New Stimulus Needed Before Recovery Stalls

Roger Bybee

President Obama speaks with Russian President Dmitry Medvedev at the G20 Summit in Pittsburgh, Pa. The summit included leaders from the 20 largest economies in the world.

The need for a second economic stimulus focused directly on job creation could not be more urgent right now.

If you stop right now, [the economy] will slide right back” into a recession, declared new AFL-CIO President Rich Trumka at a shadow summit” held by international labor leaders that coincided with last week’s G‑20 meeting in Pittsburgh.

The labor leaders don’t want the G‑20 leaders to formulate an exit strategy (from the recession) without good jobs at the heart,” Sharan Burrow, president of the Australian Council of Trade Unions, said during a news conference. Without an employment strategy, a G‑20 declaration will be rejected by labor, Burrow said.

Without a new stimulus from the Obama administration, the positive effects of the $787 billion stimulus may stall out because of a continuing wave of layoffs, plant shutdowns and off-shoring of jobs.

While the rate of layoffs has slowed markedly, there is still a vast army of nearly 15 million unemployed who lack spending power. Additional tens of millions, worried that their job will be the next to go, are cautious in their spending habits.

Job seekers now outnumber openings six to one, the worst ratio since the government began tracking open positions in 2000,” the New York Times reported Sunday. According to the Labor Department’s latest numbers, from July, only 2.4 million full-time permanent jobs were open, with 14.5 million people officially unemployed.

The Times elaborated:

For years, the economy has been powered by consumers, who borrowed exuberantly against real estate and tapped burgeoning stock portfolios to spend in excess of their incomes. Those sources of easy money have mostly dried up. Consumption is now tempered by saving; optimism has been eclipsed by worry.

Experts say that so many businesses have pared back working hours for people on their payrolls, while eliminating temporary workers, that many can increase output simply by increasing the workload on existing employees.

They have tons of room to increase work without hiring a single person,” said Heidi Shierholz, an economist at the Economic Policy Institute . For people who are out of work, we do not see signs of light at the end of the tunnel.”

In fact, while America until recently led the world in hours worked annually— because of employers’ vastly superior control over workers — the average work-week has been pared down to just 33 hours.

Stunningly, despite the stimulus, government employment has fallen by 17% in recent months. Meanwhile, unemployment in many cities has hit Depression-era levels, or soared even beyond that:

The state of Michigan includes disaster zones as Highland Park, 36.4%; Pontiac, 35.1%; Detroit, 28.9%; Flint, 28.9%; and Port Huron, 26.2%, based on July data. The auto bailout directed by Wall Streeters in the Obama administration, coupled with low consumer spending, has left these cities decimated and desolate,

Looking southward to South Carolina, things aren’t so hot either. While this bastion of the Confederacy for decades built up its manufacturing by bragging about the lowest unionization rate, rock-bottom wages and lavish tax breaks, it turns out that Mexico, China, and a host of other nations are even more hostile to unions and offer even lower wages.

Thus, South Carolina towns like Anderson face 27.1% unemployment and Spartanburg has 26.6% jobless.

But the current tendency of Democrats is to shy away from any stimulus package that would provoke shrieks of government interference,” higher deficits” (perfectly acceptable for the enormous Bush tax cuts and his wars in Iraq and Afghanistan), and socialism” from the GOP and its allies.

Instead, Democrats are likely to be tempted by limited spending on job-training programs. Everyone is in favor of more training and skills, right? And spending a few billion on training will be a lot less than hundreds of billions on a new stimulus. It will mean not having to fend off new barrages from both Blue Dog Democrats and Republicans.

But opting for job-training programs instead of a second stimulus plan would be both foolish and cowardly. As David Ranney argues in his excellent Global Decisions, Local Collisions: Job training [is] being pursued without any program to stimulate the demand for jobs.”

In other words, it’s like teaching people to swim, handing them a swimsuit, and then telling them to dive into an empty swimming pool. America’s jobless deserve much better: the chance to work again for decent wages and benefits, and thereby stimulate a still-fragile recovery.

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Roger Bybee is a Milwaukee-based freelance writer and University of Illinois visiting professor in Labor Education.Roger’s work has appeared in numerous national publications, including Z magazine, Dollars & Sense, The Progressive, Progressive Populist, Huffington Post, The American Prospect, Yes! and Foreign Policy in Focus.More of his work can be found at zcom​mu​ni​ca​tions​.org/​z​s​p​a​c​e​/​r​o​g​e​r​d​bybee.
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