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Illinois unemployment rate rises to 10.5 percent
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After dropping to 10 percent in August, the unemployment rate in Illinois went up to 10.5 percent in September, reflecting the continuing economic struggle jobless workers are having in most parts of the nation.
The Illinois unemployment rate was 6.7 percent a year ago.
According to the U.S. Bureau of Labor Statistics, to be counted as unemployed, a person must be in the labor force and actively seeking gainful employment. To be considered part of the labor force, a person must be non-institutionalized and not in the military, at least 16 years old, and either actively seeking work or working at least one hour per week. (You read that last criterion correctly: working just one hour counts a person as employed.)
While the economy, itself, is showing signs of life after the worst recession since the early 1980s, job formation is proving to be no less of a challenge than it has been in the early stages of many previous rebounds.
As explained from a more theoretical perspective in my September 28, 2009, article, "Anatomy of an economic recovery," and with evidence from economic statistics in my October 3, 2009, article, "Signs of a good recovery ahead ," widespread persistence of high unemployment rates indicates that inflationary forces are being held at bay as those who are still employed increase their productivity without putting pressure on wages and salaries.
Once businesses begin to hire significant numbers of new workers, the competition for employees will push compensation levels up, adding to price increases already showing up in consumer goods and services and in compensation rates to other production factors businesses utilize, like land and physical plant and equipment.
In the current era, the inflation trigger is quite sensitive because of an enormous overhang of excess money that has been created by the Federal Reserve over the past eight years. Recently, huge amounts of liquidity have been added by the Fed to fund government stimulus spending to get us out of this recession; but far greater sums of money were being printed by the central bank during the previous administration to fund the large, year-over-year gaps between federal expenditures and tax revenues. What the Fed wasn't printing to lend to the government was, to a significant extent, being brought to Treasury auctions by foreign central banks, which were accumulating vast sums of American dollars earned through trade with us.
All of that excess money the Federal Reserve created (or, to some extent, allowed to be created) has to be drained out of the economy before it becomes the fuel for a strong surge of inflation.
As unfortunate as it may sound, as long as the ranks of the unemployed do not shrink too quickly, the Federal Reserve can postpone the day when it must turn away from helping fund economic stimulus and set itself to the task of bleeding off that ocean of greenbacks.
Already, a few signals are coming from the environs of the central bank that the time of expansionary monetary policy is nearing an end. Once the Fed changes course, interest rates — which are the "price" of money — will begin to rise as the supply of money in the economy is drawn down.
As interest rates rise, consumer borrowing will be slowed, business investment will be truncated, and the viability of the economic recovery will be challenged as a result.
The longer the unemployment rate remains unusually high, the more cautious and deliberative the Federal Reserve can be in its transition from helper to disciplinarian of the nation's economic path forward.
The debilitating consequences on individuals, families, and communities of unemployment is undeniable, and those consequences can reach far beyond the time when jobs have again become plentiful. The economics of a successful course for the central bank through the perilous time ahead is fairly clear, but it is a course that is of little comfort to people who need jobs and cannot find them.
Those in Illinois and across the country right now in such dire circumstances must not lose hope, but neither can they expect the Federal Reserve to continue accommodative policies that were once beneficial but that will soon become toxic (if they haven't already).
At the same time, those jobless workers can expect the government to which they pledge their allegiance as citizens of this country, and to which they paid taxes when they had jobs, to do more than stand dispassionately aside as families suffer, children go without, and productive men and women become less concerned with pledging that allegiance to the country where jobs are too hard to find.
