We seem to be headed toward a “double-dip” recession, as job growth seriously slows and unemployment rises. But no one in Washington is ringing alarm bells. Instead, the Republicans are blocking any stimulus to the economy and promoting dangerously counter-productive steps.
Meanwhile, the White House seems to be afraid of calling attention to the problem of the jobs deficit — which originated, of course, under George W. Bush. But do Obama officials think the voters won’t notice if the administration doesn’t talk about it?
Unemployment has climbed again to 9.1 percent. May witnessed the creation of only 83,000 private-sector jobs, an unimpressive figure, and that was offset by the loss of 27,000 public-sector jobs. The previous three months averaged growth of 244,000 private-sector jobs. But the Republicans remain staunchly opposed to any stimulus from increased government spending, arguing tenaciously that the job shortage is somehow caused by excessive government spending and too many government jobs.
The Republicans’ chief spokesmen — people like House Majority Leader Rep. Eric Cantor — don’t bother or are incapable of laying out any logical explanation. They simply insist, again and again and again, that “too much government” is somehow draining vigor from the private sector and interfering with job creation.
A recession is characterized by high unemployment and low consumer spending. But the Republican solution consists of a bigger dose of each: more joblessness in the public sector and lower wages.
A recent Republican strategy paper (PDF link) called for displacing public sector workers to lower demands on the taxpayer. Moreover, this step would also have the beneficial effect of driving down wages in the private sector by increasing the supply of workers competing for jobs.
LOWER WAGES, MORE HIRING?
The lower wages will purportedly encourage the lords of major corporations — the job creators of whom the Republicans speak in hushed, reverential tones — to hire more workers:
a smaller government workforce increases the available supply of educated, skilled workers for private firms, thus lowering labor costs.
This notion suggests how removed the Republicans are from the problems here on planet Earth. First, the labor market is clearly a buyer’s market with all the leverage on the employer’s side.
‘High” wages are hardly a barrier to hiring. Real wages have been stagnating for blue-collar workers since the 1970s, and growth in pay among professionals has slowed severely in recent years.
The competition for jobs is extremely fierce and marked by sharp gradations dependent on the job seeker’s age, according to The Urban Institute. As former Labor Secretary Robert Reich summarizes the study’s findings:
Once you’re laid off, your chance of finding another job within a year is 36 percent if you’re under 34. But your odds drop the older you get.
If you’re jobless and in your 50s, your chance of landing another job within the year is only 24 percent. Over 62, you’ve got only an 18 percent chance.
Second, Corporate America is sitting on $2 trillion in cash reserves. If they thought it would be profitable to hire workers in the United States, they would do so.
Third, severe cuts have already been taking place in the public sector without any noticeable curative effect on private-sector hiring. On the contrary, the public sector has lost 329,000 jobs from March 2010 to March 2011, yet there has been only weakening growth in the private sector. That outcome was all too predictable.
When public workers are on unemployment comp and restricting their spending, consumer demand, which might fuel private-sector hiring and investment, grows weaker. Public-sector job cuts are no more cause for celebration than private-sector job losses.
Without a doubt, the Republicans’ diagnosis of our economic problems and their proposed treatment have crossed over into delusional territory.
THE SOUNDS OF SILENCE — OR A BOLD PROGRAM?
But what of the Democrats? At this point, the chief worry of the White House seems to be avoiding any statement or step which might erode the confidence of consumers and the bond market. But their voting constituents are not likely to forget about their precarious situations, whether reminded or not.
Accordingly, Democratic congresspeople are growing restive, reflecting the mounting impatience of their constituencies facing new rounds of wage cuts, continuing insecurity about their jobs heading to China, declining home values, rising college tuition for their kids, worries about retirement and fear of foreclosure.
With November 2012 election coming up quick, the Democrats in Congress need to develop a compelling narrative. They must tell the story they have failed to tell thus far: how greed and de-regulation brought upon the severe economic crisis, how the stimulus plan was insufficient and Republicans blocked further such moves to re-invest in America’s public sector, and how domestic job growth has been undermined by Corporate America’s strategic shift toward destroying jobs at home and increasing them abroad.
At the same time, the Democrats must abandon their passivity and put forth a compact, coherent jobs program.
It would call upon America to re-invest in America’s crumbling educational system and infrastructure, shore up its sagging safety net, add teeth to the enforcement of laws to discourage often-fraudulent and capricious home foreclosures, forcefully reject new “free trade” deals that export more jobs, and revoke tax breaks that encourage the flight of capital and jobs overseas. Democrats also need to spotlight and repudiate the Republican strategy of eliminating jobs in the public sector as a means of creating even more job losses and more downward pressure on wages.
Surely, the Republicans in the House and Senate will fight each and every measure, and might well defeat all of them.
But at least America will have a chance to see where the two parties stand if the Democrats are willing to draw up a forceful program rather than retreat into their shells until election season 2012.