The Holidays: Arguing About Good Jobs with the Family
We have had job growth in America for five years. But we don't have full employment and we haven't had anything close to full employment since the late 1960s when unemployment stayed below 4% for four years. We've had just one year since then when unemployment averaged only 4.0% (2000). But in December, Federal Reserve officials decided that the economy was healthy enough that they could start raising interest rates. That's a process that could eventually slow job creation. And that would be a bad thing.
Unemployment, and underemployment with too few hours and poverty-pay, is widespread in America. According to the Bureau of Labor Statistics, there were 7.9 million unemployed people in November of 2015 and the unemployment rate was 5%. But the National Jobs for All Coalition, to which I belong, adds 5.6 million people who say they want to work but have not searched lately, and 6.1 million part-timers who want full-time work but cannot find it. Our unemployment rate is 12% and almost 20 million people. So real unemployment is more than twice as bad as the government says.
There are plenty of stories to back up our view. In a really good job market, employers would be begging for workers, but they aren't. To fill 4,000 positions in September Chipotle had 60,000 applicants pre-register and they expected to interview 30,000 to 40,000 people. That was for jobs that often paid just 9 or 10 dollars an hour. Meanwhile, in Los Angeles, a licensed vocational nurse could not find a job and is selling her blood to pay the bills. A college student who works forty hours a week at Starbucks and lives with her working boyfriend has to sell plasma twice a week to pay the bills. Are these signs of a high-employment economy?
Another negative sign. For 80% of the work force the purchasing power of the average hourly wage in 2015 is about where it was in the 1970s. That's wage stagnation. It happens because of weaker unions, job exports to other countries, and other factors too, but a crucial cause is that there are always more people who need jobs than jobs.
I am talking to grandpa, Uncle Joe, Aunt Isobel and cousins Bert and Ernie at a holiday dinner. Uncle Joe agrees that the job situation isn't good. But he thinks government is the problem. He heard most of the Republican presidential candidates say something like that. We just need to liberate the genius of American capitalism. Get government out and we'll get a millions of new good jobs.
Really, Joe? No more Marco Rubio for you. Beginning in the 1970s, a coalition of conservatives, business leaders, conservative ex-liberals campaigned against unions and worker-friendly legislation and for more power for capitalists. And they won. We got fewer regulations, and less enforcement, lower taxes, less unionization, sharp cuts in welfare, stagnant wages, and huge increases in the amount of money going to the top 1%. More businesses learned to thrive by paying poverty wages at home and abroad. Capitalist "innovation" meant raising the level of old-time exploitation. WalMart and Amazon, with their whizzy logistics systems, have millions of workers in stores, factories, and warehouses getting lousy pay and no benefits. And now there is the Uber, which offers a convenient calling-and-payment system, but uses reactionary labor practices. The company classifies employees as independent operators, thus avoiding the need to pay taxes for Social Security, Medicare, unemployment benefits, and workers' compensation. That's innovation?
Well, OK, says Aunt Isobel. We have a problem. Why not use the time-tested method of tax cuts for business and investors to get more good jobs? I answer that the method has failed the tests. Programs that offer tax credits for every unemployed person hired often just reward employers for the hiring that they would do anyway. Ditto for Hail-Mary tax cuts that claim to incentivize rich savers and big businesses to hire more workers. The Bush tax cuts of 2001 and 2003 were a giveaway to the rich that brought no special bump in job grow and, Aunt Isobel, you may have noticed that the cuts did not keep us from the worst recession since the 1930s.
One problem with tax cuts that favor the rich is that there many other things for bankers, business planners and rich households to do with new money than to invest in good jobs in the U.S. They can invest it overseas, stash away for a better day, buy a mansion in the Caribbean or an old master painting in New York. Or invest in Instagram and other high-tech companies that have relatively few employees. Or Uber and other companies that create bad jobs. [i]
So if the Fed cannot create enough good jobs and tax cuts won't work, we are left with direct government job creation. It's was done before. In the 1930s the federal government managed three successful programs. The Civilian Conservation Corps (CCC) gave young men skills and work discipline and it gave the country parks, picnic grounds, thousands of little dams, windbreaks and much more. The Works Progress Administration (WPA) had about 2 million people at any one time working in everything from road repair to child-care and theater performances. The Public Works Authority (PWA) provided funding and supervision over projects that were usually carried out by private companies. By the end of the 1930s, the PWA had built something--dams, airports, new bridges, schools, post offices, fire houses--in 3000 American counties.
In our time, there are dozens of useful projects to employ people in regular jobs. Some are under way. Some were included in Obama's stimulus program which funded road repair. Streets in my neighborhood finally got fixed. The American Society of Civil Engineers gave American infrastructure at D+ recently, so there's a lot of work to be done fixing our roads, bridges, water systems and public schools. Obama also added money to the Weatherization Assistance Program that employs private companies to insulate the homes of low-income families. There are programs like Head Start that should be expanded and upgraded.
But cousins Bert and Ernie aren't convinced yet. They are pretty cynical about government. Sure, some things worked in the 1930s, but people were different then and the crisis was bigger. They had to work together. But now? People won't work together and most federal programs are in trouble. Obama's stimulus program flopped, Obamacare is a disaster, and Social Security is just about bankrupt. Bert and Ernie tell me that Social Security won't be there when they retire.
I tell them they are wrong about these three programs. But the cousins want to fight a little more about the pros and cons of direct job creation by the government. They are interested in the issue and it links to some of the things they have been studying in college. Here are some of the debates we had.
1. Assertion: Government screws up everything. Businesses always do things better.