Hungry For Answers

More and more working Americans are turning to food stamps to help them through tough times, and again, these are Americans with jobs who are resorting to food stamps, according to the Financial Times.

While the increase in take-up is often attributed to the sharp rise in unemployment – which on Friday hit 9.7 per cent – the Financial Times has learnt that some 40 per cent of the families now on food stamps have “earned income”, up from 25 per cent two years ago.

The agriculture department, which runs the programme, attributes this rise to workers having their hours cut back.

“I’m sort of stunned, it seems like a dire warning . . . that even the jobs people are retaining in this recession aren’t at the wage level and hours level that they need to provide for their families,” said Heidi Shierholz, economist at the Economic Policy Institute.

The pace of outright job losses in the US has started to recede, prompting hopes that the labour market could be stabilising. Official figures on Friday showed that non-farm payrolls dropped by a better than expected 216,000 in August, but still marked the 20th consecutive month that the US economy has shed jobs.

Less attention has been paid to those still in the workforce, whose incomes are also being squeezed. The average working week is now about 33 hours, the lowest on record, while the number forced to work part-time because they cannot find full-time work has risen more than 50 per cent in the past year to a record 8.8m. Wages and benefits have decelerated.

The food stamp data suggest that “the labour market problems are more significant than you would expect, given just the unemployment rate”, said John Silvia, chief economist at Wells Fargo. “For me it suggests the consumer is not going to rebound or contribute to economic growth for the next year, as the consumer would in a traditional economic recovery.”

Understand some 80% of America's entire economy is consumer based. If the American consumer is so tapped out that they are having to turn to food stamps because the average American is now working only 33 hours a week, there's something badly wrong with our economy right now. Who will lift us out of this mess? How can hard-working Americans work hard when they are asked increasingly to make do with 40 hours worth of work and getting paid for only 33? American workers continue to be the most productive in the world.

Think of how many things you do for your job off the clock. Millions of us check work email at home or on the road. We're expected to take care of work increasingly on weekends or nights. At the same time, companies are shedding employee benefits left and right in an effort to stay profitable. So again, if companies are now expecting workers that are left to start doing even more work in even less hourly time and do more work off the clock without being paid for it, how does that help our consumer driven economy?

The answer is simple: it doesn't.

What recovery?

[UPDATE 7:12 PM] California's effective unemployment/underemployment rate is 40% at this point.

A report released Sunday says two of five working-age Californians do not have a job, underscoring the challenges in one of the toughest job markets in decades. A new study has found that the last time employment levels among this group were this low was February 1977.

The study was done by the California Budget Project, a Sacramento-based nonprofit research group that advocates for lower- and middle-income families. The report said that California now has about the same number of jobs as it did nine years ago, when the state was home to 3.3 million fewer working-age people.

As bad as things are now, they're actually going to be worse next year. Count on it.