Wall Street is all giddy about the surge of ‘green shoots’ it’s seeing, including huge bonuses for investment bankers.
But on Main Street most of the ‘green shoots’ we’re seeing are the ones coming up through the floorboards of the foreclosed homes, shuttered factories and abandoned shops and businesses.
After last month’s really bad jobs numbers, which pegged the official unemployment rate at 9.8% and reported the loss of another 263,000 jobs in September, there was renewed talk from the White House and the editorial pages about the need to address the employment crisis.
There has been movement in Congress on extending unemployment benefits for an additional 13 to 20 weeks to help the hundreds of thousands of unemployed Americans on the verge of exhausting their benefits. This should be an emergency safety net no-brainer. But as Sen. Kirsten Gillibrand (D-NY) writes at the Huffington Post Senate Republicans are blocking the measure, as if to show that they have neither hearts nor brains.
The AFL-CIO is calling on the Senate to end the Republican’s obstruction, and is being joined by 14 Senators urging swift action to extend unemployment benefits across the country.
But beyond the obvious necessities to extend jobless benefits, COBRA access and food stamp relief, precious little has been offered thus far to go further in addressing the jobs crisis and the need for a real recovery on Main Street.
One of the clearer voices offering substantive, specific ideas has been former Labor Secretary Robert Reich. Writing on his blog in the wake of last month’s unemployment numbers, he asked, somewhat rhetorically, Specifically, What Should Be Done For Jobs? and outlined these four steps:
(1) Use existing authority under both the stimulus package enacted earlier this year and the nefarious TARP bailout fund — extending and combining them into a fund to make up for state and local cuts in public school budgets, childrens’ health, public health (we need workers to administer swine flu vaccine) and public transportation. Instead of bailing out banks and giant automakers, we should switch to bailing out public services that average people need.
(2) Propose a one-year payroll tax holiday on the first $20,000 of income. Republicans as well as Blue Dog Dems could go along with this, and it would be a highly progressive tax cut since 80 percent of Americans pay more in payroll taxes than they do in income taxes.
(3) Give small businesses a “new jobs tax credit” for every net new job created over the next year. Granted, under normal circumstances this sort of jobs credit doesn’t have much effect, and it’s difficult to separate hires that would have happened anyway from net new ones. But we’re not in normal circumstances; small businesses, which are responsible for most new jobs, still aren’t hiring. They need a boost.
(4) Dramatically expand the Small Business Administration’s lending programs and have the Fed buy up the SBA’s debt. Big banks are not lending to small businesses. TARP has been an utter failure in this regard. The SBA and the Fed should circumvent them and help small businesses get the capital they need, so they can start hiring again.
These steps, Reich writes, would be beneficial and not too tough to do.
With the next unemployment report, for October, scheduled to be released in two weeks, we should be hearing more about specific proposals to support the jobless, create new jobs and generate a real recovery here on Main Street.
Tags: infrastructure, Jobs, labor, recovery, unemployment
You know something is happening when top economists are calling for mass protests.
But that’s exactly what economist Dean Baker does in his latest column “Won’t You Please Come to Chicago, No One Else Can Take Your Place”.
Those disgusted by the bank bailouts, and the bankers who brought us this recession, will have a chance to make their views known when the American Bankers Association has its annual meeting in Chicago, October 25-27. A large coalition of labor, community, and consumer organizations are organizing a protest at this “Showdown in Chicago”.
A big turnout at this event can make a real difference. Just to review the scorecard, most of the country is still suffering the fallout from the bankers’ irrational exuberance of the housing bubble era. The Congressional Budget Office (CBO) and other forecasters expect the suffering to endure for years to come.
Endorsed by the AFL-CIO and many other organizations the three-day event will culminate with a protest march to the American Bankers Association convention carrying the message:
Enough is Enough.
The Banks Have Had A Recovery – Now the American People Need One.
Organizers say they will also be promoting a set of specific solutions aimed at addressing financial reform and real economic recovery, among them:
Too Big to Fail
In the US today, three banks hold almost 34% of the nation’s deposits, four banks issue 50% of the country’s mortgages and the five largest credit card lenders control 74% of the market. These companies have a stranglehold on our wallets. And as we’ve seen, when they make bad decisions, they can take the whole economy down with them.
