Save Jobs, Save the Economy
posted by: Cynthia Samuels 50 days ago
Zach Carter, Media Consortium
Last month, the U.S. unemployment rate surged to 9.8% as 260,000 people lost their jobs. Although the stock market and corporate profits appear to be recovering from last year’s financial catastrophe, work is harder to find. President Barack Obama and Congress need to act now to get people working again and help soften epic unemployment in years to come.
The current job prospects are dim. Without additional economic stimulus, the Congressional Budget Office projects that unemployment will average 10.2% in 2010, and 9.1% in 2011. That means things are going to be as bad as they are today for nearly two more years. That’s an eternity in economic time. Two years ago there were banks called Washington Mutual, IndyMac, Lehman Brothers, Bear Stearns and Wachovia. Two years of nearly double-digit unemployment means a massive increase in poverty, and the eradication of economic opportunities for an entire generation that grows up without access to basic needs.
Unemployment holds greater significance than any other economic statistic. As the editors of The Nation write, “Except for a military threat, no issue confronting a president is more serious than widespread unemployment.”
The official unemployment rate also drastically underrepresents the scope of economic suffering. AsThe Nation’s editors explain, over 15 million Americans cannot find any work at all. Another 9 million people are settling for part-time work because they can’t find a full-time job. When you include people who have simply given up looking for a job after months without success, 17% of the country is either out of work or underemployed. That’s roughly equal to the entire rural population of the U.S.
It’s important to note that today’s hefty percentage of joblessness is not a result of Obama’s economic stimulus package. As economist Dean Baker emphasizes for AlterNet, we’d be staring at 11% or 12% unemployment without that effort. New America Media correspondent Suzanne Menneh details a great stimulus package success story. The Mosaic Youth Theater in Detroit gives at-risk youth the opportunity to do constructive, creative work putting on dramatic productions, and has had a dramatic impact on its performers drop-out rate. The theater was facing heavy recession-induced cutbacks before Obama’s stimulus plan was enacted, but with a $50,000 grant, the theater can continue to employ teachers and directors.
The problem, Banker argues, is that the stimulus was too small. The president’s economic advisers expected the recession to be milder than it has been, and then scaled down the package when political pressure was applied.
While political realities do place limits on Obama’s options to create more jobs, voters are not going to find fault with the president for fighting joblessness. One of the easiest ways to boost employment, Baker notes, is to offer employers a tax credit for hiring more people.
Writing for The American Prospect, Tim Fernholz emphasizes another straightforward way to stymie layoffs. State budgets are incredibly strapped right now. The loss of tax revenue from plummeting home values and lost income has left local governments with few choices. To get the bottom line to work, states are slashing some of the most critical positions in society: Teachers, cops and firefighters are being laid off. Putting together a fresh package of aid to states can save these jobs, and as Fernholz notes, good luck to the politician running on an anti-teacher, anti-firefighter platform.
But unemployment is not the only front in the economic battle. As layoffs mount, credit card bills get higher, mortgage payments get harder to meet and many cash-strapped households turn to predatory payday loans to make ends meet. As the current wave of foreclosures demonstrates, consumer protection in the realm of finance has been absolutely dismal for decades. But despite the obvious shortcomings of the existing regulatory framework, the Obama administration’s push for better consumer protection is morphing into all-out legislative war between the bank lobby and anybody interested in the public good.
Art Levine explains the situation in a post for In These Times‘ Working blog. Financial firms spent a massive $223 million lobbying the government against new regulations in the first half of 2009 alone. The Chamber of Commerce, the top lobbing group for U.S. corporate executives, is spending $2 million on ads smearing Obama’s plan to create a new Consumer Financial Protection Agency (CFPA). The new regulator would do just what its name implies: make sure banks can’t gouge you on credit cards, mortgages, debit cards and payday loans. But the Chamber’s new ads make the ridiculous claim that the new regulator will destroy local businesses like your neighborhood butcher or baker.
