Recovery must start with job creation
President Obama this weekend called on the Congress to pass a $50 billion bill in aid to states that will help forestall the layoff of 300,000 teachers, police, firefighters and more. Despite this, the prospects for the legislation are not great. Deficit hawks seem to rule the roost these days on Capitol Hill.
How can that be? The most recent report of researchers from Goldman Sachs projects unemployment will rise to 9.9 percent in 2011 and end that year at 9.7 percent. That means more than 20 million unemployed. One of three African-American young men unemployed. Half of all urban teenagers in need of full time work. It means that long-term unemployment now at record levels will continue to worsen.
President Obama inherited an economy in free fall, losing 750,000 jobs a month. His recovery plan stanched the fall and brought the economy back to where it is generating growth and beginning to generate jobs. But the hole was much deeper than most economists thought. And we've got a long way to go to get out of it. Economists estimate it will take about 500,000 jobs a month for three years to get us back to the levels of unemployment that existed when the recession started. And those levels weren't wonderful: workers were losing ground on wages even before the recession.
Moreover, the headwinds are growing ever more fierce. The banks aren't doing much lending. States and localities are facing rising budget deficits, even as the recovery money runs out. And Europe has now turned to full-bore austerity in the wake of the euro crisis. Last month, the U.S. private economy generated only about 41,000 jobs net. The economy was boosted only by 400,000 census jobs that will disappear soon.
Despite the hysteria about deficits, this is a good time to borrow and invest. Interest rates are low. There is no sign of inflation. There is massive unused private capacity and capital. Instead of crowding private capital out, public investment now can draw private capital in. Economists like Brad DeLong argue this is the time for the U.S. to borrow long-term, create an investment bank to modernize our infrastructure, mobilize private capital and rebuild America.
But this isn't an economists' question. It is a moral question. Will the U.S. adjust to mass long-term unemployment? Or will we insist on putting people to work, and make the economy work around that commitment?
This is a moral choice. Long-term mass unemployment puts those afflicted under great stress. Divorce, depression, drug use, suicide all rise. It also undermines the broad middle class. It creates a society divided from the top down, separate and unequal society, in which a declining middle class grows ever more angry.
A commitment to full employment ensures rising wages. It forces companies to be efficient, rewards innovation and creates mass, not elite, markets.
The rabid right doesn't get this. They see full employment as a threat -- of rising wages, of empowered workers, of rising demand and prices. They put lower spending and tax cuts first, even though, when business isn't investing, lower spending threatens a worse downturn, higher unemployment, greater misery.
Now in Congress, all progress is stalled. A $100 billion bill to put people to work can't get a vote in the House. A $23 billion emergency bill to save the jobs of 300,000 teachers is blocked in the Senate. A $1 billion bill to provide summer jobs is blocked and it is already the middle of June.
That's why the NAACP, the Urban League, Rainbow Push and dozens of other organizations are coming together around a plan for a march for jobs in Washington in October. It is time to let the legislators know that Americans will not settle for a mass unemployment economy. This isn't to threaten the administration or the Congress. It may well be necessary to save them. It is time for people to make their voices heard.