New laws should be put in place that minimize the risk of the “too big to fail” problem. No single institution should be in control of such a large part of the market. Instead, we should encourage a vibrant, diverse, stable banking system, made up of thousands of small and medium size banks. Strong competition policies and antitrust laws will encourage financial institutions to invest in productive activity, instead of investing in changing the rules of the game or manipulating the market.
Consumer Financial Protection Agency
The Obama Administration has called for the creation of a Consumer Financial Protection Agency (CFPA) that will make protecting consumers a priority over protecting the interests of the banks. Seven different government agencies had the power to stop the reckless risk-taking that wrecked our economy, but they didn’t use it. Lax oversight helped spawn the disastrous mortgage products and practices that triggered the current crisis. What’s more there is virtually no regulatory authority over firms that have pushed bad mortgages, payday loans and other products that are overly complicated, or are simply rip-offs. The CFPA will bring the focus we need to clean up destructive and unfair financial practices, restore the integrity of our financial system, and prevent another disaster in the future.
As Dean Baker, the co-director of the Center for Economic and Policy Research, writes in support of the Showdown in Chicago:
The policies that will rein in the banks: reform of the Federal Reserve Board to make it democratically accountable, a tax on financial speculation to pay for the bankers’ mess, and restrictions on the bank abuses of consumers that caused the carnage have support from people on both the left and right.
A bill that would require the Fed to disclose what it did with more than $2 trillion in loans to banks and other financial institutions was originally co-sponsored by Ron Paul and Alan Grayson, one of the most conservative and one of the most progressive members of Congress. Due to public pressure, it now has more than 270 co-sponsors.
This is exactly the sort of alliance that gets the elite worried. Reining in the power of the financial industry will be a long, hard-fought war, but it is one that must be fought. President and Nobel peace prize winner Barack Obama may not have been able to bring the Olympics to Chicago, but everyone who wants to retake our country from the banks can bring their backside there on October 25th.
Tags: banks, financial reform, recovery
Last Friday’s jobs report from the Labor Department was worse than expected.
The headlines focused on the 263,000 jobs lost in September and that the official unemployment rate increased, yet again, to 9.8%.
But no matter where you drill down in the report, it’s bad news. That’s no surprise to those on the economic front lines, Americans working at precarious jobs, working part-time jobs, often two or more, or not working at all. Since the start of Bush’s second recession in December, 2007, the number of people officially unemployed has more than doubled to 15.1 million. More Americans are unemployed right now than at the depth of the Great Depression in 1933.
There’s nothing in the latest jobs report to indicate that a real recovery is in the offing.
The number of unemployed persons increased by 214,000 in September.
The number of persons in the labor force declined by 571,000 in September.
The number of employed persons declined by 785,000 in September, which is exactly the sum of the newly unemployed and those no longer counted in the labor force.
And despite the relatively stabilizing effects on public sector jobs of the Obama administration’s stimulus program, government employment still declined by 53,000 in September, its biggest drop since November of 2000. Former Labor Secretary Robert Reich reports that 15,600 teachers didn’t return to work in September. Without the fiscal aid to states and municipalities flowing from the stimulus program, we can be sure that public sector job losses would be much, much worse.
Right now the unemployed, underemployed and too-discouraged to look for work total 26.5 million Americans. That’s 17.2% of America’s workers.
And the number of long-term unemployed continues to rise. The New York Times reports:
For those out of work, the job market looks harsher now than at any point in the recession. The number of people who have been jobless for more than six months increased in September by 450,000, reaching 5.4 million.
Of all unemployed, 36% are now long-term unemployed, or unemployed for more than six months, the highest percent on record.
“We have a truly massive crisis of long-term unemployment,” said Christine L. Owens, executive director of the National Employment Law Project in a statement, adding that nearly 400,000 jobless people had exhausted their unemployment benefits by the end of September. “Today’s employment report is a marching order for Congress to pass unemployment benefit extensions to all states, quickly.”
And now we learn, at the conclusion of the latest jobs report that the Bureau of Labor Statistics says its revised figures show another 824,000 jobs were lost in the 12 months ending March, 2009 than previously reported.
The Times notes:
“The endurance of hard times seems likely to increase pressure on the Obama administration and Congress to consider another dose of spending aimed at stimulating the economy, even as the economy grapples with deficits projected by some economists to exceed $10 trillion over the next decade.”
Congress is already moving on plans to extend unemployment benefits.
