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Navigating the Jobs Crisis: 3 Strategies for Real Economic Recovery

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As part of the Roosevelt Institute's 10-part series on the Jobs Crisis, running on the New Deal 2.0 blog from Nov. 12-25, I was asked to reflect on what can be done to get Americans working again. Here's my take.

As this month's unemployment numbers confirm, the nation's economy continues to suffer despite recent positive and relatively impressive productivity numbers. Unemployment now exceeds 10 percent for the general population. Unemployment for African Americans and Latinos exceeds 15.5 percent and 13 percent respectively. For Native Americans living on reservations, it is just below the fabled and feared 25 percent of the Great Depression. For all families out of work, the economy is in a depression. Unable to find a suitable job, more than a third of those out of work are classified as long-term unemployed. The longer they remain out of the labor market, the more difficult it will be for them to reenter the workforce. It also makes them less likely to regain a job paying the same or higher wages than the job they have lost, and more likely to run out of unemployment insurance and potentially end up on the streets with few, if any, options. In fact, prior to the recent extension of unemployment benefits, roughly 7,000 people per day were losing their benefits.

Many economists dismiss the bad news on the employment front arguing that unemployment is merely a lagging indicator. But a recovery without jobs is meaningless for families worried about paying their mortgages, purchasing food, affording health care, sending their kids to college, and saving for a decent retirement. And, a recovery without jobs presents the prospect for further damage to the financial system as growing numbers of households are unable to pay their debts. Most concerning, continued significant job losses open the door for a possible "double-dip recession" given the key role played by consumer spending.

While there is legitimate concern over the size of the federal deficit, the threat to the economy of continued high levels of unemployment is more urgent. The foreclosure crisis -- which sparked the collapse of the credit markets and economy -- continues to grow. But unemployment is now the leading reason families are losing their homes. Moreover, more than $13 trillion of household wealth has been lost since the crisis began. While it's hard to estimate how much of that wealth was an illusion, much of it was real savings. So, more must be done to help the nation recover from its sudden and dramatic loss. Creation, retention, and access to jobs must be a focal point for additional recovery spending, as well as management of current available recovery dollars. Employment strategies should focus on three major efforts:

  • Job training that translates directly into real jobs or careers -- For those out of the labor market or marginally employed, we should create job-training programs in the form of apprenticeships that are directly linked with job placement and retention strategies or first-source hiring agreements with industry. Job training programs should also focus on long-term career opportunities (i.e. teach transferable skills, create opportunities for future training and education, technical assistance for those who want to start their own businesses), wrap-around services and ongoing case management.
  • Increased access to existing jobs for the hardest hit communities -- Every agency within the federal government has annual contracting goals to increase the participation of small, disadvantaged, and women-owned businesses. Adherence to these goals varies greatly by agency with some key programs poorly enforced. The US Department of Housing and Urban Development estimates that for one of its largest programs (Section 3 requirements), only 25 percent of HUD funded recipients report their compliance and 80 percent of those reporting fail to meet the minimum requirements. Compliance with these types of guidelines consistently across agencies could channel tens of thousands of jobs to the hardest hit families and communities in America.
  • Rebuild the middle class -- We should implement policies that encourage the creation of reliable and sustainable jobs that allow families to earn a living wage, receive reasonable benefits, build assets, and retire in dignity. Investing in clean energy and energy efficiency programs can replace many manufacturing jobs that have been lost over the past few decades and position the nation to be a leader in many industrial jobs of the future. Federal policies should also protect American workers from direct competition with countries that fail to respect worker rights and not reward firms that ship economic opportunities abroad.
This pose originally appeared on New Deal 2.0.