Congress on Jobs: Bad Policy, Pathetic Politics

The unemployment crisis is startling to looking a lot like the gusher in the Gulf, except that where there may not be much political leaders can do about that, there are things that can be done about unemployment. The difference is that they are choosing not to do anything about it. Just as the spread of the oil from the Gulf may have long-term consequences, and leave permanent damage, so will the jobs deficit Washington has determined not to do anything about. That's not just bad policy. It's pathetic politics.

Maybe that’s over the top, but we are so close to creating a permanently unemployed or underemployed class that it seems not so “over the top."

Congress has sent a clear message to unemployed Americans squeezed by this economy: You’re on your own. Help is not coming now, nor likely to come later. That's the message sent by the Senate's scaled back jobs legislation [1], and the Senate vote that slammed the door on any real action to create jobs or save job. [2]

The 56-to-40 vote left Democrats with no clear path forward on legislation that, among other things, would protect doctors from a 21 percent drop in Medicare reimbursement rates, reauthorize extended unemployment benefits, and provide $24 billion in federal assistance to state Medicaid programs, preventing an expected wave of public sector layoffs.

"Tonight, every single Republican voted to deny states critical aid that would keep firefighters, police offices and teachers employed," said Jim Manley, spokesman for Senate Majority Leader Harry Reid (D-Nev.). "And tonight, every single Republican voted to tell the one in ten Americans who have lost their jobs that they are on their own."

By the end of this week, 903,000 people who have been unemployed for longer than six months will have missed benefits checks they would otherwise have received had Congress managed to reauthorize the stimulus bill provisions that expired on June 1. By the end of next week, that number will climb to 1.2 million.

Let's be clear, it's not just "every single Republican." Since May, in the House and Senate, a number Democrats voted along with Republicans (with the exception of Rep. Cao, of New Orleans) to deny both help and hope to those 1.2 million Americans facing long-term joblessness.

Manley was right, thought, that all of the Republicans in Congress along with the Democrats above have effectively voted to inflict more pain upon millions of Americans who are in truth suffering the consequences of the financial sector's sophisitaced-but-doomed shell game shenanigans, and the same conservatism responsible for the malignant regulatory neglect that allowed corporations to run amok until they caused disasters in our economy [3] and our environment [4] — disasters that will have far-reaching impacts, the longer our elected officials are unable or unwilling to fix them.

Either way, it comes down to choosing to do nothing, when something could be done to alleviate the economic pain this crisis is visiting upon increasing numbers of American families. Choosing to do nothing is choosing the status quo. Choosing to do nothing is choosing to let current trends continue unabated.

The choice is, as the Vice President put it [5], simply "business as usual." The choice is, essentially, more pain for those who are already suffering. Steve Benen [6] writes that "in real world terms," this means that millions of Americans will stop receiving unemployment benefits and states counting on aid to avoid massive layoff won't get it.

And that means more suffering, and more stories like those we've all read — about people who have worked all their lives and still want work [7], if only they could find it; if only there was any to be found. It means they won't find it because there will be six times more job-seekers than jobs [8], perhaps even more. It means more unemployment among minorities [9] who are already disproportionately impacted by the economic crisis. It means more people will lose their homes along with their jobs [10]. It means that even more people who lose their jobs will go hungry [11]. It means poverty will continue to rise [12], even in the supposedly "safe" suburbs. It mean's already record "economic stress" will continue to rise [13].

It means more pain for those who already bear the worst of the pain [14] in this economic crisis.

What you’re not hearing from the politicians and the talking heads is that the joblessness and underemployment in America’s low-income households rival their heights in the Great Depression of the 1930s — and in some instances are worse. The same holds true for some categories of blue-collar workers. Anyone who thinks this devastating problem is going away soon, or that the economy can be put back on track without addressing it, is deluded.

...There has been talk about income inequality over the past several years, but what is happening now is catastrophic. The Center for Labor Market Studies at Northeastern University in Boston divided American households into 10 groups based on annual household income. Then it analyzed labor conditions in each of the groups during the fourth quarter of 2009.

The highest group, with household incomes of $150,000 or more, had an unemployment rate during that quarter of 3.2 percent. The next highest, with incomes of $100,000 to 149,999, had an unemployment rate of 4 percent.

Contrast those figures with the unemployment rate of the lowest group, which had annual household incomes of $12,499 or less. The unemployment rate of that group during the fourth quarter of last year was a staggering 30.8 percent. That’s more than five points higher than the overall jobless rate at the height of the Depression.

The next lowest group, with incomes of $12,500 to $20,000, had an unemployment rate of 19.1 percent.

