Economic Recovery

Will Workers Survive State Budget Belt-Tightening?

Susan Ozawa — Tue, 13 Jan 2009 15:30:36 -0500

Executing the Main Street Economic Recovery Program Equitably

Susan Ozawa — Mon, 22 Dec 2008 16:14:25 -0500

Given the male dominated nature of construction and heavy manufacturing involved in infrastructure projects Eileen Appelbaum, at the School of Management and Labor Relations and Director of the Center for Women and Work recommends that proposals pushing infrastructure investment include construction of child care centers and additional space to accommodate expanded pre-K programs. Appelbaum also recommends including in this investment funds targeting training historically marginalized workers and incentives alongside other mechanisms to ensure these jobs are distributed equitably.

A petition along these lines can be signed here. Progressive economists highlight the importance of the quality of the jobs created, pushing for those receiving recovery funds be held accountable to create jobs with livable wages, health insurance, paid sick days, paid holidays and vacations. Monitoring and oversight to ensure transparency is fundamental. Provisions are outlined by the National Partnership for Women & Families here.

Endorser of the Main Street Recovery Program, Randy Albelda, professor of economics and Senior Research Fellow at the Center for Social Policy at University of Massachusetts Boston, highlights the need to address our severe deficits in social infrastructure as well as physical infrastructure. The Main Street Economic Recovery Program emphasizes spending on education, health care and child care, recognizing these should be down payments on larger reforms in our domestic budget priorities.

Signatory, Robert Drago, Professor of Labor Studies and Women's Studies at Penn State University further highlights the economic benefit of child care funding. The multiplier effect embodied in services is stronger than pure construction partly because child care workers earn less, but also because infrastructure investment is capital intensive and can involve foreign inputs although the Main Street Recovery Program emphasizes procuring domestic supplies. You can find Drago’s full argument here.

Following this lead, the Direct Care Alliance has laid out a series of recommendations to President-Elect Obama here. To avoid the kinds of jobs created after Katrina, to begin to set in order our ailing economy and to redirect our comprehensive infrastructure priorities these recommendations offer sound guidance on executing a progressive Main Street Economic Recovery Program that can benefit us all.

Other Economic Recovery Plans

Susan Ozawa — Tue, 16 Dec 2008 16:19:41 -0500

Center for American Progress, How to Spend $350 Billion in a First Year of Stimulus and Recovery

The United States Conference of Mayors, MainStreet Economic Recovery Report

National Governors Association, Economic Recovery: A Federal‐State Partnership

National Environmental Coalition, Economic Recovery through Investments in our Environment, Energy System and Heritage

USAction, TrueMajority.org and USAction Education Fund, The Next New Deal: Our Plan to Invest in America’s Future

Economic Benefits of Various Stimulus Proposals

Susan Ozawa — Fri, 05 Dec 2008 18:50:28 -0500

Snapshot by Mark Zandi, Moody's Economy.com

Minsky and Economic Policy: “Keynesianism” All Over Again?

Susan Ozawa — Fri, 05 Dec 2008 18:22:34 -0500

The Shape of Fiscal Stimulus: Spending vs. Tax Cuts

Susan Ozawa — Fri, 05 Dec 2008 18:18:40 -0500

Jobs Crisis In Real World ... Just Not In DC

Dave Johnson — Thu, 03 Feb 2011 08:30:54 -0500

Who is our economy for? Who is our government for? For 30 years we have been undergoing a transition from "We, the People" democratic government to a plutocracy run by and for the wealthy. One indicator of this transition is the way the DC Elite respond to unemployment. 9-10% unemployment used to be a national emergency. Now it's a yawn.

What The Washington Paper Says

The Washington Post has a front-page story, Why does Fresno have thousands of job openings - and high unemployment? that says the problem is really "structural," a skills gap, and there is little we can do. This is significant because so many people who make policy read the Washington Post while sitting in their nice, expensive restaurants. Stories like this risk that they will think that there really are plenty of jobs out there, but the serfs just aren’t up to taking them, or are too spoiled, but in any event there is no problem that needs solving, and call the lobbyist because this month’s check is late.

Meanwhile, anyone in the real world outside of Washington or Wall Street, reading about “thousands” of job openings going unfilled immediately knows something is fishy. In fact, if this story ran on the front page outside of DC or Wall Street we might even need to worry about Egypt-style riots. Anyone on the same side of the continent as Fresno knows that there are not “thousands’ of unfilled job openings. There might be thousands of foreclosures, or thousands of people in food lines, or thousands of people whose unemployment has run out but there are not thousands of unfilled job openings.

