Monday, Apr 9, 2012, 10:25 am
Disappointing—That’s the Word for Jobs Report, Prospects for Full Recovery
The Labor Department's disappointing report on March unemployment, released on Friday, confirms the weakness of the nation's recovery from the Great Recession and the need for the federal government to do more to generate increased demand and both directly and indirectly create jobs.
Yet despite the existence of such good proposals as Sen. Tom Harkin (D-Iowa)'s Rebuild America Act, conservative Republican opposition is likely to block enactment of even such traditionally bipartisan projects as long-term renewal of the highway construction funding bill, which was only extended by 30 days at the end of March when it would otherwise have expired. Such funding insecurity depresses spending in a sector that ought to be greatly expanded.
Even if job creation legislation could pass Congress, it would still have to buck strong headwinds, such as the depressing effect of the housing market collapse and the efforts of many families and businesses to de-leverage, or get out from under debts—underwater mortgages, credit card obligations, student loans and more.
The rest of the world also is creating constraints to American economic growth, including European government austerity policies, an anti-growth mentality at the European Central Bank and government debt crises. Slowing growth in China and rising world oil prices—reflecting new Mideast instability and rising demand in developing countries—also crimp U.S. economic growth.
The official unemployment rate in March fell one-tenth of a percentage point to 8.2 percent—the only good political news for President Obama. But that gain largely reflected the numbers of people who dropped out of the labor market. The 120,000 increase in jobs, about half the recent rate and a third of what's needed to return to relatively full employment in three years (according to Economic Policy Institute economist Heidi Shierholz), may be low for technical reasons (warm weather shifting the time of hiring, disturbance of the normal seasonal adjustments the Labor Dept. makes in reporting job changes).
But despite some strength in manufacturing and, as usual, healthcare, there was little to cheer. Earnings increases for the vast majority have been modest—less than even the low rate of inflation, reflecting the influence of slow growth, weak labor markets and capture of almost all income gains by the richest one percent.
Even the unusually high growth in average hours worked during the recovery--a trend slightly reduced last month--has a good and bad side. On the one hand, it suggests increased demand for labor, but as EPI economist Josh Bivens argues, it has meant that employers were as a result able to avoid hiring 2.3 million workers. That's an argument for more aggressive implementation of subsidized work-sharing, a successful policy in Germany, promoted in the U.S. by Center for Economic and Policy Research economist Dean Baker, and given an additional boost in the latest extension of payroll tax cuts.
"Absent serious measures to boost growth, [unemployment changes in the future] will be excruciatingly slow," Bivens warns. And despite widespread optimism about job figures in previous months, a significant, if minority, group of economists warn that a new downturn could occur.
Passage of Rep. Paul Ryan's budget--approved by the conservative Republican majority in the House--would almost certainly send the economy into a downward spiral or, at best, prolonged stagnation. But Harkin's bill provides a broad outline of what a progressive solution might be. Harkin's comprehensive proposal includes $300 billion for infrastructure, as well as funding for modernizing schools, training teachers, and helping states and localities pay for needed public employees. It would set up programs for rebuilding manufacturing and developing "jobs of the future," and would promote fair trade and an end to tax subsidies for offshoring. It would raise the minimum wage, strengthen social security benefits, expand and enforce overtime pay, support child care, mandate paid sick days, strengthen protection of workers' rights to unions, and increase job options for the disabled.
Harkin would also change the tax code—establish a minimum tax rate, or "Buffet rule," for the rich; create a financial trading and speculation tax; eliminate hedge fund operators' tax breaks; raise the capital gains tax; and more. Too bad for the unemployed that it has no chance in this Congress.
David Moberg, a senior editor of In These Times, has been on the staff of the magazine since it began publishing in 1976. Before joining In These Times, he completed his work for a Ph.D. in anthropology at the University of Chicago and worked for Newsweek. He has received fellowships from the John D. and Catherine T. MacArthur Foundation and the Nation Institute for research on the new global economy. He can be reached at email@example.com.