If long-term discouraged workers are also counted, as was officially done in 1980, the unemployment rate was 22.7% in June. In other words, between one-fifth and one-fourth of those willing to work are without jobs.
The US economy has still not recovered from the Great Recession that began in December 2007 despite the largest fiscal and monetary stimulus in its history.
The “headline” unemployment rate, the one emphasized by the media, stood at 9.2% in June, 2011. If short-term discouraged workers are also considered, the unemployment rate stood at 16.2%. If long-term discouraged workers are also counted, as was officially done in 1980, the unemployment rate was 22.7% in June. In other words, between one-fifth and one-fourth of those willing to work are without jobs.
A study by Prof. James M. Cypher of Mexico shows that between the decade of 1970s and the year 2009, the average productivity of American workers grew by 55.5%. In the same period, the real average hourly wage fell by almost 10% (excluding benefits).
Anger is rising among working class families. The popularity rating of President Obama is falling rapidly.
In the last week of July and first week of August, a big drama was enacted to keep the people of America as well as all capitalists of the world on tenterhooks. The impression was created that the American government will run out of money and the whole world economy may come apart unless a deal is struck between the two major parties in the US on raising the ceiling for public debt. After prolonged negotiations, which became the focus of prime-time media attention, an agreement was signed between the Democratic Party and Republican Party representatives and the Debt Ceiling Bill was passed on 2nd August.
Both parties knew from the start that they were going to reach an agreement to raise the public debt ceiling; they were only haggling over the exact number. The suspense and hyperbole created over whether a deal will be struck or not served the ruling class to adopt an anti-worker and anti-social legislation and present it as if it is a great piece of good news for the people.
On 12th July, the leading capitalist monopolies in the U.S issued a letter to the President and all members of Congress, demanding that the “U.S. government not default in any way on its fiscal obligations.” The signatories included lobbies of the most powerful monopolies: Business Round Table, Financial Services Roundtable, National Association of Manufacturers and U.S. Chamber of Commerce. The list also included individuals linked to major monopoly groups from various sectors, including Citigroup, J.P. Morgan Chase, Morgan Stanley, Aetna, Allstate, Dow, Dupont, Bechtel, Pfizer, UPS, Verizon, Whirlpool and Xerox.
On 14th July, Bernanke, Chairman of the Federal Reserve (equivalent of the Reserve Bank in our country)demanded a “strong credible plan” for massive budget cuts. He said failure to raise the debt ceiling and make the trillions in budget cuts would risk a “self-inflicted wound” that would cause a “very severe financial shock”.
According to the deal struck on 2nd August, more and more space will be created in the federal budget over the next two decades, to pay the leading institutions of finance capital their annual interest on public debt, and an equal amount of space will be cut from the allocations for public education, medical care and social security entitlements.
The crisis in the US is the outcome of capitalism having reached a stage where parasitic finance capital has established all-round domination over the economy and the state. The response of the financial oligarchy to the crisis is to take steps to guarantee further expansion in their loot and plunder by further cutbacks on public education, medical care and social security entitlements. This will increase the degree of exploitation of labour and parasitism of capital even further, paving the way for even deeper crises in the future.