by Robert J Samuelson:

The first Labor Day, held in New York City in 1882, was less a cel­e­bra­tion of the dig­nity of work than a demon­stra­tion in favor of the eight-hour day, down from the pre­vail­ing 10 to 12 hours. Com­pared with then, Amer­i­can work­ers have come a long way. Con­gress made Labor Day a national hol­i­day in 1894, and over the years it evolved into a day off rather than a moment to reflect on the state of labor, broadly defined and extend­ing beyond unions. Well, not this year.

It’s the bleak­est Labor Day since at least the early 1980s (unem­ploy­ment in Sep­tem­ber 1982: 10.1 per­cent). With the unem­ploy­ment rate at 9.7 per­cent in August and expected to go higher, cheery news is scarce. The Eco­nomic Pol­icy Insti­tute, a lib­eral think tank, has painted a sta­tis­ti­cal por­trait of today’s labor mar­ket. Here are some lowlights:

– Since the recession’s start in Decem­ber 2007, the num­ber of lost pay­roll jobs totals 6.9 mil­lion. A third of today’s job­less have been unem­ployed more than six months, almost dou­ble the share a year ago and a post-World War II high.

– Wage growth has slowed dra­mat­i­cally. In the first half of 2007, all pri­vate wages and salaries rose at an annual rate of 3.7 per­cent; in the first half of 2009, the increase was 1.3 percent.

– The unem­ploy­ment and “under­em­ploy­ment” rate is 16.8 per­cent — this includes the offi­cially unem­ployed plus all part-time work­ers who’d pre­fer full-time jobs, as well as dis­cour­aged and demor­al­ized job-seekers who have stopped look­ing for work.

Job anx­i­ety has also increased sharply, accord­ing to opin­ion sur­veys com­piled by Kar­lyn Bow­man of the con­ser­v­a­tive Amer­i­can Enter­prise Insti­tute. A Gallup poll in August found that 31 per­cent of work­ers wor­ried about being laid off, up from 15 per­cent a year ear­lier; 32 per­cent thought their wages might be cut, up from 16 per­cent; and 46 per­cent feared fringe ben­e­fits might be reduced, up from 27 percent.

What’s most omi­nous is not today’s job mar­ket; it’s the out­look. After the 1981–82 reces­sion, unem­ploy­ment dropped steadily from an annual aver­age of 9.7 per­cent in 1982 to 7.5 per­cent in 1984 and 5.5 per­cent in 1988. The descent this time is expected to be much slower. In 2014, the unem­ploy­ment rate will still aver­age 7.6 per­cent, fore­casts IHS Global Insight, which pre­dicts a peak of 10 per­cent early next year. Reduc­ing unem­ploy­ment requires an eco­nomic expan­sion fast enough to absorb today’s job­less plus the nat­ural growth of the labor force. Most fore­cast­ers expect a tepid recov­ery will only grad­u­ally dent unem­ploy­ment, despite slow­ing labor force growth.

“The 1982 reces­sion was largely caused by the desire to break the back of infla­tion,” says econ­o­mist Nigel Gault of IHS. “Once the [Fed­eral Reserve] was com­fort­able it had bro­ken infla­tion, it low­ered inter­est rates, and eco­nomic growth took off.” Interest-sensitive sec­tors — autos and hous­ing — pro­pelled recov­ery. By con­trast, today’s slump results from finan­cial cri­sis, Gault says. The Fed has already cut inter­est rates, which will prob­a­bly go up. As over­bor­rowed house­holds repay debt, their spend­ing will be slug­gish. The weak recov­ery then retards new jobs.

The impli­ca­tions of pro­longed high unem­ploy­ment — should it mate­ri­al­ize — haven’t been fully explored. Peo­ple with­out work don’t acquire on-the-job skills. Young col­lege grad­u­ates are already hav­ing trou­ble get­ting work. High unem­ploy­ment could depress wage gains for years. It could fos­ter pro­tec­tion­ism and long-term poverty. “In a tight econ­omy like the late 1990s, firms are more will­ing to take chances on more dis­ad­van­taged work­ers,” says Har­vard econ­o­mist Larry Katz. EPI’s Lawrence Mishel thinks that the effects on low-income fam­i­lies would be dev­as­tat­ing; the child poverty rate could jump from 18 per­cent in 2007 to 27 per­cent, he says.

Of course, today’s bleak eco­nomic fore­casts could be wrong — just as upbeat fore­casts before the finan­cial cri­sis were wrong. Some econ­o­mists are warm­ing to greater opti­mism. “Global man­u­fac­tur­ers cut out­put too deeply,” says David Hens­ley of JPMor­gan Chase. “Peo­ple thought we might be headed into another Depres­sion.” Here and abroad, he says, com­pa­nies are revers­ing pre­vi­ous cut­backs. “Busi­nesses over­shot. They’ll snap back [in hir­ing]; that will fuel con­sumer spend­ing.” One good omen: In August, an index of online job vacan­cies rose 5 per­cent, reports the Con­fer­ence Board.

Job cre­ation has been a his­toric strength of the Amer­i­can econ­omy. Its capac­ity to remain so will increas­ingly frame the eco­nomic debate: between those who want more gov­ern­ment and those who want less; between those who fear bud­get deficits and those who favor more eco­nomic “stim­u­lus”; between those who see mea­ger wage gains as imped­ing recov­ery and those who see them as encour­ag­ing hir­ing. On Labor Day 2009, future jobs are the nation’s gigan­tic ques­tion mark.