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Originally published September 1, 2012 at 8:01 PM | Page modified September 4, 2012 at 10:57 AM

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State of the labor force under pressure this holiday

Special to The Seattle Times

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The data are simple and merciless.

American gross domestic product, adjusted for inflation, has recovered all its losses from the Great Recession and hit a new high. Exports stand at an all-time high. Industrial production is edging close to its 2007 peak. Corporate profits after taxes shot up to a $1.65 trillion in the second quarter.

All this, and 12.8 million Americans are officially unemployed. Millions more that want full time work are stuck in part-time jobs, or have given up looking and moved in with family, are living off savings or otherwise scraping by.

Is this the brutal new normal? Has American business found a way to recover quite nicely using far fewer workers?

Happy Labor Day.

The jobs crisis is even present below the glitter of Seattle prosperity. The unemployment rate in Seattle-Tacoma-Bellevue rose to 8.3 percent in July, 157,000 fellow citizens, matching the national rate. Washington's 8.5 percent was surpassed by only 12 states, ranging from New York to South Carolina.

Washington added 55,800 jobs over the year. But, as with the nation, the pace of improvement is dreadfully slow.

For comparison, the recession of the early 1980s saw unemployment peak at 10.9 percent in late 1982. Since the Great Depression, this was the worst downturn until the Great Recession.

Two years after the official end of that recession, unemployment was down to 7.2 percent. Three years after, 7 percent. Yet three years after the official end of the Great Recession, national unemployment was 12 percentage points higher than where it stood at a similar point in the 1980s recovery.

To be sure, there are important differences. The 1981-82 recession was brought on by Paul Volcker's Federal Reserve to vanquish high inflation. The United States enjoyed economic supremacy worldwide, an intact industrial base and a labor market still based on real, full-time jobs with benefits.

The stimulative effect of President Reagan's tax-rate reductions is still debated (he also went on to raise taxes several times), but he also added civilian federal workers. State government employment also rose. The national government was not paralyzed, with Congress playing chicken with the debt ceiling.

The Great Recession was caused by the collapse of a massive speculative bubble and a global banking panic. These always require longer recovery times. One of the biggest employers, house building and everything connected to it, was devastated and remains weak.

In addition, the American economy today is much more based on financial plays and constrained by consolidated industries, neither of which creates many jobs. Indeed, they are predicated on reducing employment. Offshoring and outsourcing are routine now. President Obama has been cutting federal workers and state governments have as well.

One of the most serious consequences of today's jobs crisis is long-term unemployment, which is higher than at anytime since comparable keeping began after World War II. The longer a person is unemployed, the more difficult it becomes to find new work. Skills decline. Employers, who can be picky, are wary of that empty time on the resume.

Another is the new shape of work. Technology, outsourcing and offshoring have all killed jobs in America. Many new jobs are temporary or classified as "independent contractors."

These can range from relatively well-off techies to the poorly paid short-haul truckers at the Port of Seattle. The one similarity is that these jobs lack the benefits and security that were once commonplace in America. And their use is on the rise.

The majority of jobs added since the recession have been low-paying, according to as new study from the National Employment Law Project, which examined 366 occupations tracked by the Labor Department.

The study found that jobs with median hourly wages of $13.84 to $21.13 made up 60 percent of the jobs lost from the beginning of 2008 to early 2010. But they represent only 22 percent of total jobs added since. Meanwhile, low-skilled occupations paying from $7.69 to $13.83 - 21 percent of job losses during the recession - constitute 58 percent of all new job growth.

Wages continue to stagnate. Even though productivity continues to rise, average U.S. workers are enjoying fewer of the benefits. No wonder the Pew Research Center identified the 2000s as a lost decade for the middle class. Median net worth is back to 1992 levels.

Younger people who can find work are generally making less than they would have a generation ago. They're often carrying heavy student debt. Both situations will make it very difficult to enjoy the economic mobility of the past.

But it's no easier for many baby boomers. According to the U.S. Labor Department, workers between ages 55 and 64 are more likely to be unemployed, and if they can find work suffer severe pay reductions (hat tip to Catherine Rampell, of The New York Times, for first reporting this).

I don't know where the cost-cutting executives, enjoying big compensation themselves, think their customers will come from if these trends persist or worsen.

Northwestern University economist Robert Gordon has produced a provocative new paper indicating just how tough the new hard times may be.

Gordon argues that we face an indefinite stagnation. The reasons include a pause in the technology revolution, demographic changes, rising inequality, globalization, debt and the costs of climate change.

None of this can be wished away. But we're not powerless, either. Gordon's paper can be seen as a do-list, not a downer. Unfortunately, the leaders of the richest nation on earth are convinced our biggest immediate problem is federal red ink.

If they keep acting on this assumption, we will fail to do essential things that could create jobs and eventually pay down debt, such as investing in education, infrastructure and research. Not only that, but these leaders will cause a new recession with more joblessness.

One more thought: Unemployment is a global phenomenon. Robots and mechanization even threaten the low-wage workers in China.

If policymakers and business leaders don't step up, the world will confront a frightening future.

Jon Talton is a journalist and author living in Seattle. For more than 20 years he has covered business and finance, specializing in urban economies, energy, real estate and economics and public policy. You may reach Jon Talton at jtalton@seattletimes.com

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About Jon Talton

Jon Talton comments on economic trends and turning points, putting them into context with people, place and the environment in the Pacific Northwest

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