State Of The Union As The Job Situation Gets Worse

Prediction: In the upcoming State of the Union speech President Obama is going to talk about jobs. (Just a hunch, let’s see if I’m right.)

We’re in a jam where the economy is still shedding jobs, never mind creating enough jobs to start hiring people again. The stimulus hasn’t been enough, and there isn’t anything reviving the real economy to take over.

There is one place where new hobs can be created. The world is going to wean itself off of coal and oil, and we have to join the parade. A green manufacturing revolution starting around the world that is going to be huge, but our country doesn’t have a national economic/industrial policy process that is taking us along with the other countries into this new era.

So we need the President to talk about more stimulus to create jobs now including direct job creation. We need a national policy process to bring us up to competitive status with the rest of the world. We need tax incentives and other policies that bring about investment in green manufacturing.

And finally we need core economic restructuring so everyone shares in the payoff. The payoff can be very big and this means we’re going to have to think about structuring the economy around leisure time for regular people rather than the slaveholder mindset we have today.

Let’s review the situation. The official unemployment rate is 10%, but when you look at “U-6”, which is “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” you get 17.3%. And people have been out of work longer than in other recessions,

“…the number of long-term unemployed (those jobless for 27 weeks and over) continued to trend up, reaching 6.1 million. In December, 4 in 10 unemployed workers were jobless for 27 weeks or longer”

And to make matters worse, in this terrible job market more and more people are just giving up,

“Among the marginally attached, there were 929,000 discouraged workers in December, up from 642,000 a year earlier.”

We need to create 10.9 million new jobs just to get back to where we were at the start of this recession in October of 2007. (And never mind where we were at the end of the 90's.)

Is the economy getting better? The stimulus has saved and created lots of jobs, while the unemployment benefit extensions and COBRA subsidies have helped some of the laid-off people. Think about all the teachers, police, firefighters, construction contractors and small-business owners who have kept their doors open through projects funded by the act. (Why do you think many conservative governors are refusing to put up signs at highway projects, etc?)

But the stimulus just wasn't enough. While Wall Street is doing better than ever -- with a $150 billion bonus pool this year -- the economy and job market remain in the doldrums and things are nowhere near what it will take to put enough people back to work. Just last week the weekly job loss number edged back up. See US jobless claims up, regional manufacturing dips.

How Did the Jobs Picture Get so Bad? Two words: Conservative Policies.

A consumer-driven economy depends on consumers being able to consume. Reagan's policies decoupled wage growth from productivity growth. Before this wages increased along with productivity but since, all productivity increases just meant more $$ going to an already-wealthy few the top, with the rest of us having to borrow just to keep going. Borrowing took over -- government borrowing forced by tax cuts and consumer borrowing forced by stagnant wages. In fact the amounts borrowed by consumers happens to closely match the lost income gains that consumers would have had if the benefits of productivity growth had been shared. All this hit a wall that resulted in the economic collapse.

The income and wealth has instead concentrated at the top.

And because we call moving a factory "trade" and think this is good for some reason, we have been shedding manufacturing jobs. This was particularly bad under George W. Bush. Since 2000 one in three manufacturing jobs has been lost.

Basics = Making Things

Manufacturing jobs are the foundation of other jobs because they create the goods that bring in the income that supports the service economy. We can’t just cut each other’s hair and sell each other hamburgers, the income to pay for those haircuts and burgers has to come from somewhere.

We have been shedding factories, manufacturing jobs, and consequently the suppliers, contractors, shippers, trainers, managers, etc. that go along with them. This loss of manufacturing jobs and capacity has coincided with the increase in borrowing to pay for things made elsewhere. And this has coincided with an increase in the share of Wall Street's portion of the economy. In 2007, 40 percent of America’s corporate profits came from the financial sector. And what does Wall Street sell? Debt! And what has happened to America since the rise of Wall Street? Debt! What a fantastic coincidence that is!

Wall Street Domination

The last few decades have been about selling off the manufacturing infrastructure, converting the goods economy to a paper economy and deferring maintenance of or just tearing down or selling off our infrastructure - the public structures of government oversight, courts, roads, bridges, schools and the rest of what We, the People had built over the previous two centuries before Reagan and the “free market” con artists used corporate dollars to gain sufficient influence to run their schemes on the rest of us. And now that the Supreme Court has unleashed a new flood of corporate money directly into our election ... can things get better?

So it’s the SOTU, what can the President announce -- and DO?

The President needs to break with the past and launch major new job-creating initiatives. The caution and conservative "conventional wisdom" that drove his first year have proven disastrous to his and his party's political standing, to the people who are suffering from the terrible economy, and to the public's perception of the legitimacy of government and democracy itself.

Today: Help Small Business and even Direct Hiring

Yes, small businesses do drive the job engine of the economy. And for all the help that is being given to Wall Street and the big businesses that are able to purchase legislative and regulatory assistance, the small businesses are in trouble and getting worse. Lending to small businesses dropped by another billion in November, the seventh month in a row of decline. (How's that bailout working out?)