The House on Friday approved legislation that would provide 13 more weeks of benefits to states with unemployment rates of 8.5 percent or higher. Democratic leaders in the Senate are pushing a measure that would also provide aid to states that do not meet the threshold.
Senator Harry Reid of Nevada, the majority leader, is promoting legislation that would provide four more weeks of unemployment coverage to all states, while states over the 8.5 percent threshold would get 12 more weeks.
On the morning before the latest jobs report was issued, economist Paul Krugman wrote in a column titled “Mission Not Accomplished”:
Stocks are up. Ben Bernanke says that the recession is over. And I sense a growing willingness among movers and shakers to declare “Mission Accomplished” when it comes to fighting the slump. It’s time, I keep hearing, to shift our focus from economic stimulus to the budget deficit.
No, it isn’t. And the complacency now setting in over the state of the economy is both foolish and dangerous.
Yes, the Federal Reserve and the Obama administration have pulled us “back from the brink” — the title of a new paper by Christina Romer, who leads the Council of Economic Advisers. She argues convincingly that expansionary policy saved us from a possible replay of the Great Depression.
But while not having another depression is a good thing, all indications are that unless the government does much more than is currently planned to help the economy recover, the job market — a market in which there are currently six times as many people seeking work as there are jobs on offer — will remain terrible for years to come.
After citing reports from the Economic Policy Institute, the Congressional Budget Office and the International Monetary Fund, professor Krugman writes:
So we should be doing much more than we are to promote economic recovery, not just because it would reduce our current pain, but also because it would improve our long-run prospects.
But can we afford to do more — to provide more aid to beleaguered state governments and the unemployed, to spend more on infrastructure, to provide tax credits to employers who create jobs? Yes, we can.
At the same time Bob Reich writes, and I doubt it could be stated more clearly:
Let me say this as clearly and forcefully as I can: The federal government should be spending even more than it already is on roads and bridges and schools and parks and everything else we need. It should make up for cutbacks at the state level, and then some. This is the only way to put Americans back to work. We did it during the Depression. It was called the WPA.
Yes, I know. Our government is already deep in debt. But let me tell you something: When one out of six Americans is unemployed or underemployed, this is no time to worry about the debt.
Professor Reich goes on to explain how the 1950s economic growth, predicated as it was on the deficits created to counter the Depression and to fight World War II, was in turn what allowed us to pay down those deficits.
People who now obsess about government debt have it backwards. The problem isn’t the debt. The problem is just the opposite. It’s that at a time like this, when consumers and businesses and exports can’t do it, government has to spend more to get Americans back to work and recharge the economy. Then – after people are working and the economy is growing – we can pay down that debt.
But if government doesn’t spend more right now and get Americans back to work, we could be out of work for years. And the debt will be with us even longer. And politics could get much uglier.
Tags: Jobs, recovery, unemployment
At first I thought this must be a typo:
“Wait Until 2017 Before Job Market Recovers, Report Says”
But no, that’s the headline in today’s Economix blog story by Steven Greenhouse at nytimes.com
In a depressing new report, two Rutgers professors predict that it will take more than seven years to restore the health of the nation’s labor market to pre-recession levels.
The report, released on Wednesday, says that even if the nation adds more than two million jobs annually over the next seven years, that will barely offset what the authors see as a giant employment deficit.
The large employment deficit, the report says, was created by the loss of 7.1 million private-sector jobs since the recession began in December 2007 and by the economy’s failure to keep up with labor-force growth — that is, the increasing number of people who want jobs — during the recession.
The 16-page report (pdf), written by James W. Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy, and Joseph J. Seneca, professor and an economist at the Bloustein School, gives job growth over the last ten years a failing grade. It calls the decade from 1999-2009 “The Lost Employment Decade” because the nation will “exit the decade with fewer jobs than when it began” — 1.3 million fewer private-sector jobs.
To return to the labor market conditions of 2007, the report said the nation would not only need to offset the 1.3 million annual increase in the labor force, but would also need to compensate for the job losses suffered during the recession. Given conservative estimates of further declines in employment, the Rutgers professors see an overall employment deficit of 9.4 million private-sector jobs by December 2009.
“Erasing this deficit will require substantial and sustained employment growth,” the report said.
How much sustained employment growth?
