Transcription
Welcome, friends, to another edition of Economic Update, a weekly program devoted to the economic dimensions of our lives and those of our children. I'm your host, Richard Wolf.
Before we get started, I want to remind everyone, uh, that the deadline to apply for the Worker Co-op Academy summer boot camp edition is June 10th. In case you have no idea what I'm talking about, the Worker Co-op Academy is a 14-week online course designed to equip participants with the tools they need to build, maintain, and grow their own worker co-op. It's presented in collaboration with the People's Network for Land and Liberation and the Wellspring Cooperative. You can find out more about the program, the instructors, the registration procedure, and so on by going to democracy at work.info/wca for worker co-op academy.
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Okay, today I want to do two things. I want to talk to you about two important strikes in which large groups of working people are fighting to change the situation we all find ourselves in. I find people able and willing to hurt their own income, jeopardize therefore the things they hold dear in terms of finance, in order to make a point, in order to get a job that is more accommodating to real people's real needs. They're kind of heroes and heroines for me.
So, the first one is huge. It's the 50,000 nurses that are members of British Columbia, um, Nurses Union. My, my apology. British Columbia Nurses Union in our northern neighbor, Canada. They have voted 98-plus percent to authorize a strike and to empower their leaders to call job actions and all kinds of preliminary steps, steps to a strike. And they're doing it mostly because their workloads make it impossible for them to provide the kind of care they were trained to provide, they want to provide, and that the health of the people of Canada, particularly those in British Columbia, deserve and require. Authorization to pay them properly and to give them the proper work conditions is what they are fighting. Government entities that want to save money, as if they were businesses, are making a terrible mistake in the way they run the hospitals and the healthcare. And the nurses have the courage, since they're right on the front lines, to stand up and to say so and to demand smaller workloads, more staffing, and so on.
The second strike is already underway as I prepare this talk today. It's 3,500 workers who work in the Long Island Railroad. It's the largest commuter rail system in the United States, bringing hundreds of thousands of people from Long Island into New York City every day. And they too, having been working under a contract that they want renewed, that is now timing in the right time to renew it, are discovering that, yep, again, the managers, the people who run are interested in their money, in their profitability, in the pressures they face, and they want basically to sacrifice the workers in terms of what they offer, and the workers won't have it. And I want to remind folks, workers are the majority in our country. They ought to have the respect and the power that goes with that.
Okay, this is a reasonable way to get me into the second topic today. Unemployment is rising in the United States. Has been now for a bit, and will promise to do so in the months ahead. I want to talk to you today then, in the time that remains, both in the first half and in the second, to explain the economics of unemployment and to do so in a way that I don't think most of you have heard or understood, because it hasn't been presented to you as it should have been. So, here we go.
First, as of April 2026, the latest statistics we have, the official rate of unemployment in the United States is 4.3%. In other words, that's the percentage of our total labor force that is currently unemployed, according to the government's systematic collection of the data on which these numbers are based. Well, let me put that in more human terms. How many people, therefore, are unemployed in the United States? Well, 4.3% of a labor force currently estimated to be 170 million people, just shy of half of our population. That works out to 7.4 million Americans. Please let the number sink in. 7.4 million people. That's almost the population of New York City. It is more people than exist in many countries around the world. Okay? 7.4 million people.
And let me be clear with you, so the statistics are not misunderstood. The government counts as unemployed only those people looking for a job now and not finding one. It doesn't count people, for example, in institutions, people in a hospital, people in the military, people in prison. All those people are not counted. You might think of them as unemployed. I certainly do. But that's not what the government is counting. Only those people looking for work. If you're not looking, if you answer the questionnaire or you tell the officials in the unemployment office, you're not looking now. Or if you're in a category, say, a retired person who's not, you're not counted either. Just the people looking for work and not getting it. 7.4 million Americans.
Now, let me drive home. When Mr. Trump, the president, says the economy is great, what in the world is he talking about? 7.4 million people are not working and want to and can't find a job. In many places, they won't get their unemployment compensation if they're entitled to it unless they can prove they're looking. They have to bring back a slip of paper from an employer saying, "Such and such a person approached me, and I don't have a job for that person." So, when the president says it's great, it's not.
Here's another thing to think about. Many people over the last several years supported and endorsed the idea of immigration control and deporting millions of people by making the argument, "We can solve our unemployment problem if we put native people born here in the United States and give them the jobs and get rid of these foreigners who are taking jobs." So, we did. We got rid of a lot of them, and we blocked any more of them from coming in. Is the unemployment going down as a result? No, it's going up. You know what that means? Immigration wasn't relevant. We scapegoated those poor folks coming here to do what generations of immigrants have tried to do by blaming them.
