The pink slips are piling up, and jobs are getting a lot harder to find. That's the unmistakable conclusion of the US government's employment report for December.
According to federal statistics, just 18,000 new jobs were created in December, and the overall unemployment rate jumped from 4.7% to 5%, the largest spike in joblessness since the aftermath of the September 11 attacks in 2001.
Overall, the US economy added 1.3 million jobs in 2007, nearly half the number for 2006. The tiny jobs gain of December — the smallest increase in four years — led to a rise in the jobless rate that economist and New York Times columnist Paul Krugman called "brutally bad".
In manufacturing alone, 31,000 jobs were eliminated, bringing the total loss of factory employment in 2007 to 212,000. Many of the jobs that disappeared were good-paying positions permanently eliminated by the Detroit automakers. What's more, unemployment in the construction industry, hammered by the housing crisis, hit 9.4% in December.
Over the entire year, the unemployment rate rose 0.6% — which means 895,000 more people are out of work. As always, Blacks and Latinos were the first to lose their jobs. The African American unemployment rate in December hit 9%, and 6.3% of Latinos were out of work.
Long-term joblessness is on the rise, too. "The percentage of unemployed workers who have remained without a job for more than 26 weeks (the normal duration for regular unemployment benefits) and continue to search for work is considerably higher than on the eve of the last recession", wrote economist Chad Stone of the Center on Budget and Policy Priorities. "In December 2007, 17.5 percent of all unemployed workers were long-term unemployed, compared with just 11.1 percent in March 2001."
However, not all of the unemployed need worry about benefits running out.
Consider Charles Prince, CEO of Citigroup until the board of directors demanded his scalp for plunging the biggest bank in the US into the centre of the sub-prime mortgage crisis. Given the scale of the debacle at Citigroup — where the losses are still mounting — it's not at all clear whether Prince can expect to find another job at the top of Corporate America.
But he's not likely to suffer. A Wall Street Journal article reported that the disgraced executive was walking away with benefits worth US$29.5 million.
"In addition, Citigroup will provide Mr. Prince an office, an administrative assistant and a car and driver for at least five years, or until he finds a new employer. It will also pay certain taxes associated with those benefits, according to the SEC filing."
Prince wasn't the only Wall Street boss to walk the plank over the mortgage mess. Stan O'Neal was forced out as CEO of Merrill Lynch for presiding over billions in losses as a result of the housing crash.
But O'Neal's walk-away money makes Prince look poor: $165.5 million in various types of stock grants and retirement funds. And that's not all. The Journal noted, "Mr. O'Neal is also expected to receive a portion of his salary for the year" — although a Merrill spokesperson wouldn't say how much. Last year, O'Neil earned $18 million in cash bonuses alone.
Not bad for a guy who presided over an $8.4 billion in write-off of bad loans and a $2.2 billion loss in the third quarter of 2007 alone.
But even O'Neal's payoff can't match the golden parachute for James Cayne, recently ousted as CEO of the investment bank Bear Stearns.
Last July, when Bear Stearns became the first Wall Street firm hit by the credit crisis after two of its hedge funds collapsed, Cayne "was playing in a bridge tournament in Nashville, Tenn., without a cell phone or an e-mail device", the Journal reported.
"As Bear's fund meltdown was helping spark this year's mortgage-market and credit convulsions, Mr. Cayne at times missed key events ... In summer weeks, he typically left the office on Thursday afternoon and spent Friday at his New Jersey golf club, out of touch for stretches, according to associates and golf records.
"In the critical month of July, he spent 10 of the 21 workdays out of the office, either at the bridge event or golfing, according to golf, bridge and hotel records."
Cayne initially survived the scandal, scapegoating Bear Stearns co-president Warren Spector, who was sacked in August. Spector received $23 million in "capital accumulation package awards".
Then, in early January, the 73-year-old Cayne was forced out, too. But he remains the owner of 4.9% of Bear Stearns stock, worth an estimated $1.3 billion.
Other end of the scale
At other end of the economic scale, workers who were bypassed by the boom are bracing for recession.
Economists of every political stripe are predicting a slump, the Democratic presidential candidates have all made proposals for an economic stimulus package — and even the Bush White House, long in denial about the housing crisis and its impact, is trying to put together a plan to jump-start the economy.
Yet the stimulus proposals from both parties amount to just a fraction of the amount spent on the US wars in Iraq and Afghanistan.
With more bad news emerging on practically every economic front — falling house prices, a credit squeeze, declining consumer spending, stagnant wages and higher inflation — the picture is likely to get worse.
But Wall Street has already signaled Corporate America's plan: grab all the cash you can, and make workers pay.
[Abridged from January 18 US Socialist Worker,