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Working In These Times

Friday, Jun 3, 2011, 4:19 pm

The Grim New Unemployment Report Underscores Country’s Massive Jobs Deficit

BY David Moberg

Disappointment with Dems grows, as Republicans hide smiles

The Obama administration tried to paint a smiley face on today’s report on May unemployment from the Bureau of Labor Statistics, even though it showed the official, narrowly defined unemployment rate rising very slightly to 9.1 percent as job growth slowed from previous months.

The president went to Toledo, Ohio, to tout the success of the auto industry aid program—wildly unpopular when proposed and implemented, but proving in most regards a wise use of government intervention to save jobs. While acknowledging unemployment is too high, Council of Economic Advisors chairman Austan Goolsbee called the job news one of the inevitable “bumps on the road to recovery.” He insisted that the administration’s policies—including a payroll tax cut and business incentives—“have contributed to solid employment growth overall this year.”

But the real smiley faces—behind stern frowns of disapproval—were undoubtedly on the faces of Republicans. They have little chance of defeating Obama next year if the jobless rate drops significantly but a serious shot at the presidency if joblessness remains high—even with their current crop of contenders.

And that’s one reason among many to suspect that the Republicans are pushing policies that would cut spending, jobs and income. True, they push the same agenda regardless of the condition of the economy—tax cuts for corporations and the rich, reduction in government except for the garrison state, and deregulation.

Some right-wing politicians may actually believe such moves will strengthen the economy. But a recent report from the progressive Economic Policy Institute found that a decade of Bush-era tax cuts—much the same medicine as now proposed--were a poorly designed stimulus that failed to create strong growth, even though thy were more expensive than projected an continue to add to the deficit and interest costs.

(On the other hand, Republicans probably would be happy that EPI also found that the wealthy mainly benefited, especially the super-rich, with little benefit trickling down to all the people they consider losers.)

Many Republicans, however, surely recognize that government spending and a stimulative Federal Reserve policy would generate jobs, even if they don’t like government to do much, if anything. But they are more focused on corporate profits, executive pay and capital gains, which are high, not on jobs. And for cynical, partisan reasons, they want high unemployment to stoke disillusionment with Obama.

Economist Paul Krugman in the New York Times today warned that Republican austerity would intensify the problems caused by Obama’s premature ending of an already inadequate stimulus, repeating the 1937 policy errors of the Great Depression. And former labor secretary Robert Reich raised the specter of a double-dip recession yesterday in the Financial Times.

With anemic economic growth, the private sector generated just 83,000 jobs last month, down from an average of 244,000 a month for three prior months, the BLS noted. (Center for Economic and Policy Research co-director Dean Baker suggests some of the shift may reflect statistical anomalies.) But that weakness was compounded by the loss of 27,000 public sector jobs, reflecting the cutbacks in state and local government that are undermining the recovery.

Manufacturing employment, which had been recovering fairly well, although still deep in a hole from the recession, lost 5.000 positions. But other sectors that had shown some growth—healthcare and professional and business services—still expanded.

The growth Goolsbee cited is weak by comparison with the losses that preceded it (just as weak as the policies he mentioned). The National Employment Law Project calculates that 8.7 million jobs disappeared in the recession, but only 1.8 million have opened up since early in 2010—an ongoing loss of 6.9 million jobs. At the same time, the labor force has expanded as the population has grown, creating a need for 4.1 million more new jobs.

The nation thus suffers a more serious deficit than the one most debated in Washington—a deficit of 11 million jobs.

And to make matters worse, as the number of people unemployed for a long time (more than 26 weeks) continues to grow, several state legislatures are cutting back the amount and duration of unemployment compensation.

Beyond the shortcomings of administration policy and the ill effects of Republican austerity, job creation may have been slowed by reduced consumer spending, the wealth-loss effects of declining home prices (which also indirectly depresses construction employment), austerity policies in Europe and elsewhere, the tsunami disruption of Japan’s economy, and continued employer misgivings about the future of the economy.

Many of these influences are out of control of the government, but there are actions government could take—creating public works jobs for the long-term jobless, funding infrastructure improvements, subsidizing clean energy manufacturing, giving bankruptcy judges power to restructure troubled mortgages, and aiding state and local governments, to mention a few.

Now Democracy Corps pollsters find the key Democratic constituencies of unmarried women, voters of color, and young people are increasingly disappointed with Obama and Congressional Democrats but still support a progressive solution to their economic woes. Republicans want to keep them unhappy, but Democrats think they have to play a less hurtul version of the Republican game, leaving themselves, the jobless and the country as losers—just what the GOP wants.

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 davidmoberg@inthesetimes.com.

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