Right-Wing Obstruction, Weak Policies Slow Job Recovery

David Moberg

With an uptick in the official unemployment rate and a third month of slow job growth, the May jobs report released last week will hurt President Barack Obama’s election prospects. But a closer look shows that, whatever the weaknesses in the president’s proposals, Republican obstruction of even modest job-creating actions, abetted by Democrats in too many instances, remains one of the principal reasons the job recovery has been so slow. 

AFL-CIO president Richard Trumka said in a statement:

Most frustrating is the fact that it is not the means for recovery that lack, but rather the will. For purely political and cynical reasons, Republicans in Congress have blocked President Obama’s efforts to maintain momentum for growth, whether it’s the American Jobs Act or routine highway infrastructure investments. Moreover, under the leadership of Mitt Romney, Paul Ryan and John Boehner, Republicans are also looking to cut back on policies that provide relief for the millions of working families worrying about how to pay the bills and how to make ends meet.

Although the U.S. economy has generated job growth in the private sector for 27 months, the rate of increase has slowed in the past few months, and continued public sector lay-offs undermine even the limited private sector good news. Federal aid to state and local governments — which right-wing Republicans have blocked — could help re-hire needed teachers, firefighters and other workers, in turn producing a ripple of private hiring. Also, the official unemployment rate ticked up 0.1 percent to 8.2 percent, largely because more people were coming back into the labor market (while the unemployment rate dropped by the same amount last month as a result of the reverse trend — more people dropping out of the labor market). With 42.8 percent of the unemployed out of work for six months or more (and an average of nearly 10 months without work for all the jobless), this is clearly no time to eliminate emergency, extended unemployment benefits.

But that’s exactly what Congress did in February as part of the Middle-Class Tax Relief and Job Creation Act. The legislation phases out extra benefits now received by about three million long-term unemployed workers by the end of the year, when the unemployment rate is nearly certain to be much higher than when such unemployment assistance programs ended in the past. Beyond the personal financial hardship that imposes, the phase-out thus eliminates some of the public policy tools that most effectively stimulate job growth and retention.

Europe’s economic troubles and slowdowns in China and other developing countries dampen U.S. economic growth, but the fallout from the burst housing bubble, which triggered the financial crisis, continues to cause widespread hardship, to depress consumer demand, and to impede job growth. A new report from Zillow, a real estate valuation service, finds that 31.4 percent of homeowners with a mortgage — 16 million Americans — have negative equity in their homes (or are under water”). Together they owe $1.2 trillion more than their homes are worth on the market.

But Republicans have fought even Obama’s relatively weak proposals. In order to get the economy moving and to create more jobs, drastic measures are needed. The Home Defenders League, a nationwide effort that was launched on Thursday to organize homeowners under threat of foreclosure or under water, wants legislation that would reset all such mortgages at their current fair market value, which would effectively inject $71 billion of new demand into the economy and create 1 million jobs.

Construction employment fell sharply to its lowest level since August, with much of the loss in heavy and civil engineering, which mainly involves public infrastructure projects. The Associated General Contractors report that public construction spending dropped by 1.4 percent, prompting the trade group’s CEO, Stephen E. Sandherr, to urge Congress to pass the highway and transit bill so far blocked by Republicans.

Council of Economic Advisors chair Alan B. Krueger, while giving his best positive spin to the numbers, also argued that proposals tied up in Congress could help increase the number of jobs, saying in a statement:

In the American Jobs Act and in the State of the Union Address, the President put forward a number of proposals to create jobs and strengthen the economy, including proposals that would put teachers back in the classroom and cops on the beat, and put our nation’s construction workers back on the job rebuilding our nation’s infrastructure. The President has also proposed a To-Do List” of actions that Congress should take to create jobs and help restore middle-class security. This includes eliminating tax incentives to ship jobs overseas, cutting red tape so responsible homeowners can refinance, giving small businesses that increase employment or wages a 10 percent income tax credit, investing in affordable clean energy, and helping returning veterans find work.

In response to the weak job numbers, progressive — and even some conservative or industry groups — supported a variety of new federal action. Both Trumka and the Alliance for American Manufacturing urged action on China’s currency manipulation to reverse a slowdown in the growth of manufacturing employment. The conservative American Enterprise Institute threw support behind progressive Center for Economic and Policy Research economist Dean Baker’s proposal for work-sharing. Caring Across Generations co-director Ai-jen Poo called for expanding care for the elderly. But, as Trumka said, the political will is lacking. It is too weak on the part of Democrats and aimed in the wrong direction — towards a deeper crisis in order to win the fall elections — on the part of Republicans.

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.

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