Unemployment rose yet again in July, reaching 5.7 percent, the highest level in over four years. Job losses totaled 51,000 for the month and 463,000 since January.
Employers are laying off staff, reducing work hours and limiting raises, resulting in a dismal 2.8 percent increase in weekly earnings over the past year—significantly below the inflation rate of over 4 percent. When earnings lag behind inflation, purchasing power is reduced, effectively constituting a pay cut.
According to the Bureau of Labor Statistics, underemployment and unemployment combined are 10.3 percent—up from 9.9 percent in June.
The rise in unemployment coincides with sharply increased labor productivity. Under capitalism, the introduction of labor-saving technologies results in layoffs when more is produced than can be sold at a profit.
“When the economy barely grows but labor productivity does, you are inevitably putting people out of work, “said Jan Hatzius, an economist at Goldman Sachs. (New York Times, Aug. 2)