“Even if the nation could add 2.15 million private-sector jobs per year starting in January 2010,” the report said, “it would need to maintain this pace for more than 7 straight years (7.63 years), or until August 2017, to eliminate the jobs deficit!”
But the economy is not a magic act. And if policy makers are governed by the budget-deficit-fearing “experts” rather than by economists who seek an effective attack on the catastrophic jobs deficit, the kind of employment growth we need may never happen.
What about the budget deficit fears? Economist Dean Baker said a couple of days ago:
The basic story on the budget deficit is very simple: We need badly need large budget deficits in the short term. They are the only force that can sustain demand in the economy after the collapse of housing construction and the loss of the consumption that had been supported by $8 trillion in illusory housing bubble wealth.
As economist Paul Krugman noted yesterday, we remain stuck in a liquidity trap which requires fiscal expansion just to begin to gain any traction for jobs and recovery. That fiscal expansion, Krugman notes, rather than “crowding out” private investment actually stimulates it “because a stronger economy leads to more investment.” Fiscal expansion, he says, increases not just future potential, but also future revenue expansion.
If we are going to start creating the “substantial and sustained employment growth” required to address our massive jobs deficit, continued fiscal expansion and large-scale job-creation initiatives are needed now.
We can’t wait.
Tags: Jobs, recession, recovery
The unemployment crisis continues to deepen. Another 466,000 Americans joined the ranks of the unemployed last month. Right now more Americans are unemployed than ever before, even more than in 1933 at the depths of the Great Depression.
Yet, where is the uproar? Robert Reich, former Labor Secretary, asks “why isn’t the media screaming?” New York Times columnist Bob Herbert has been asking that question and more for months.
According to the August employment report from the Bureau of Labor Statistics “the number of unemployed persons increased by 466,000 to 14.9 million, and the unemployment rate rose by 0.3 percentage point to 9.7 percent.”
Another 2.3 million Americans are unemployed but aren’t counted because they hadn’t sought work in the last four weeks. Add this group to both the labor force and unemployment totals, and the number of unemployed Americans is actually 17.2 million — with the actual unemployment rate at 11 percent.
Another 9.1 million Americans are underemployed, reports the BLS, “working part time because their hours had been cut back or because they were unable to find a full-time job.” Add this group and the unemployed and underemployed number 26.3 million Americans — nearly 17 percent of the work force.
In an interview last Friday on The Ed Show on MSNBC, Nobel prize economist Joseph Stiglitz, professor at Columbia University, said:
“There’s absolutely no reason why we need to accept a situation where people who want to look for a job can’t get it. We have so many needs in our country. And this situation where we have people looking for jobs, and we have so many needs — I think we should view as unacceptable.”
Prof. Stiglitz is one of an impressive list of leading economists, compiled by the Center for Economic and Policy Research, who’ve said the February 2009 stimulus was too small, or have since called for another round to fuel job-creating recovery.
And that is exactly what the AFL-CIO Executive Council called for July 28 in a major policy statement.
It is crystal clear that urgent action from the federal government is needed to boost economic growth and jobs, and invest in America’s future: we need a second installment on the Obama Administration’s economic recovery program, and this second installment must focus like a laser beam on job creation.
Our growth model in recent decades—debt-financed consumer spending and asset bubbles, combined with huge trade deficits—has failed. We cannot borrow and outsource our way to prosperity: without good jobs in America, there will be no sustainable economic recovery. As private demand pulls back and Americans rebuild their savings, the most effective path to sustainable growth is an ambitious public investment agenda.
There is no viable alternative to public investment right now.
The policy statement also calls for extending unemployment benefits immediately, increasing food stamp spending to help families in need, providing additional aid to state and local governments to offset budget cuts and stem more layoffs, and investing in additional transportation, clean energy and other infrastructure projects.
As the August jobs report shows, the unemployment crisis in America continues to deepen. The day after that report was issued The New York Times lead editorial “Where the Jobs Aren’t” asks:
The question, then, is how bad does it have to get before the Obama administration and Congress make job creation a priority.
Will administration officials and lawmakers fight for new laws to make it easier to form unions, which are especially important in elevating and protecting the jobs of low-income workers? How will professed support for green jobs be translated into a manufacturing policy that promotes good jobs? Will efforts to improve the educational system also include serious efforts to train and retrain people for new jobs?
Help is wanted for out of work Americans.
Tags: Jobs, recovery, stimulus, unemployed, unemployment