The good news, Levine notes, is that Obama isn’t taking the attacks lying down. The President sharply criticized the Chamber in a speech on Friday, and groups like Americans for Financial Reform are pushing to make sure lawmakers look at the issue from the perspective of consumers, not just bank profits. The House Financial Services Committee is scheduled to mark-up the consumer bill on Wednesday. Creating a strong CFPA is absolutely critical to making sure our economy answeres to ordinary people. Levine quotes It Takes a Pillage author Nomi Prins, a former Goldman Sachs managing director, to emphasize that banks will not act in the public good on their own.
“We still have a bizarre and misplaced faith that huge corporations—which are deisgned for the sole purpose of making profits—are somehow able to act ethically and restrain themselves,” Prins says.
Even if your own pocketbook has never taken a pounding from the banking industry, the legitimacy of your government is at stake. As Glenn Greenwald explains for Salon, even after wrecking the global economy, banks have been able to sabotage efforts to avert foreclosure while demanding enormous bailouts at taxpayer expense. The chain of command is clear: The banking industry still showers lawmakers with campaign contributions, while individual bankers can still get the ear of top policymakers charged with major economic decisions. How easy is it for Wall Street bigwigs to influence policy? Laura Flanders of GRITtv highlights an AP report that details Treasury Secretary Timothy Geithner’s phone records. Geithner has spoken with Citigroup CEO Vikram Pandit more times this year than he has with Rep. Barney Frank, D-Mass., the key legislator pushing Geithner’s own financial reform package. And Goldman Sachs CEO Llyod Blankfein has talked to Geithner more times than Sen. Chris Dodd (D-Ct), who is Frank’s regulatory reform counterpart in the Senate.
Many top policy makers, in fact, come to government from high-profile positions on Wall Street. The result has been almost direct control of the legislative branch of our government, and ideological control of the executive branch.
“Earnest, substantive debates over this or that policy are so often purely illusory, as the only factor that really drives outcomes is the question of who owns and thus controls the political system,” Greenwald writes.
The government is supposed to represent all of us, not just the wealthy and not just major corporations. The past two years have made clear to everyone that the government often must take strong actions to limit the damage created by private-sector calamaties. We need another round of economic stimulus to get people working again, and we need a fair set of rules to make sure working people don’t get duped by predatory bankers.
This post features links to the best independent, progressive reporting about the economy by members of The Media Consortium. It is free to reprint. This is a project of The Media Consortium, a network of leading independent media outlets.
Read more: politics, unemployment, recession, job creation, economic stimulus
comments
I work 2 jobs to make ends meet, and I'm darn lucky to have them. Some of the students I work with are living in squalor off medicare and food stamps because their parents can't find employment. Then I read about corporate executives giving themselves bonuses while running their company into the ground and taking stimulus money. There is something very wrong with this picture. We need financial regulation and a way to help those who need it most. And we need it soon, before we destroy our nation with our greed.
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I know we have some problems that are very real. I am now retired because I lost my job. But I also know that businesses for a long time now have been running with less people to boost their bottome line. They will use any excuse to reduce staff and I believe a lot more of that is going on now.
They can scream it's the ecconomy and keep reducing staff and then the existing staff does work of 3 or more people and the bottom line continues to grow and so does the bonuses of the Execs.
Believe me I saw it happen. I was doing the work of four people. This is not just my opinion, it was also the opinion of our outside CPA firm and consultants and I wasn't the only Director doing more.
It's all about greed and the top of the Exec ladder.
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This article was very on in exposing the facts of why unemployment is high, why its continuing to climb, how its spiraling effect snowballs into other economic sectors and how Obama' stimulus has stymied it from reaching even higher unemployment percenatges. But, it didn't shed much light on why we are here.
For the last 8 years the mentality of American capitalism was the lean & mean idea approach of laying off workers, moving to cheaper labor countries, cutting working hours of current employees, cutting benefits and with all that savings put most of it into the CEO's pockets for saving so much. That trend definitely lead us to this point and in effect also has hurt the companies, for now there is no one that is in a position to buy their products or services.