These are the kinds of jobless rates that push families already struggling on meager incomes into destitution. And such gruesome gaps in the condition of groups at the top and bottom of the economic ladder are unmistakable signs of impending societal instability. This is dangerous stuff. Nothing good can come of vast armies of the unemployed just sitting out there, simmering.

As Paul Krugman noted, "creating jobs is out, inflicting pain is in." [15] And, as Benen points out, it's not like there were no other choices.

If the Senate had been allowed to vote on the measure, it would have passed. But Republicans kept up their scandalous habit of filibustering literally every proposal of any significance, leading to a 56 to 40 vote. (Sens. Ben Nelson (D-Neb.) and Joseph I. Lieberman (I-Conn.) voted with Republicans, who unanimously opposed the bill.) Because the Senate is ridiculous, 40 votes trumps 56.

Note that Majority Leader Harry Reid (D-Nev.) did not switch his vote for procedural reasons, which means that the economic aid package is, for now, dead.

In real-world terms, this means more than a million unemployed Americans will stop receiving assistance next week, and aid states are counting on to prevent massive layoffs won't arrive.

The Senate had a choice: worry about the deficit or worry about higher unemployment. For reasons that defy common sense, the Senate chose the former — as if the deficit will improve when more Americans are out of work.

In a previous post, I laid out several options for action on unemployment [16] that could make a difference, and cost a fraction of what our government pledged to bailout the financial sector.

The Local Jobs For America Act. As I wrote weeks ago [7], the passing the Local Jobs For America Act [17] would prevent and reduce unemployment by allowing state and local governments to avoid layoff and cuts in critical services, while boosting local economies in the bargain. According to an EPI analysis [18] (PDF), the bill authorizes $100 billion over two years for the purposes above. According to my math that's about 0.8% of the total committed to the bailout. Plus, EPI found that the total cost of the legislation would be offset by $39 billion, because it would keep taxpayers on payroll, and reduce spending on unemployment benefits, and other social services.

The House version was introduced by Rep. George Miller in March, and now Senators Sherrod Brown, Al Franken, and Mark Begich have introduced the companion bill in the Senate [19]. With bills now introduced in both chambers, Congress and the White House have a can act to create jobs, preserve jobs, prevent further unemployment, and boost the economies of America's hometowns.

The White House may be starting to get the idea. President Obama has asked Congress to quickly approve $50 billion in state aid, to keep teachers, police officers, and firefighters in our communities. Spending just 0.5% of the total committed to the bailout. (For some perspective, it also amounts to just 6.3% of the $790 billion stimulus package [20], which itself was just 6.4% of the total committed to the bailout.)

The Jobs for Urban Sustainability Act. Earlier this month, I mentioned the Jobs For Urban Sustainability Act [21], which would direct $10 billion newly returned TARP money to cities with populations of 600,00 or more and unemployment rates of 10%or more, to spend on job training, public works and economic development. Not only is this a good way to use TARP returns, but my math says [22] it's a scant 0.08% of the total committed to the bailout.

Community Colleges. In Washington Monthly, Jamie Meristosis and Stan Jones outline a plan that would help community colleges revamp their one- and two-year degree programs [23] — to emphasize timely graduation, job placement and tracking — and lift unemployment insurance restrictions that bar recipients from enrolling in college. This would be a huge help to the unemployed who have lost not just jobs but careers, as Meristosis and Jones describe it, and will need education and training to prepare them for the kind of jobs that are likely to be created in a recovery.

Last year, at the height of the recession, America’s unemployment rate hit 10.2 percent, slightly lower than the 10.8 percent peak of the previous major recession in the early 1980s. But the recent crisis is likely to prove far more unforgiving for the nearly 15 million Americans who are still out of work. After the economy began to turn around in late 1982, a substantial portion of the unemployed returned to their old jobs, or at least to jobs in their previous occupations. That’s less likely to happen this time around. The reason is that in recent years companies have learned to use economic slumps as opportunities to restructure—to close less-efficient facilities, drop less-profitable product lines, or extract themselves altogether from businesses that aren’t making money. What that means is that those who have become unemployed in this recession haven’t just lost their jobs; they’ve likely lost their careers. The skills that once earned them a living—assembling automobiles, processing mortgages, writing newspaper stories—are no longer much in demand in the marketplace. If these Americans hope to work again at anything approaching a middle-class wage, they’ll need to acquire new skills.

