So today we learned that we lost another 131,000 jobs last month, with an anemic 71,000 jobs created by the private sector and unemployment remaining at 9.5 percent. Last week we saw that economic growth slowed from 3.7 percent in the first quarter to 2.4 percent in the second quarter and personal consumption growth fell from 1.9 percent to 1.6 percent.
Let's brush past the pain of joblessness and take the issue right to corporate terms: People who don't have jobs don't make good consumers. But business is unmoved.
Nonfinancial companies are hoarding cash. They're sitting on a reported cash pile $1.8 trillion high, about a quarter more than at the start of the recession. But they're not hiring. One recent survey of CFOs says most don't expect unemployment to drop back to pre-recession levels until 2012 or later -- even though they foresee rising corporate earnings.
Do we need more evidence America's jobs crisis is not going to be solved any time soon by the private sector, even though its refusal to create more jobs keeps demand low and could stall out our fragile recovery? Do we need more evidence that our elected leaders must do more to put people back to work?
It's astonishing to me that the same day we got the dismal news about July's unemployment, the Senate went off on its long August recess -- which many members will use to campaign. Many Democrats have been fighting on our side, along with the Obama administration, for federal investments to create and save good jobs. They finally broke the filibuster that had been tying up state and local aid to save the jobs of hundreds of thousands of teachers, firefighters, police, nurses and others who provide vital public services.
But a near solid bloc of Republicans in the Senate -- and a Democrat or two as well -- has stood as immovable obstacles to job creation. I keep asking myself: How the heck can they go back home and with a straight face ask jobless machinists, construction workers and teachers for their votes? How can they gladhand firefighters, police officers, school bus drivers and postal workers who are waiting to see if they get a layoff notice today?
Nobel Prize winning economist Paul Krugman recently lamented, "Yes, growth is slowing, and the odds are that unemployment will rise, not fall, in the months ahead. That's bad. But what's worse is the growing evidence that our governing elite just doesn't care -- that a once-unthinkable level of economic distress is in the process of becoming the new normal."
We cannot accept as "normal" almost 15 million Americans out of work and another 8.5 million underemployed, or unemployment rates of 15.6 percent among African Americans and 26.1 percent among teenagers. Maybe our companies can function with the status quo, sheltered by hidden wads of cash and a recovering stock market -- but our families can't.
As Krugman said, "The point is that a large part of Congress -- large enough to block any action on jobs -- cares a lot about taxes on the richest 1 percent of the population, but very little about the plight of Americans who can't find work."
Shameful. Absolutely shameful.
Here are their excuses: First, we can't spend money to create jobs because of the deficit. Second, businesses aren't creating jobs because they're worried about new regulations.
Shameless. Shameless hypocrisy.
Once and for all, let's get it on the record: We do not have an immediate deficit crisis. We have an immediate jobs crisis. We cannot hope to shrink the deficit if the economy fails to grow or create jobs -- or worse, if it falls back into a double-dip recession. Once we get past the jobs crisis we can focus on stabilizing the national debt over the long term.
If there's any doubt the deficit hawks in Congress are blowing smoke, take a look at what they're saying about the George W. Bush tax cuts. They want to extend them. And those tax cuts make up 60 percent of the deficit they claim to be so concerned about.
And is business worried about new regulations? Recently enacted regulations are not going to hurt responsible businesses any more than tough drunk driving laws harm people who don't drive drunk.
If businesses really were failing to hire because of worry about regulations, they would be working their existing workforce longer hours. But they're not.
The truth is, businesses aren't dipping into that hoard of cash to hire because they're awaiting the resurrection of consumer demand.
And that's not going to happen until people have jobs.
It's a circle--and we can either watch as a vicious circle takes us spinning downward or turn it into a virtuous circle that lifts America up.
I know which I choose.
I agree that we have an immediate jobs problem. However, to put it in perspective 9.5% unemployment is not an uncommon phenomenon in countries that have relied on large government expenditure to spur employment. In Europe, their STRUCTURAL unemployment rates average in the high single-digit and low double-digit range. In fact Germany, during 2006 when all was good, was registering an unemployment rate at 11.7%, not including a huge percentage of their population that was either part-time or underemployed. These countries in response to inefficient large-government economies have been adopting more market-based initiatives to get their economies on track. They have been reforming their labor rules, reducing government expenditure and reducing corporate tax rates to spur growth in their economies to the point where America now has the second highest corporate tax rate among the OECD countries. In short, long-term government induced demand is not the way to go.
More importantly, I might add that government stimulus at the bottom to spur consumption is, in effect, creating temporary artificial demand which has yet to create a virtuous economic cycle since business owners are smart enough to realize that a) it is short term, b) it increases debt which has a future price that will be equally if not more economically painful, and c) does nothing to address their structural profit model in the long term the way that low capital gains taxes or low corporate tax rates would.
Kai
Thanks again for your response.
I picked Germany because most pundits agree that they have the most robust economy out of the group of basket cases that make up the EU/OECD, many of whom have even worse unemployment situations. If Germany is not good enough for you, well, pick your poison. I will point out the flaws in any of them. With the exception of Norway, which is a net exporter of oil, the rest of them have high structural unemployment and this is after decades of failed stimulus and protectionist efforts. Many of these failed countries are now either facing bankruptcy or are moving toward American style tax, labor, and regulatory reform. We are going one way, they the other. Why? Because they have been where we are going and didn’t like what they saw.
Kai
Long time no chat. Hope all is well with you.