Someone needs to halt this business mentality's horses and re-steer them into a direction that will begin benefiting the middle class and working families that after all, are the ones whom truly support this nation in overall taxation and consumption.
I believe in free markets and private business conduct, but when CEO's pay is over 700 times that of his average worker, common sense dictates that money dispersed in only the pockets of the few, the major pockets will be forced to quit spending or saving.
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It's a sad situation. I lost my position at a construction company where my title was Administrative Assistant but I was basically running the office. I did everything from payroll to human resources to procurement to arranging travel and so forth. Then, after being there for over a year, my company decided to close the Southern California location due to the economic downturn. I was on unemployment 5 months and was unable to keep up with my credit card bills, car payment, rent, car insurance, etc. I had to give up my medical insurance even though I have asthma and other issues. I finally found a temporary position with no benefits where my salary is less than I made in 2006 and I am still unable to pay my credit card bills. I am now hounded daily by creditors who have said some awful things to me as they try to collect what I dont have to give them. I have tried to make arrangements and pay just a little and they have bullied and said that I had to pay a certain amount. I am now thinking about filing bankruptcy. It's embarassing, it's depressing, I dont see any other way of getting out from my situation besides filing for bankruptcy which I have never done and never considered. President Obama needs to make employment a top priority. I am now looking at leaving California to work elsewhere but the prospects in other areas look dismal as well. I am trying to remain upbeat but this is a dire situation that must be taken seriously and given some attention.
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You are right Rosemarie. The government have different levels of unemployment as released by the Bureau of Labor and Statistics. Think they go from U1 to U6. And the media only reports the rosy U1. U6 I believe the last time I read about it was hovering around 20% or so. Just horrible as the taxpayers were sold short by the politicians to the big corporations.
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Maybe that is the national average, but they aren't looking at the places hardest hit. Detroit hit 28% unemployment, I am sure it is worse in cities, still it is at least in the double digits....
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I am one. I found a pt job, but only barely enough to pay the bills. I get food stamps and friends and family are gracious enough to help with essentials. It's hard, very hard. Small towns don't have jobs for any one unless you were born in the town. I've been here three years and its not getting better.
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Think a minute: For over 30 years, our government has used our taxpayer dollars to cover the costs of massive, unprecedented corporate "tax relief;" in other words, we pay the taxes owed by the rich so they don't have to. The theory was that these corporations would use their tax relief for massive job creation -- and they did, but not here in the US. Billions of those dollars were then used to move our jobs to foreign nations. Yes, all those billions of dollars of corporate tax relief left us with fewer jobs and left the country FAR worse off, and that's because government provided no-strings-attacked handouts to the rich.
The solution: Put absolute conditions on every penny of future aid/tax relief (or however we wish to describe it). If a company wants tax relief, they must sign an unbreakable commitment to use that money ONLY for job creation here in the US, and must be prohibited from moving any jobs out of the country for a specified period of years. If a company does close down plants here to open up new plants in any foreign country, prohibit sales of the product(s) in the US for a period of years. Do this without allowing the myriad of loopholes that has given US corporations carte blanche for decades.
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Of course, unemployment figures are based on those filing or receiving unemployment. There are many who did not qualify for it, or are under-employed, working at McDonald's, just to have some money coming in.
The government can't fix this. But they could have discouraged companies from offshoring or outsourcing. But even the government offshores work. A lot is so source downed through one contact to another,indirectly, until it winds up, say in India.
These CEOs have no patriotism, consider themselves to be "citizens of the world" and care nothing about the future of this country.
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why is this inappropriate?
Of course, unemployment figures are based on those filing or receiving unemployment. There are many who did not qualify for it, or are under-employed, working at McDonald's, just to have some money coming in.
The government can't fix this. But they could have discouraged companies from offshoring or outsourcing. But even the government offshores work. A lot is so source downed through one contact to another,indirectly, until it winds up, say in India.
These CEOs have no patriotism, consider themselves to be "citizens of the world" and care nothing about the future of this country.
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