capitalism is a great system, it eventually ends up trying to eat its own tail. And do you really think fewer companies controlling key industries like banking is a good idea?
One last note…I agree that the era of easy credit is over, and I’ve been harping on this for over a decade now as I saw one person after another fall hopelessly into credit card debt. And then we collectively began to spend more than we earned, the first time in history this had ever happened. But you know the only thing that would have stopped that before it got out of hand? Government intervention. And how realistic do you think that would have been?
December 5th, 2008 at 3:38 pm
Justin,
Evidence.
Please explain to me how the government spending money it doesn’t have, increasing both the national debt and the budget deficit to levels unseen since World War II, and printing money at a pace that will have inflationary impacts at some point down the road is going to solve the problem.
The answer is that it’s not. Government policy is as much a cause of the credit crisis as anything else, and repeating the same mistakes over and over again (by, for example, trying to reinflate the housing bubble like the Federal Reserve and Treasury Dept are trying to do) may solve the problem in the short run, but, in the long run, it’s going to make the pain of dealing with the mistakes all the much worse.
December 5th, 2008 at 9:39 pm
Where are the private companies able and willing to provide DIP financing? I’ve read several places that they don’t exist right now and have seen no evidence to the contrary.
December 6th, 2008 at 3:25 pm
Then of course there is the more accurate measure of overall unemployment called the U6, though you won’t find hardly any references to its name if you search the online news. Just plugging in the latest number though, which is 12.5% does get hits including this one from the New York Times, which says in part:
December 6th, 2008 at 3:27 pm
“Of course, I for one, can’t wait to buy a Pelosi-Reid Designer Car – I’m just not sure how many others will.”
The LFG/Powerline/Hot Air troll returns.
December 7th, 2008 at 10:30 am
[...] the startling new unemployment numbers coming out this week, it’s a good time to focus on what this actually means to the individual [...]