There are two mantras trotted out frequently when the subject of unemployment comes up that President Obama would best not repeat. The first is that, yea, things are getting worse but not as fast as they were. The second – one that he seems taken with – is that joblessness is expected to be a “lagging indicator,” that is, the “recovery” will, by its nature, come quicker than improvement in the jobs picture.
The decline in the economy has, indeed, slowed down and that is one of the accomplishments of his administration. It can be directly attributed to the economic stimulus package put in play last year. But that looks to be temporary and as the project winds down, the future appears at best uncertain.
The lagging indicator argument – which both Obama and Labor Secretary Hilda Solis cited again last week – is not an iron law of economics. Saying something happened one way in the past is no guarantee it will do so in the future. Indeed, current commentary on the economic crisis contains constant references to the potential of a “new normal,” that is a jobless recovery that lasts a long time. A reoccurring theme in economics writing these days is that we are in danger of creating a category of workers who have either been jobless for so long, or have not been able to even enter the workforce, that they will lose the skills and habits necessary to successfully work in the future.
It goes without saying that the burden of this situation falls heaviest on African American and Latino workers, especially the young.
“The country also needs a program that would create jobs for teenagers — ages 16 to 19 — whose unemployment rate is currently a record 27.6 percent,” the New York Times said editorially last Sunday. “Deep and prolonged unemployment among the young is especially worrisome. It means they do not have a chance, and may never get the chance, to acquire needed skills, permanently hobbling their earnings potential.”
African American unemployment reached 15.7 percent in October (17.1 percent for black men). It’s been climbing steadily for the past two years. It was 11.3 percent a year ago and 12.6 percent in January. A similar picture emerges for Latinos: 10.4 percent in October 2008, 12 percent in January and currently running at 15.5 percent.
The Labor Department Household survey indicates that black teenage unemployment was 41.3 percent in October; it was 30.9 percent this time last year. Latino youth unemployment reached 35.6 percent in October, up from 28.3 percent a year ago. About a quarter of white teens were reported out of work in October. That’s bad enough but I suspect if it had risen to half, someone would have called for a state of emergency.
There appears to be general agreement that unless something drastic is done soon the jobless figures will just continue to rise. How high will they go? Most economists seem to think unemployment will start to decline sometime next year. “In all likelihood, the economy will continue to shed jobs, at least through the rest of the 2009, and probably into the first months of 2010. The unemployment rate will probably not peak until the spring of next year, at close to 11.0 percent,” writes Dean Baker of the Center for Economic and Policy Research. “As dreadful as they are, the headline numbers understate the severity of the problem,” says the Times. “They also obscure an even grimmer fact: Unless there is more government support, it will take several years of robust economic growth — by no means a sure thing — to recoup the jobs that have been lost.”
I guess it was to be expected that the 10.2 percent overall unemployment figure, coming as it did on the heels of the November 3 election, would prompt a lot of commentators to speculate and draw conclusions about what it all means for the Obama Administration and the Democratic Party. Times columnist Charles Blow put it pretty succinctly: “Job creation has dropped from top priority to one of many, and President Obama has been remanded to pandering for patience and offering excuses.” On the one hand, he argues the tortured rationale that there is good news in the awful numbers: Things are still getting worse but at a slower pace. On the other, he incessantly reminds us that he inherited the crisis. The implication: “Don’t blame me, blame Bush.”
“But this president can’t keep deflecting to the last one,” wrote Blow. “Pain is presently felt. The crisis that took form on Bush’s watch is being experienced on Obama’s. Fair or not, finger-pointing is not effective policy.”
It’s a refrain we’ve heard quite a bit over the past week. Somehow it moves me little. What’s happening to the lives of the legions out of work – particularly the young men and women – has to take second place to the fortune of the President and his party. The human crisis would be real regardless of who is in the Oval Office and is what should move the President and the Congress to do the right thing.
“The Administration’s biggest economic mistake so far was to badly underestimate last January how bad the employment situation would become by fall,” Robert Reich wrote last week. “As a result, it low-balled the stimulus — settling for a plan that, while avoiding even worse job losses, didn’t go nearly far enough.”
It’s alarming to think that the high powered brain surgeons the President brought in to stop the hemorrhaging on Wall Street couldn’t get the job projections right. But then again, maybe they did and just didn’t want to tell us because we might object even stronger to their putting banks and bankers first. In any case, Reich says now, “Obama has to return to Congress, seeking a larger stimulus.”