What The Local Paper Says

The Fresno Bee has a different story to tell, EDITORIAL: President should come see impact of joblessness in Valley:

The economy may be improving, but it would be difficult to persuade the thousands of out-of-work Valley residents that things are looking up.

The six Valley communities cited in a U.S. Labor Department report have unemployment rates that run from 16.4% in Hanford-Corcoran to 18.6% in Merced. The other Valley cities on the list are Fresno (16.9%), Visalia-Porterville (16.8%), Modesto (17.2%) and Stockton (17.5%).

. . . The nation's economic recovery will not be complete until Americans go back to work. At every level of government, the goal should be to implement policies that improve consumer confidence and encourage businesses to hire workers.

The Fresno Want Ads

The Fresno Bee help-wanted ads tell the story.

There are 963 “Sales” jobs listed, but the first 519 of those are at the same "company," called “Work At Home Jobs, Inc.” and are mostly the same "job," if you can call it that. The next 136 are a different "company" and the "jobs" are calling people from home to sell them wireless cell service – on commission. The next 52 are the same deal but a different "company," selling internet from home, on commission. The next 46, same story. Etc.

The next category after Sales is “Business development”, with 691 jobs, 466 are “work at home” and many of the rest are the same jobs at the same companies as the “sales” jobs. The next two categories are "General Business" and "Other" and, again, list the same "jobs" at the same "companies." The next category is "Business Opportunity." I challenge you to guess what "companies" and "jobs" are listed. (Hint: it's the same ones again.)

Supply And Demand

Among the few specifics in the story is the example of "Jain Irrigation, which cannot find all the workers it wants for $15-an-hour jobs running expensive machinery that spins out precision irrigation tubing at 600 feet a minute, 24 hours a day, seven days a week."

$15-an-hour is just above the poverty level for a family of four, at about 130%.

Dean Baker, writing in, The Problem of Structrual Unemployment: Really Incompetent Managers, makes the point that a company complaining they can’t find skilled workers at $15 an hour needs to think about raising their offer. Baker writes,

It presents comments from one employer who complains that he can't find workers for jobs that pay $15 an hour. This is not a very good wage. It would be difficult for someone to support themselves and their children on a job paying $15 an hour ($30,000 a year). If the company president understand economics, then he would raise wages enough so that the jobs were attractive to workers who have the necessary skills.

If they can't get workers, they should know that they need to bump up the wage offered until they can. That is about as basic as it gets in the supply/demand equation.

Can't Sell The House And Move

Part of this problem is the housing market. If Fresno really doesn’t have the skilled workers businesses need, Silicon Valley and Las Vegas certainly do, and have very high unemployment rates, but the people there can’t sell their houses and move! And even if they could sell they are "underwater," will come out of the sale owing a ton of money that they can't make up by taking a $15-per-hour job!

Externalizing Training Costs

Companies expect workers to already be trained, “externalizing” one more cost onto local communities, while shopping for the lowest tax areas to locate.

California has a budget crisis and is cutting back on funding for the community colleges and other programs where people are trained for jobs. One reason for the budget crisis is businesses demanding ever-lower taxes, or playing communities and states against each other for tax incentives to relocate, using property tax avoidance schemes and so many other ways to get out of paying something back to the public for the public investment that enabled them to prosper.

The Real Problem

Out here in the real world the real problem is not "structural," it is that there just are not enough jobs, they don't pay enough, "free trade" deals have lowered wages and undermined our manufacturing base, there is not enough demand in the economy and the government is not doing its job of picking up the slack and after 30 years of tax-cutting the infrastructure is crumbling and not supporting competitiveness for our businesses.

There are millions of unemployed and millions of infrastructure jobs that need doing. There is a new green energy and manufacturing revolution going on in the world and we do not have an economic/industrial policy to capture our share. There is problem after problem that is not being addressed by a government captured by interests.

DC Avoids Dealing With The Problem

It seems that the DC Elite will do anything to avoid just seeing what is in front of their faces.

Clearly we have lost jobs from trade deals, Wall Street financialization and domination, lack of investment in infrastructure and education, etc. But the DC Elite come up with a thousand reasons not to fix these because the interests that benefit from those deals have influence over them. Our budget deficit is obviously from tax cuts and military spending – but you will never, ever, ever, ever hear that. Instead we hear job-killing "austerity" solutions that avoid asking the wealthy few to pitch in.

On one issue after another, the DC Elite provide cover for the wealthy elite interests who now control DC. The transition from We, the People democracy to a plutocracy of, by and for the wealthy few is nearly complete.