A lot of them are trying. We’ve seen a surge in enrollment at community colleges and for-profit colleges and trade schools since 2008, as unemployed adults and recent high school graduates unable to find work go back to school. In general, this is a good thing. As the current recovery picks up steam, new jobs will be created—slowly, perhaps, but surely—and economists already have a reasonably good fix on what those jobs will be and the skill levels they’ll require. Looking at federal government and other data, Anthony Carnevale and Jeff Strohl of the Georgetown University Center on Education and the Workforce forecast that about 47 million jobs will become available over the next decade, as workers in existing jobs retire and as newly created jobs come on line. About 30 million of these new positions will require a postsecondary education. Of those, 14 million will demand only a two-year associate’s degree, a one-year certificate, or some college training short of a bachelor’s degree. These "middle skill" occupations include jobs in information technology (network managers), business services (managing temp workers, running institutional food operations), and especially health care (nurses, nurse assistants, medical technicians). Starting salaries range from about $25,000 to more than $40,000 and can grow substantially from there. In fact, about 30 percent of people with one- and two-year college credentials earn more than people with bachelor’s degrees.

For a substantial portion of today’s unemployed, then, one- and two-year college credentials offer a viable route back to the American dream. There are a lot of obstacles, however, standing between a jobless adult and a college degree.

Not the least of these obstacles, besides the risk of losing unemployment insurance while enrolled, is cost. As Meristosis and Jones point out, even the cheapest college education costs money, something the unemployed don't have. For-profit schools, which offer convenient and consistent scheduling, with a curriculum focused on training students for better jobs, are likely to cost even more; up to six times more than community colleges.

Jones and Merristosis offer a plan with $2 billion of "seed money," just 0.016% of the total committed to the bailout, tucked into the health care reform reconciliation bill, over which the White House has "considerable discretion," should the president opt to use it.

Building Star. According to the AFL-CIO [24], "Building Star" — which takes its name and focus from the White House's "Home Star" [25] program, and the EPA's "Energy Star" [26] program — could create 185,000 green jobs this year.

In the current recession, no sector has been harder hit than the construction industry, which has lost more than 2 million jobs. The unemployment rate in the construction industry is a staggering 27 percent, almost triple the overall unemployment rate.

You can help put building and construction trades workers back on the job by contacting your senators and representatives and urging them to support Building Star—H.R. 5476 [27] and S. 3079. [28] The legislation would provide building owners rebates and low-cost financing options for energy-efficient renovations in existing buildings.

...If acted on quickly, the bill could create as many as 185,000 jobs this year in construction, manufacturing and support jobs.

New Deal Solutions for the Gulf. As George Will began his meandering column with a reference to the oil disaster in the Gulf of Mexico, it's appropriate to end this post by linking to David Wollner's suggestion of a a New Deal solution for the Gulf oil disaster [29].

None of these things, even all combined, were anywhere close to enough to solve the problem, but any of them would have been a step in the right direction.

And it's not as if there's not enough public support for spending to create jobs. A recent Gallup poll showed that 60% of Americans favor spending to create jobs and stimulate the economy [30].

Among four pieces of legislation Congress could consider this year, Americans are most supportive of authorizing more economic stimulus spending. Specifically, according to a June 11-13 USA Today/Gallup poll, 60% of Americans say they would favor "additional government spending to create jobs and stimulate the economy."

[31]

With that kind of support, and a number of options on hand, the question remains: Why? Why is Congress choosing not to act. It's not because they can't, and that leaves one rather disturbing possibility to consider. Perhaps they just don't want to, or don't want to badly enough.

Instead, it’s been decided that no one’s going to do anything significant. Instead our leaders have chosen the scenario that's been laid out countless times. Most recently by Jeff Faux [32].

Fifteen million Americans are out of work. Another roughly 10 million can only find part-time jobs or have disappeared from the labor force and are surviving God knows how. State and local governments are shredding the social safety net. In a nation where the vast majority live paycheck to paycheck, forty-five percent of the jobless have not worked in six months. And the fierce competition for jobs is shrinking the paychecks for those who still have them.

The basic economic problem is not very complicated: if no one spends, no one works. Since the financial market crash in late 2008, consumers, businesses and state and local government have cut back on their spending. In order to keep people working, as the Great Depression taught us, the Federal Government must therefore compensate by increasing its own fiscal deficit. As jobs return, consumers resume buying, businesses respond by investing and state and local government revenues grow. When we're back to full employment, the Federal budget should return to balance.

Last year's $789 billion government stimulus clearly braked the economic free-fall. But, given that this is the deepest recession since the 1930s, it was not enough to get the battered job market growing again. Thus, we need a second stimulus. Roughly $400 billion would create over 4 million jobs, and put us solidly on the road to recovery.

