14.7 million people are unemployed in the United States, 9.5 percent of the workforce. While there are a few signs of economic recovery, employment isn't one of them. The Obama Administration must address the jobs' crisis.
In the June 27th Republican radio address, House Minority Leader John Boehner blamed the Obama Administration for the high unemployment rate. While that's a stretch - 7.5 million Americans have lost their jobs since November 2007, when the recession began on George Bush's watch, and only 1.6 million of these job losses occurred under Obama - the fact remains that unemployment is at historic highs. And even worse than it looks.
The most recent Bureau of Labor Statistics summary has a "realistic" unemployment rate of 16.5 percent. That figure includes "Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers."
While one in six American workers are effectively unemployed, a growing number are chronically underemployed, working part-time but desiring full-time work. Citing a report from the Northeastern University Center for Labor Market Studies, NEW YORK TIMES columnist Bob Herbert notes, "The overall labor underutilization rate in May 2009 had risen to 18.2 percent, its highest value in 26 years." These are workers, such as teachers or carpenters, whose hours have been cut back and are forced to take additional jobs as waiters or taxicab drivers in order to make ends meet.
The bottom line is that one out of every three Americans who wants to work has inadequate employment. What actions should be taken to fix this problem?
First we have to understand the factors causing this crisis. According to the Bureau of Labor Statistics, many segments of the American economy are shrinking. Since the fourth quarter of 2008 only "education and health services," and "government" has increased employment. There have been huge losses in "manufacturing," "construction," and "professional and business services." When the housing bubble burst, most construction stopped. There was a financial meltdown and many white-collar workers lost their jobs. In parallel, there was a disaster in the automobile industry and orders for durable goods fell, resulting in additional job losses. Consumers spent less, depressing retail sales and causing widespread business failures and layoffs.
In a typical recession, we might expect these jobs to reappear as the economy rebounded. Unfortunately, most economists don't expect this to happen. Not all laid-off workers at Chrysler, Ford, and General Motors are going to be rehired. Neither are those carpenters and real-estate agents who lost their jobs. Nor are Wall Street accountants, bankers, financial analysts, and lawyers miraculously going to regain their positions. In many segments of the economy, the lost jobs aren't coming back because there's going to be a "structural adjustment."
That grim reality suggests that traditional palliatives, such as unemployment checks, aren't going to get America through this recession. There has to be massive retraining. But it's unclear what jobs American workers should be prepared for.
Economist Robert Reich notes that manufacturing jobs are disappearing everywhere, not just in the US. In general, as routine jobs disappear new technical occupations are taking their place. Reich defines these as "'symbolic analytic' work because most of it has to do with analyzing, manipulating and communicating through numbers, shapes, words, ideas." Yesterday's assembly-line worker must become today's computer technician.
Writing in THE NATION, businessman Leo Hindery and labor leader Leo Gerard recognize the nature of America's employment crisis and call for bold action to end the jobless recovery. "The Obama Administration... must [enact] a national manufacturing and industrial policy that puts American workers first." Hindery and Gerard see four critical elements of this program.
First, it must "pick winners" in the economy. Rather than rely upon the market to determine what economic sectors most benefit the US, the Obama Administration has to take the lead. Prime examples include clean energy technology, "green" transportation including high-speed rail, and health-care and security software.
Second, Hindery and Gerard call for the Administration to "fund a ten-year program of significant public investment to upgrade and rebuild our nation's infrastructure." There should a public works program on the scale of that initiated by FDR during the Great Depression.
Third, the authors recommend that federal procurement policies be guided by "Buy American" requirements. They note, "Federal purchases make up about 20 percent of the economy, yet America is the only nation among the major developed nations and China without a significant 'buy domestic' procurement program."
Finally, Hindery and Gerard argue for corporate tax reform, "incentives for corporation to create jobs here [and not] relocate manufacturing and services abroad."
Several malignant factors combined to produce the current severe recession. Foremost among them was the "hands off" policy of the Bush Administration, which was guided by the naïve belief that the market would remedy all problems. That philosophy has been repudiated.
The Obama Administration's number one priority must be seizing control of the economy with a bold policy to create meaningful jobs for American workers.
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