We have had ups and downs of unemployment because that's what the employer class does. They have what they call business cycles. We have them ups and downs of the economy that depend on whether companies are expanding or contracting. And who makes the decision whether a company expands or contracts? The board of directors, the owners of the company, the capitalists, the employer class. And you want to know what's causing the unemployment these days? 30 years of moving jobs out of the United States, moving the factory to China or the warehouse to Malaysia or something to Brazil. Who knows? And who made those decisions? The same executives, the same employer class. They're the ones. Capitalism produces unemployment. It always has, whether the immigrants are up or down. Don't be fooled.
Well, let's keep going. Let's talk about what unemployment means. 7.4 million of our fellow Americans are looking for work and not finding it. Here's something to understand in economics. If 7.4 million people are not working, they are not contributing their brains, their muscles, their energy to producing goods and services. But notice they keep on consuming them. Unemployed people don't die. Unemployed people don't disappear. Unemployed people continue to eat, wear clothing, need shelter, and all the usual things, all the rest of us do. But of course, if 7.4 million people are consuming but not producing, it must mean that the rest of us are producing but don't get to consume part of what we produce, because it's taken over and used for the sustenance of the unemployed. Unless we become a kind of population that kills off unemployed people, and we're not there yet. It's irrational, irrational socially, to have some people wanting a job who don't work being sustained by the people who have a job and who therefore have to give over part of what they produce to people who aren't themselves producing. The people who get have their output taken away are not happy about it. And the people who have to depend on other people, they're not happy about it either. That's why they're looking for a job. It's an irrational arrangement.
And let me point out the irrationality a second way. We have 7.4 million Americans without work. The, excuse me, the Federal Reserve system has another statistic to keep in mind. It's called capacity utilization. It's what portion of the tools, equipment, factories, machines that we have available for production that are sitting idle, gathering rust and dust. You might be surprised. About a quarter, roughly 75%, 3/4 of our capacity we're using, but about a quarter of it sits idle. So, let me tell you, 7.4 million people who want a job and can't get one, and a quarter of the tools, equipment, and raw materials needed for them to work with. They could produce enormously. They could make the working days shorter in this country because we'd have the extra output of all those extra people working. We wouldn't be wasting the tools, equipment, and raw materials. It's irrational to have unemployment, and capitalism has always produced and reproduced it time and time again.
We've come to the end of the first half of today's show. Stay with me. We're going to talk about why we keep getting this unemployment and what we can do about it when we come back.
Before we jump into the second half of today's show, I wanted to thank you for your very generous response to our fundraising efforts, uh, this year and in particular in the last couple of months. And in part responding to that, we are extending the availability of our limited edition linen-covered hardcover version of Understanding Capitalism, the book I wrote, and that we have been making available now for quite a while. If you are interested, I will be signing copies of that hardcover, and they will be available to you as they have been, uh, over the last few weeks. Just simply send an email to us at info democracywork.info and put in the subject line, "Limited Edition." We will send you all the information you need to order and receive your copy, signed copy of Understanding Capitalism in its hardback. And thank you again for your kind attention to the fundraising dimension of what we do.
Welcome back, friends, to the second half of today's Economic Update. We're devoting our program today mostly to the unemployment issue because unemployment is growing. Because unemployment is, as I tried to show in the first half today, a fundamentally wasteful, irrational aspect of modern capitalism. I want to turn next to talk about why, in the end, we have unemployment. It's already implicit in what we've talked about, but now I want to put it straight out in straight English.
In our type of capitalist system, in which private enterprises are the way we organize the production of goods and services, the result of doing it that way is that employers, employers, the US Census Department again tells us, 3% of our people, Americans, are employers. The other 97% are not. 3% the employers make the decision to hire. That is, most American, the overwhelming majority of Americans, if they have a job, have one because a private employer hired them. Yes, there are also government employers, and they act quite similarly, but we can focus on the overwhelming majority, which is private employers.
And now here comes the economics to understand. The private employer only hires a worker if it is profitable to do so. For the employer, the question is, if I give Mary or John a job, whether it's for $20 an hour or $20 million a year, I want to know one thing: Does this decision where I spend money as an employer get me back more money? Is it a profitable investment to hire Mary or John? Why is this important? Because it means that we live in a capitalist system which makes employment hostage to profit. No profit, no job. Wow. Think about that, friends. You think about it simply, you'll capture its essence. Profits flow to the employer. Wages and salaries flow to the workers. To say that we will only hire a worker if it's profitable means that whether or not wages and salaries go to the vast majority of the people, the majority, the big majority, depends on a decision made by a tiny minority, the 3% employers. They decide to hire us, we get a job. They decide not to hire us, we lose a job, we don't get one in the first place.