The real problem is not a breakdown of the structure of the job market and is not a mismatch between the jobs and the skills, it is a lack of jobs because of lack of demand, and a mismatch between who our government and economy are supposed to work for, and the interests that have brought this about.

March 10 Summit on Jobs and America's Future

On March 10, 2011, the Summit on Jobs and America’s Future will bring together leaders and activists who understand that America faces a jobs crisis – and who are committed to building a political movement for sustainable economic growth, dynamic job creation, and a revival of the American economy.

It's free, $15 if you want lunch. Beat that.

Winning The Future, Brought To You By GE

Digby — Wed, 26 Jan 2011 15:24:02 -0500

Here's an interesting interpretation of Winning the Future:

After two years of federal spending to boost the economy, the ground has shifted decisively in Washington: On Tuesday night, the most pressing question was not whether to spend more to create jobs but whether to cut spending, deeply and now.

For the first time in his annual address to the American people, President Obama did not hail a newly passed "recovery act" or call for a "new jobs bill." Instead, he called for a five-year freeze in domestic spending, except for "investments" in education, infrastructure and research.

Republicans went much further, calling for an immediate and unprecedented reduction in non-defense programs that could take more than $100 billion out of the economy over the next few months. Both sides are casting their proposals as the best course for deepening the economic recovery and improving U.S. competitiveness abroad.

But with the unemployment rate still hovering at 9.4 percent, neither the president nor congressional Republicans are offering a clear strategy to create jobs in the short run, economists said, and that is the most critical challenge in the minds of voters heading into the 2012 presidential election. The one initiative likely to have immediate impact is the GOP's plan for sharp spending cuts, and some economists fear that could push the economy in the wrong direction.

Hours before Obama spoke Tuesday, the House approved a resolution calling for domestic spending to be cut to 2008 levels for the rest of the fiscal year, and Republicans are discussing reductions of at least $60 billion. Cuts of that size would trim domestic programs to their lowest level as a share of the economy in more than 30 years, according to an analysis by the liberal Economic Policy Institute, endangering as many as 600,000 jobs.

"Government spending restraint is vital to addressing our long-term fiscal problems. It just shouldn't start in 2011," said Mark Zandi, chief economist at Moody's Analytics, who has advised both Republicans and Democrats on economic issues. Zandi said cuts of the magnitude Republicans are discussing probably would not invite a new recession. But they could push unemployment back into double digits, he said, "taking a very significant risk with this fragile economy."

So? What's wrong with double digit employment? We almost have that now and nobody seems to give a damn. It certainly wasn't a big topic last night from either the president, the Republicans or the Teabaggers. This is the new normal. We only worry about GDP now and Mark Zandi isn't worried about that, thank goodness, so carry on with the freezing and cutting. It's all good.

I'm not sure how high unemployment has to rise before people feel it's a big problem again, but at this point I'd have to guess that it would take another five percent. Which means that we are now a country that thinks it's perfectly fine to have tens of millions of people out of work—while at the same time we are busily slashing spending at the local, state and federal level. Talk about a winning future!

In this instance, the conservatives (and I include the likes of Kent Conrad in that designation) are far more honest than the "centrists" about what this all adds up to. They don't pretend to care about the unemployed or the students or the people who have lost their futures in this downturn. They are right up front about what this is about—☺confidence fairies:

Conservative economists are less inclined to predict that immediate spending cuts would harm the economy. But they don't see them as an effective economic tonic, either. At a time when the national debt has surpassed $14 trillion, business leaders and bond market investors are looking to Obama and other policymakers for certainty about tax policy, entitlement spending and the nation's long-term budget outlook, said Glenn Hubbard, dean of the Columbia Graduate School of Business.

"The right way to do a pro-jobs agenda would be to limit policy uncertainty. We need to put the country on a long-term sustainable path," said Hubbard, who served as chief economist in George W. Bush's White House. "Businesses fear investing if we can't get this stuff right. You don't have to start cutting now. But absent presidential leadership, it's really hard to see how it gets done.&quot

The view that the U.S. economy would benefit from adoption of a comprehensive deficit reduction plan is broadly shared by policymakers and budget analysts.

"Most economists say if you put in place a credible plan that only took effect once the economy had strengthened, just adopting a plan itself would have positive benefits for the economy right now," said Senate Budget Committee chairman Kent Conrad (D-N.D.).

I happen to have the man who can explain why this is total, complete, utter bullshit right here:

That was six and a half months ago, when unemployment was the same as it is now. (Krugman's response to the speech is here.)