Will the President announce direct lending and job-creating programs, like FDR did in the depression? The government needs to step in and just get programs going that get credit to small businesses and programs that hire people until the private sector recovers enough to take over these tasks. The government and the private sector are both failing to do those things today so the government has to do it - if we want jobs and credit. Direct lending would bypass the big bailed-out banks that aren't lending. Direct hiring can even mean fixing up our national parks like the CCC did during the depression.

We can start with Cash for Caulkers. The idea behind this program is to just hire people or otherwise pay to have workers go into buildings and houses and install insulation, seal doors and windows and otherwise make them more energy efficient. It's a good idea and ends up saving our economy a lot of money.

Tax Credits?

The President is expected to announce job-creating tax credits. The problem with a tax credit for companies who hire new workers is that businesses would be hiring new workers anyway if customers were coming through the doors. and tax credits are only meaningful to companies with profits to pay taxes on. These are the very companies that do not need help. If this was instead a job-creating subsidy, giving a company $3,000 toward hiring a new worker, this could tip the scales and put people to work. It's the same $3,000 cost to the government, but applied to companies that need it instead of companies that don't.

The AFL-CIO Plan

The AFL-CIO has a 5-point plan for creating jobs now. The points are (follow the link for the details):

1. Extend the lifeline for jobless workers.
2. Rebuild America’s schools, roads and energy systems.
3. Increase aid to state and local governments to maintain vital services.
4. Put people to work doing work that needs to be done.
5. Put TARP funds to work for Main Street.

The Future: Green Jobs

Burning fossil fuel like oil and coal puts CO2 into the air with heats the planet and changes the climate. For those conservatives who don’t accept the science and think the photos of ice-free shipping lanes in the Arctic are Photoshopped, so much oil has already been pumped out of the ground that production is declining and we need to find new energy sources. For those conservatives who think that having almost used something up means we need to “drill, baby, drill” and use the rest up even more quickly, oil will get more and more expensive no matter what. For those conservatives still under the influence of oil company propaganda and think that using more and more of something very expensive is better than using wind and sun that is free as an energy source, rooftop solar panels and collectors, small windmills, biofuels and other alternative energy sources free people and businesses from depending on large, centralized energy companies and free the economy up for greater innovation and efficiency. For those conservatives who think this will cost jobs the majority of the public voted out the oil company executives who did nothing about these problems for 8 years so suck it up and deal with it.

There is a green manufacturing revolution beginning as we start to replace oil and coal as the energy source for our economy, and this revolution means that our energy infrastructure must be updated. This process will create millions of jobs and will result in a much more efficient economy.

So what are these “green jobs?”

So much is involved in building a wind turbine power-generation unit. This is a major manufacturing and construction operation.

There is turbine itself, the gearbox, the power management. These require significant manufacturing operations, machine tools,supply chains, training: jobs. Then there are the blades. These are manufactured as a single unit, up to 50 years long! The limitation on size today is need to make it around turns on the roads between the manufacturing facility and the location of the completed unit. Again, the entire factory/supply chain/tool/training infrastructure develops around the manufacturing. The turbine has to sit on top of a platform that must be constructed: jobs. When the platform is built the turbine and blades must be shipped and mounted: jobs. Connected to the power grid: jobs. Then they must be maintained: jobs. This develops an industry: jobs.

The same is true for a solar power-generation facility, or a biofuel or geothermal facility. Jobs. You get the picture: jobs.

What is holding us back? The old, powerful, monopolistic, entrenched oil and coal industries are fighting the change, funding "climate skeptics," and pouring out propaganda about environmentalism as a "job killer." Scaring people, fighting change, trying to hold onto the immense wealth and power they have.

Eventually we will have built enough renewable energy generation infrastructure to replace the oil and coal we use today. This will free us from the anchor of carbon. And because these energy sources do not necessarily have to be centralized this will also free our economy from carbon's domination and dependence.

In a few decades we will build out the new energy infrastructure and our economy will be much more efficient. (Perhaps we might even do this in time to slow global warming and save the planet.) But efficiency by definition means less work is required to get things done. So after the buildout the main "green" jobs will be maintaining this infrastructure. Since this means a slowdown in green manufacturing this is where economic restructuring must come in.

So the question is, after the green jobs, then what?

President Obama is accused of dramatically restructuring the economy -- by the people who, under the previous administration actually did dramatically restructure the economy much for the worse. So since he is already being accused and convicted of it, perhaps President Obama will use the SOTU to actually propose changes that create an economy that works for all of us.

We need to restructure the economy so that everyone shares the benefits of the work that gets done. In the current paradigm all the incentives work toward eliminating your job, without giving you any of the gains from doing that. But suppose workers shared the gains when machines and computers replace workers. That would mean less work to do, with the same income! Think about what this would mean to your life. It would mean more free time, more vacation, more time with your families, seeing more movies, reading more books, more enjoyment of life. This is known as the pursuit of happiness and once upon a time there was a document that said this was one of the purposes of our country.

Views expressed on this page are those of the authors and not necessarily those of Campaign for America's Future or Institute for America's Future