You ought to wonder, if you think you live in a democratic society, whether what I just told you is consistent with democracy. I'll save you time. It isn't. Not even close. Where and how could you ever justify, if you believe in democracy, allowing 3% of our people to make the decisions of employment for pretty much everybody else, or the dependence of all those employees who depend on the wage and salary the employees get? That's not a democratic arrangement. That is an autocratic arrangement in which the 3% employers sit on a power not shared by the mass of employees. The employees can't fire the employer, but he, he or she can fire them. Wow.
Why is this important? Well, there's 7.4 million Americans sitting today unemployed, being an irrational dimension of our system, are where they are. The irrationality exists where it is because the system empowers a tiny minority who have decided, looking at the economy today, it's not profitable to hire 7.4 million people who, therefore, are in trouble. They may depend for a little while on a government check. When that runs out, they will depend on their family, on their church, on their neighbors, and they will become desperate. If you didn't know it, let me tell you, every index of social problem gets worse with unemployment. The more people are unemployed, the more problems with alcoholism, with child abuse, with spouse abuse, with domestic violence, with, fill in the blank. So the cost to our society of this irrationality is enormous.
What then does the government do? And the answer is far too little. In some societies, the government does nothing. And conservatives, even here in the United States today, would like the government to do nothing. They don't want even unemployment compensation where the government doles out a little money every week for half a year or maybe longer to help you for a while. And why does the government do that? 'Cause workers have demanded it. And why did the government do what the workers demanded? Because if you don't do what the workers demanded, excuse me, you run a risk, which is those workers will tear down the system. Very rational thing to do, given the way the system works or for the unemployed doesn't work. That's right. Unemployment compensation, the whole welfare system, was developed in Germany in the 19th century and then spread across capitalism. You better take care of these people to whom you give no work, because if you don't, they're going to have very little to lose, and they'll turn against the system. And if they turn against the system, you may not get any profit from anybody. So you want to keep your system going, you got to deal with the irrationalities of your own system.
Some of you have figured out that giving people welfare is a kind of a crappy solution. What the people want is a good, steady job that pays well. And that would be better for society, because then the money they earn would be offset by what they help to produce. Giving them a job is way better for everybody than putting them on welfare. That's correct. But we only have welfare because the system fails to provide work for everybody. It always has.
The closest the United States ever came to real full employment was in World War II. That's right. The only time we came close is when there was a national emergency. We felt the country's life was at stake. So we took millions of unemployed people. Remember the 1930s, the Great Depression? So we had many, many, many, much more than today, unemployed people. The government stepped in, put half of them in uniform to fight World War II, and the other half in the factories to make the uniforms, the guns, the bullets, and everything else. The irony of capitalism to overcome its own irrationality requires war and killing of large numbers of people. Whoa, what a quality of the system. And other than the war, we've never come close. It's a failure of capitalism.
And what does the government do besides welfare and unemployment checks? Here's what the government does most of the time. It works to make capitalism more profitable, because they, that's how they want to solve the problem. Get people hired because it's profitable. And if capitalism isn't profitable by itself, give it some government help to make it profitable. Give them a subsidy. Sometimes a government comes in and says, "We'll pay a portion of the wage." Have we done that in American history? Absolutely. Notice we're being held hostage to the profiters, the propheteers. The government helps them in order that way to help unemployed people.
But of course, there's an alternative, isn't there? The government could help unemployed people directly. And you know how it could do it? Employ them. Give them a job. That's what they want, and that's what would benefit the country. Did we ever do that in America? Yes. Really, only once in the depths of that same depression in the 1930s. The United States government, desperate because so many people were unemployed. Everybody understood the absurd irrationality. And people turned against capitalism because they knew that's what the problem was. More people joined socialist and communist parties in America in the 1930s than at any time before and at any time since, because it was so clear. And that scared the government. So they went and did what I just said. They hired, get ready, millions, estimates vary, 10 to 15 million unemployed people got a job working for the federal government. They built those national parks in the West that many of you enjoy. They did some of the earliest ecological conservationist projects. They did things that the society needed that weren't being done by private profitering capitalists. So the government did them.
In most socialist societies, keeping the people working is the number one priority. It's more important than profit. If profit has to be sacrificed, work for all who want it is the priority. That's another way to organize a society. And before you think that it can't work or hasn't worked, let me remind you, the most rapidly growing society in economic terms over the last 30 years has been the People's Republic of China. They have set themselves the goal to employ everyone. They haven't always succeeded. There has been unemployment, but this is a government that has focused on the priority of work for everyone, not on the profitability. Half their economy are businesses owned and operated by the government, which hire without that profitability being the dominant variable in their minds. Is it possible? Sure it is.
Think about it, folks, so that we don't bequeath to our children the notion that unemployment is something you have to live with. You don't. You shouldn't. We should outgrow it. It's long overdue. Thank you for your attention. I hope you found this economics of unemployment interesting. And as always, I look forward to speaking with you again next week.