From what I can tell this is working for the president. I would guess that the country is sick of bad news and just wants more than anything to believe that the president can end all this and that we can get back to the way things were. But psychologically we are starting to adjust to this new normal and that new normal is not good for the middle and working class of this country. (The poor are so screwed they don't even merit discussion.) In fact, it's devastating and it's all happening to benefit the ever more powerful top two percent.

Of course, it's the top two percent who have the money to fund elections, so there is a logic to all of this. This is Oligarchy and for those who say that it can't work in a democracy, I think we are seeing just how wrong that is.

Update: It occurs to me that deficit reduction has now joined Tax Cuts for the cure-all for what ails the economy. After all, Kent Conrad has been agitated about deficits when they are small, when they are large, when the economy is booming and when it's in recession. No matter what the situation, the proper response is always to cut government spending, preferably "entitlements." (Being a Democrat he'll sometimes give a vague wave toward raising taxes, but it's never a deal breaker.)

As Wall Street Cheers Gridlock, We Get Stuck

Isaiah J. Poole — Wed, 27 Oct 2010 12:45:48 -0400

Wall Street, conventional wisdom has it, likes legislative gridlock. Stock prices tend to go up when Election Day results in the two major parties splitting power. As a USA Today story recently noted, “In the words of many Wall Street analysts and economists: Gridlock is good.”

Wall Street, be careful what you wish for.

At a forum Tuesday presented by the New America Foundation, several scholars and economists counted the cost of more than three decades of conservative-dominated economic policy and the federal government’s severely compromised response to the Great Recession. One thing became clear very quickly: The last thing you should want when an economy is gasping for air is gridlock that keeps emergency vehicles from responding.

That’s what’s already been happening, thanks to House Minority Leader John “Hell No You Can’t” Boehner and Senate Obstruction Leader Mitch McConnell. They led the effort that prevented the 2009 economic recovery bill from being sufficient to the need, and then stood in the way of follow-up attempts to aid state and local governments, extend unemployment benefits and move overdue transportation infrastructure funding through Congress.

Heidi Shierholz, economist at the Economic Policy Institute, said a continuation of this kind of policy paralysis—assured if the House switches from Democratic to Republican control after the November 2 elections—would mean a record level of sustained and elevated unemployment for at least the next three years.

“We have unemployment forecast to be 9.9 percent next year, which would actually be higher than the highest annual rate of the early 1980s recession,” she said. “Then, in 2012, it will be higher than the highest annual rate of the early 1990s recession. In 2013, the unemployment rate will be forecast to be over 6 percent, six years after the start of the recession. …

“If we keep going on as we have, we are going to have recessionary unemployment levels through 2013, and elevated beyond that. So that paralysis will have real effects on the ground.”

As it stands now, Shierholz said, the economy is 11 million jobs short of what’s needed to undo the damage of the Great Recession. By 2016, the economy will have to create 19 million new jobs to bring the nation to full employment.

Getting the economy on track to meet that need will require dramatic policy changes that are actively opposed by Republicans and are beyond what many Democrats are willing to embrace in the current political environment. “When you've had a meltdown you can't just throw a switch to get things started again,” said economist James Galbraith at the forum, and you certainly can’t expect the conservative policy prescriptions that have failed to work for 30 years to work in today’s even more challenging economic environment.

Galbraith and Sherle Schwenninger, director of the New America Foundation's Economic Growth Program, said the elements of a response to today’s jobs emergency would have to include, among other things:

A restructuring of the financial services industry, building on the reforms progressives won this year, so that it is more accountable to the public interest, combined with tools such as an infrastructure bank that uses federal dollars to leverage private investment in rebuilding the nation’s infrastructure.
Stabilization of the housing industry, including write-downs of principals on underwater mortgages and a curbing of the foreclosure fraud machine that, having sold mortgages that should never have been written, then sought to put people out of their homes through what amount to robo-foreclosures that flout the law and due process.
Allowing the federal government to take its rightful role in leading the economic recovery, recognizing that it alone, not states and localities, has the capacity and flexibility to take countercyclical actions to stimulate the economy in the absence of private sector demand. That role could include a return to Nixon-era “revenue sharing” with states, federal assumption of state Medicaid programs, and direct job-creation.
Making it easier, not harder, for older people to leave the labor market if they choose. Pushing back the Social Security retirement age to 69 or 70, as being encouraged by politicians in both parties, will mean less room for new entrants to the labor market. We should be working on ways to strengthen Social Security benefits and make Medicare available at least to people 55 and older (a proposal that was blocked by conservatives from the health care reform bill).