You made several good points. You are right, I would rather see money given for training than simply as a handout, i.e., unemployment insurance. I would like to pint out, however, that was not my point. My point was that Germany’s, or most European countries, have a worse economic and unemployment situation than we do. It is masked with the way they treat unemployment, but there is no reason that at the height of a global boom, Germany could only get to a 11.7% unemployment rate. It is so bad that Germans have to go overseas to work, as do the French, etc. My point was that Germany is doing RELATIVELY well despite its government intervention, not because of it. I must give credit to the Germans through, they realize that their system is broken and they are taking initiatives to fix it. A host of American-style labour reforms in 2005, surely is helping them now! They got tired of 15% of their working-age adults living on the dole for over 36 months at a time and the another 10% being partially employed. Their workers got tired of it too which is why they have bene voting in non-socialists to fix tehir government and put their books in order. I cannot wait until we do the same.
You other points are all sensible with regard to training and restructuring of the unions.
Kai
I guess time has come for bold actions, headline grabbing ones to take notice and counter the party of NO. Time to call for a constitutional amendment to guarantee workers right to unionize. Japan has a constitutional amendment, German workers have even more rights. Their countries have no foreign debt and their economies are far better than ours. Besides for every little thing the party of NO always calls for removing or adding a constitutional amendment, lets return the favor.
Thank you for your post.
I would agree that in real terms, wages for many workers have been going down; however, I would argue that you are erroneously equating an inverse causal relationship between trickle down economics and wage growth. American jobs and wages have been threated since the 60’s due to, most notably, increased competition from a fully-rebuilt Europe and increased competition from rising-tiger economies, back then it would have been Japan, Taiwan, today it is China, etc. Not Reagan. I would argue that if you do not want to be treated like a commodity do not let yourself become a commodity: study hard, work hard, differentiate yourself, and learn skills that today’s employers need instead of relying on the government to protect your unskilled commodity jobs.
Secondly, unionization does not expressly guarantee that workers will make more in real terms, the Japanese manufacturing worker having also become uncompetitive is also realizing this, with their jobs now being exported to China and the government using deficits to increase domestic aggregate demand to near ruinous results. Germany recently reformed their labor rules in 2005, bringing in a host of new policies more like America, even so, they still have a STRUCTURAL unemployment rate in the high single-digit. That means that what we have had for just a few years, they have had for decades. One of the reasons they are moving away from big government and big labor, much to Paul Krugman’s displeasure
Kai
And no other nation has free trade with a communist dictatorship like China. The reason is simple. In a communist dictatorship workers have no rights and the labor market isn't free.
Therefore its not a free market. A worker's life has no value in China. So by competing directly with them you have to drive down your own workers lives to nothing to compete.
If slavery is what you want then move to China and become a citizen/slave. Cheers.
the ONLY way to decrease the deficit is by getting people back to work and paying taxes. I somehow think that the folks who are in possession of 67% of the nation's wealth after the Bush robber baron days and the TARP looting will be able to absorb a tax hike of 4%.
Or they can all leave and go to Afghanistan.
I used to like the days when I could actually find USA made products and had the choice of whether to buy cheap junk or things that last and are well made. Now, I have to find oldies but goodies on the auction sites.
It's appalling that each year what my slender budget can stretch to is poorer quality than the year before.
Its hard to follow someone who won't even lead.
1. Uncertainty around regulations.
2. Too much litigation.
3. Card Check.
Also Clinton policies are soundly rejected. Policies that created over 8 million new net jobs.
Business not investing in the US? Looks like they are ones now On Strike.
I would say my business is doing its employee very well.
My point is don't go thinking you are some super hero. We are all running a small business.
True?, I don't know, but this guy believed it and as long as average Americans believe that Unions are the problem with us being globally competitve you won't get your way.
What I didn't notice in your post was the concept of buying products from these "hoarding" companies because they do hire Americans.
Until you can communicate these ideas to working class Americans we will circle around this morass.
I have another uncle that works in a non union coal mine. He has great pay and great bennys and he says "thank God I don't work in a union mine".
He doesn't see that without the unions he would make a dollar an hour, but that is the perspective that is out there, and that is the challenge for the union leadership.
Clinton also created free trade with communist China. How is that working out for jobs?
Right now, if I can't ship your job to China, I can offshore it to Asia or Mexico, or I can import a worker from somewhere to replace you here in the US. So take all the training you want. But be prepared to compete for the lowest wages in the world.
Our ruling class depends on our ignorance so the only way to fight any of this begins with education. We need to learn the actual history of this country, not the one taught to us. A good place to start is by reading Howard Zinn's "A People's History of the United States".
The American ruling elite constantly had to put down rebellions and riots of the lower classes struggling for humanized working conditions and fair pay for their labor since the founding of this country. In the beginning they kept us out of government, then they learned to use party politics, religion and race to divert our anger and divide us. They fought fiercely against the formations of unions because they fear us if we are united. Now the ruling class has bought most unions, invested in secret surveillance, created a police state and still use politics, religion and race to control us.
Educated people are propaganda resistant and recognize that it isn't the other political party that is interfering with changes that would benefit working people. Educated people know that it isn't the people of another race or religion that have caused these problems. It is a class war that has gone on for many centuries.
Now that Wall Street is bailed out and happy, they would gut our safety nets and reduce our national debt on the backs of the American workers and the unemployed. They would let us starve to death on the streets rather than try to help the American workers. We may as well take our stand now, rather than die off gradually in silence. Give me liberty, or give me death!