“Everything else on the table — a new jobs tax credit, more loans to small businesses, more help to troubled homeowners, another extension of unemployment insurance, another round of subsidies to first-time home buyers — are small potatoes relative to the importance and likely effect of a larger stimulus. Some of these initiatives may do some good, but even combined they’ll barely make a dent in the growing numbers of jobless Americans,” wrote Reich, even before the latest statistics were released, when it wasn’t certain the jobless rate would even hit 10 percent.
‘Meanwhile, the states are slicing their budgets, laying off workers, and ratcheting up taxes. That’s because state tax revenues are falling off a cliff, and almost every state is barred by its constitution from running a deficit. That means the states are actively implementing an anti-stimulus plan.”
The Times editors concur with Reich’s prescription, saying, “We know that more stimulus spending and government programs are a fraught topic. But they are exactly what the country needs. It may be the only way to prevent a renewed downturn. And the only way to create the jobs needed to put Americans back to work. Those are the essential — and missing — ingredients of a sustained recovery.”
Last Sunday, Washington Post Staff Writer Alec MacGillis talked about another kind of medicine that needs to be taken off the shelf, and which a lot of people seem to want to keep under wraps. “Why has a White House that talks so much about boosting employment steered clear of the most direct strategy that could keep Americans on the job?” he wrote.
“Since taking office, the Obama administration has studiously avoided paying people to go to work, which could be accomplished by subsidizing workers’ private-sector employment or by creating new government-paid jobs,” wrote MacGillis. “There are programs in a handful of states that financially compensate employees who cut their hours to prevent broader layoffs at their companies — an approach that costs relatively little, since it results in lower payouts of unemployment benefits, and that has helped Germany keep unemployment under 8 percent despite the deep slowdown there. But the Obama administration has so far opted not to expand this initiative. And aside from a small summer employment program for young people, it has not sought to create jobs on the public payroll, something the country did in the 1930s and 1970s.”
Of course, we know well what the response that kind of program would evoke. The “Blue Dogs” would start screaming about the federal deficit and passing on the debt to our children and grandchildren just as they did during the healthcare debate. The “tea party” people would start jumping up and down and yelling about a “government-run jobs program.” The administration is “scared of [any plans] seeming like old-fashioned make-work, but that’s what it is: You’re giving [people] jobs because they have nothing left to do,” Dean Baker, co-director of the Center for Economic and Policy Research, told MacGillis “Giving people a shot at a job has to be worth a little bad publicity . . . but as in a lot of areas, they proved more cautious.”
Yes, Depression era New Deal programs, like the Works Progress Administration and the Civilian Conservation Corps, should be put on the table. Not necessarily the same programs. Much of the country’s infrastructure is in dire need of repair and reconstruction. We need new energy efficient transportation systems.
There is a pressing need to accelerate the development of new “green jobs” programs to meet the challenge of climate change and fossil fuel depletion.
John Russo, co-director of Youngstown State University’s Center for Working-Class Studies, told MacGillis that the Obama administration shows little indication of lifting the taboo against public works projects because “Neo-liberalism continues apace even though it’s been thoroughly discredited.” The White House, he said, “has held back, and it has hurt. People were looking for a more aggressive approach; they did a political calculation and said, ‘This is all we can do.’ “
“The alarming news that unemployment has hit double digits should be a wake-up call to sleepy politicians,” said AFL-CIO President Richard Trumka November 6. “The nation’s jobless rate worsened yet again last month, with 190,000 jobs lost and the unemployment rate climbing to 10.2 percent. A total of nearly 16 million can’t find work.
“It is of great concern that there is still little sign of a sustainable private sector recovery, even more jobs will be lost in the coming months. Despite Wall Street celebrations of what they see as a recovery based on GDP growth of 3.5 percent in the third quarter, American workers know there can be no recovery unless everyone who wants to work can find a good job.
“The nation’s jobs situation would be even worse without the Obama administration’s American Recovery and Reinvestment Act. Nearly one million jobs have been saved or created because of the stimulus plan and the White House says the nation is on track to meet the president’s goal of 3.5 million by the end of next year. Additionally, the extension of unemployment benefits by Congress is an essential and welcome step.
“Every day, it becomes more urgent that the federal government step up to the plate with bold actions to boost job creation. Those actions should include urgently needed fiscal relief to state and local governments, community jobs programs, additional investments in infrastructure and green jobs and credit relief to small and medium-sized businesses. Failing to act puts us at very real risk of a lost generation — of hard-working Americans who can’t put food on the table and bright young people who never realize their potential.
“We must do better.”
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