“The private sector jobs machine is broken and has been for years,” Galbraith said. The conservative solution, cheered on by Wall Street, is to keep emergency vehicles obstructed so they cannot get to the machine to fix it. Keeping this up will only keep working-class families sliding downward, and at some point Wall Street will find that their dependence on profits without broad prosperity is unsustainable.

Right-Wing Obstruction Will Cost Thousands Their Jobs

Isaiah J. Poole — Wed, 22 Sep 2010 14:18:34 -0400

Less than a week after the U.S. Census Bureau reported record levels of poverty in the United States, congressional leaders have informed members of a progressive jobs coalition that there will not be a vote before the November elections on a jobs program for low-income people that is set to expire on September 30.

In the absence of any action by Congress, many of the 250,000 people employed in the program stand to lose their jobs.

The culprit: Senate Majority Leader Mitch McConnell and his conservative colleagues in the Senate. The program in question—the Temporary Assistance for Needy Families Emergency Contingency Fund—is not moving forward because McConnell's "hell no you can't" party won't allow a measure containing funding for the program to come to the Senate floor.

That's not the only jobs program that's not moving. Progressive activists have been told that the Local Jobs for America Act, which would directly fund public-sector and social-service jobs, is also unlikely to come up for a vote this fall. That's not a surprise, frankly, because the conventional wisdom has been that neither the Democratic congressional leadership nor the White House has the stomach to fight a battle over a multibillion-dollar jobs bill weeks before the congressional midterm elections. (The Huffington Post did report late Wednesday that Senate Democrats will push for a vote on an "American Jobs and Ending Offshoring" bill within the next two weeks. That bill waives payroll taxes for new hires for two years while ending a loophole that allows corporations to avoid taxes on income earned overseas.)

Still, the impending expiration of the TANF Emergency Fund program is a stunning blow.

Last week 30 senators, all Democrats, signed a letter urging the program be continued. "Without immediate Congressional action, tens of thousands of jobs will be lost in the coming days and weeks," the letter says in part. "Job losses in the states and counties with the large subsidized employment programs could see substantial increases in their unemployment rate. Small businesses that have relied on the fund to expand during the recession and rehire laid-off employees will once again face financial uncertainty. And states may implement reductions in cash assistance, assistance which is effective in stimulating the economy because the poor families receiving it spend virtually every cent in their local economy immediately to meet basic needs."

It's another example of conservative hypocrisy. As we've noted before, the jobs component of the TANF Emergency Fund does precisely what many conservatives say public policy for out-of-work low-income people should do: Get people who would otherwise be on welfare off the dole and into a productive, private-sector job.

The $5 billion emergency fund program was included in the Recovery Act package Congress passed in 2009, and the administration is seeking an additional $2.5 billion in funding for fiscal 2011, which begins October 1.

Liz Schott and LaDonna Pavetti of the Center for Budget and Policy Priorities earlier this month wrote that the program "has been a 'win-win-win,' helping unemployed families find work, businesses expand capacity in a difficult economic environment, and local economies cope with the recession. Without the fund, some 120,000 young people would not have had summer jobs and some 130,000 parents would not have had jobs to provide for their families’ basic needs; they would also have lost a valuable opportunity to build skills for the future."

NPR recently told the story of David Sullivan, an unemployed Chicago resident who got a $10-an-hour hotel maintenance job through the TANF program. Schott and Pavotti share other anecdotes and testimonials from around the country, including one from South Carolina officials who say that their state's welfare caseload, which had been rising during the recession, dropped after it launched its subsidized jobs program.

The House has twice approved funding to extend the program, but block-and-blame Republicans are not budging on their contention that $2.5 billion to keep low-income people working and above the poverty line is not something that the nation can afford—but we can afford $80 billion in just the next two years alone to continue the Bush tax cuts for the richest 2 percent of Americans.

Last week Sen. Max Baucus, D-Mont., introduced a jobs and "tax extenders" bill that included money for continuing the TANF Emergency Fund. That legislation, however, was blocked by McConnell and his band of do-nothings within moments after it was introduced. It turns out their actions answered a question I asked last week—Are Senate conservatives so desperate to hold the economy hostage to their political ambitions and ideological rigidity that they would block even Baucus's relatively unambitious bill?—before I even asked it.

No doubt when the pink slips start to be issued next week for these TANF workers they will be tempted to blame the Obama administration and the Democrats in Congress for not fighting hard enough for them. But the real blame lies with a right wing in Congress that has become so rigid, self-righteous and control-obsessed that it would rather see people unemployed and starving in the streets, as the rich party on in their enclaves with their tax breaks, than have a modest amount of tax dollars go into a program that not only reflects moderately progressive policy but also fundamental human decency.