Not going to happen. Despite the polls showing that the chief concern of voters is unemployment, Republicans and Democratic Blue Dogs have perverted legitimate concern over future deficits into a jihad against the increased public spending needed to jump-start private job growth. Within the Beltway, the only serious debate is over how fast to reduce the deficit. Since tax increases are toxic and military budgets sacrosanct, this means cutbacks in domestic spending. Intimidated by Tea Party hysteria and Republican Party hypocrisy (even at full employment George W. Bush was running sizeable deficits) the White House has cut back on its job creation proposals, slapped a freeze on discretionary domestic spending and asked agencies to plan for actual cuts.

Don't worry about unemployment, say the pundits of this new consensus. It's a "lagging indicator." A hiring upturn is only a matter of time.

The question is, "How much time?", and the answer seems to lie in how much damage will be done by long-term unemployment, and thus whether it amounts to a crisis or a "correction." [33]

Certainly the picture painted by Don Peck in his March 2010 Atlantic article, "How a New Jobless Era Will Transform America." [34] suggests we're on our way.

[35]

There is unemployment, a brief and relatively routine transitional state that results from the rise and fall of companies in any economy, and there is unemployment—chronic, all-consuming. The former is a necessary lubricant in any engine of economic growth. The latter is a pestilence that slowly eats away at people, families, and, if it spreads widely enough, the fabric of society. Indeed, history suggests that it is perhaps society’s most noxious ill.

The worst effects of pervasive joblessness—on family, politics, society—take time to incubate, and they show themselves only slowly. But ultimately, they leave deep marks that endure long after boom times have returned. Some of these marks are just now becoming visible, and even if the economy magically and fully recovers tomorrow, new ones will continue to appear. The longer our economic slump lasts, the deeper they’ll be.

If it persists much longer, this era of high joblessness will likely change the life course and character of a generation of young adults—and quite possibly those of the children behind them as well. It will leave an indelible imprint on many blue-collar white men—and on white culture. It could change the nature of modern marriage, and also cripple marriage as an institution in many communities. It may already be plunging many inner cities into a kind of despair and dysfunction not seen for decades. Ultimately, it is likely to warp our politics, our culture, and the character of our society for years.

The world that Peck portrays, in an article too dense with information to quote without practically reposting it in full, is hardly a future many people would wish for themselves, their children, or the children's children. He writes of an economy in "a hole that is more than 10 million jobs deep," which is the number of jobs required to get us back to even 5% unemployment. That we could do in two years if we returned to double the 1990s rate of job creation.

That may be a conservative estimate. But it means that meager increases in monthly employment numbers — that are considerably reduced when taking factors like seasonal employment, etc., in to consideration — won't get us there. Not even close.

Instead of addressing the root of the economic crisis (and the deficit, by the way) we opt for short term, band-aid, solutions that can't begin to address the entirety of the challenge before us.

Contrary to conventional wisdom, we are not digging ourselves deeper into an economic hole if we spend to create jobs, extend unemployment benefits, and keep people in their homes, etc. We are digging ourselves deeper by steadfastly refusing to do so. And that's merely perpetuating the current status quo, which will make playing catch-up unlikely, at best.

I’m not an economist, but as I understand it people don’t spend if people don’t work, and people don’t work if people don’t spend. So, for what it’s worth, politicians have chosen more unemployment – for “the small people,” if I can borrow a phrase from the BP rep who said exactly what he meant, but wasn’t supposed to say in public. Honestly, the Republicans, along with the “Blue Dog” Dems and the just plain weak-kneed Dems in Congress aren’t all that different from Rep. Barton, who apologized to BP for its being held accountable to the people whose lives and livelihoods have been and will be impacted by the Gulf oil disaster. The only difference is that, at least for a moment, Rep. Barton was honest about his priorities.

The conservative meme is essentially that people have had it too good for too long, and that they'll be better off when their worse off. The deficit hawks have managed to convince our elected officials that people don't have it quite bad enough yet, and that the best way to start moving towards recovery is to inflict more pain.

I can't put it any plainer than this. So, I'll say it again: the conservative meme is that people have had it too good for too long, and will be better off when they're worse off. It's not just urging the infliction of pain, but touting the infliction of pain and permanent loss a a cure. It's like telling a marathon runner with a sprained ankle that amputation — say from the knee down — is the surest path to getting back in the race.

The Senate has now, effectively decided that the pain of this economic crisis will by borne those already in considerable economic pain, without aid or relief. More to the point, they have made sure their major campaign donors bear not even a modicum of it.

If I sound angry, it's because I am. Unnecessary cruelty makes me angry, and that's what congressional inaction on the jobs deficit amounts to — deliberate and unnecessary cruelty.