The ADP private sector jobs report says that 169,000 people became unemployed in November. This means that the government figures on unemployment for last month will likely indicate that the jobless population went up by 200,000 or more. Experts give a large range of figures, but at least seven million people are out of work since the beginning of the recession which started at the close of 2007. Several Fed governors and a number of private economists believe that unemployment will remain above 10% for most of next year. The problem is even worse since hundreds of thousands of people are losing their last means of support, which are their public unemployment benefits.
The President’s job summit begins today. The meeting will last for several hours and include 130 CEOs, academicians, labor leaders, entrepreneurs, and government officials. Mr. Obama said that the reason for the gathering was “We are going to be bringing together people from all across the country … to explore how we can jumpstart the hiring that typically lags behind economic growth, but we don’t want to wait.” He did not mention that “exploring” and “doing” is not the same thing.
Unemployment is the greatest threat to the economic recovery. Consumer spending is still two-thirds of the American GDP. The Treasury’s receipts will almost certainly miss forecasts as personal income is undermined by joblessness. That creates a deficit that is growing faster than expected and a national debt that will need extraordinary interest payments each year. Those payments are expected to reach $700 million per annum by the end of the next decade.
The most important economic issue in the country will get one working day of attention, at best, in a room filled with scores of people, each of whom will probably be given no more than ten minutes to speak. The conversations will almost certainly be disjointed because so many very important people want their very important voices to be heard.
One hundred and thirty people are too many to set out the strategy for any national issue. Even in Congress most work is done by committee over weeks and sometimes months.
The jobs issue will not be solved while the $787 billion stimulus package is going to fund projects that may or may not create jobs. This is an observation that has been made quite often. The federal government needs to make a direct investment through tax credits to businesses and other financial incentives to arrest and reverse rising unemployment. This has been said too often as well.
The experts who have laid out a reasonable path to government investment in creating jobs sit in a state of disbelief as Washington moves from solution to solution and summit to meeting, none of which yields a reasonable and concrete plan to decrease unemployment. Healthcare reform legislation may end up being passed by Congress and signed into law before there is any meaningful jobs bill. The government can then provide health benefits to the millions of people who lost their jobs in 2008 and 2009. That will allow the Treasury to continue to send out more money than it collects.
For those people standing in unemployment lines or at job fairs expecting that they will be lucky to find work any time in the next few months, it is hard to answer the question about why it is taking so long to find a solution, even a modest one, to the problem that American businesses have disincentives to hire American workers. Companies that are barely profitable are not going to add employees. Those that are profitable have found that the recession is a fine way to cut back on workers and increase the productivity of the people who they employ and are happy to have jobs. There is nothing cruel in that. It is just business.
Historians will look back on 2009 as one of the periods in American history when unemployment became an epidemic which almost certainly had several cures which it took much too long to administer. Epidemics are always the result of too little too late
Douglas A. McIntyre
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