State Of The Union As The Job Situation Gets Worse

Dave Johnson

Prediction: In the upcoming State of the Union speech President Obama is going to talk about jobs. (Just a hunch, let’s see if I’m right.)

We’re in a jam where the economy is still shedding jobs, never mind creating enough jobs to start hiring people again. The stimulus hasn’t been enough, and there isn’t anything reviving the real economy to take over.

There is one place where new hobs can be created. The world is going to wean itself off of coal and oil, and we have to join the parade. A green manufacturing revolution starting around the world that is going to be huge, but our country doesn’t have a national economic/industrial policy process that is taking us along with the other countries into this new era.

So we need the President to talk about more stimulus to create jobs now including direct job creation. We need a national policy process to bring us up to competitive status with the rest of the world. We need tax incentives and other policies that bring about investment in green manufacturing.

And finally we need core economic restructuring so everyone shares in the payoff. The payoff can be very big and this means we’re going to have to think about structuring the economy around leisure time for regular people rather than the slaveholder mindset we have today.

Let’s review the situation. The official unemployment rate is 10%, but when you look at “U-6”, which is “total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers” you get 17.3%. And people have been out of work longer than in other recessions,

“…the number of long-term unemployed (those jobless for 27 weeks and over) continued to trend up, reaching 6.1 million. In December, 4 in 10 unemployed workers were jobless for 27 weeks or longer”

And to make matters worse, in this terrible job market more and more people are just giving up,

“Among the marginally attached, there were 929,000 discouraged workers in December, up from 642,000 a year earlier.”

Is the economy getting better? The stimulus has saved and created some jobs. Think about all the teachers, police, firefighters, construction contractors and small-business owners who have kept their doors open through projects funded by the act. Why do you think many Republican governors are refusing to put up signs at highway projects, etc? Because if voters see them they might understand that the stimulus helped. If the stimulus wasn’t helping these governors wouldn’t bother.

But the economy and job market remain in the doldrums. Just last week the weekly job loss number edged back up. See US jobless claims up, regional manufacturing dips. The stimulus saved and created jobs – but not nearly enough because of caution and an administration and legislature that has been captured by conservative “conventional wisdom.”

How did the jobs picture get so bad? Here is a clue: Since Reagan wage growth has decoupled from productivity growth,

Productivity Wages

The income and wealth has instead concentrated at the top.

Uneven_Gains_Distr

And since 2000 one in three manufacturing jobs has been lost.

MFG_employment

Basics

First and foremost an economy needs to grow food and make things. Manufacturing jobs are the foundation of other jobs because they create the goods that bring in the income that supports the service economy. We can’t just cut each other’s hair and sell each other hamburgers, the income to pay for those haircuts and burgers has to come from somewhere.

But we have been shedding factories, manufacturing jobs, and consequently the suppliers, contractors, shippers, trainers, managers, etc. that go along with them. This loss of manufacturing jobs and capacity has coincided with the increase in borrowing to pay for things made elsewhere. And this has coincided with an increase in the share of Wall Street’s portion of the economy. In 2007, 40 percent of America’s corporate profits came from the financial sector. And what does Wall Street sell? Debt! And what has happened to America since the rise of Wall Street? Debt! What a fantastic coincidence that is!

MFG_vs_FIRE

Wall Street Domination

Our economy not creating jobs because we gave too many of them away, and stopped sharing the productivity. A consumer-driven economy depends on consumers being able to consume. Since Reagan all productivity gains have gone to a top few, while borrowing took over. In fact the amounts borrowed by consumers happens to exactly match the lost gains if productivity had been shared.

“Free Trade” and “free market” arguments tricked us into letting them close factories and outsource jobs to low-wage, low-protection countries. Wall Street came to dominate the economy, but the thing is this is not an economy that makes real things that people can use, or benefits regular people with jobs, it destroys jobs. It is about selling off for short-term profit the things that benefit us in the long-term.

Picture a family that has built us a hardware store over several generations, and makes a good income. If dad dies you can put a bunch of cash in your pocket today by selling the store, but tomorrow the cash AND the store are gone, so what are you left with. What has been happening to the country, though, is even worse, because we are not even sharing in the proceeds from the sale of the store! What has happened is that dad (government oversight) died, the sneaky, no-good brother (Wall Street) sold the store and took off with all the money (bonuses), and now the rest of the family (We, the People) are out in the street with no home or income.

The last few decades have been about selling off the manufacturing infrastructure, converting the goods economy to a paper economy and deferring maintenance of or just tearing down or selling off our infrastructure – the public structures of government oversight, courts, roads, bridges, schools and the rest of what We, the People had build over the previous two centuries before Reagan and the “free market” crowd of con artists used corporate dollars to gain sufficient influence to run their schemes on the rest of us.

So it’s the SOTU, what can the President announce — and DO?

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