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Joshua Lott / Reuters With 15 million unemployed, the jobs picture is still bleak—and Washington isn’t doing enough to help. Former Labor Secretary Elaine Chao on what the White House can do to create more jobs.
There was little to cheer in Friday’s unemployment report, other than the fact that there have been worse in the past year. But the unemployment figures are not going to get much better unless and until policymakers in Washington acknowledge that jobs lost do not automatically bounce back—especially not in the face of a still-tight credit market and actions in Washington that, however well-intentioned, would dissuade the hiring of new workers.
No one feels that more keenly right now than America’s 15 million unemployed workers, who have been without a job, on average, for 29 weeks—the longest since that data began being collected in 1948. In normal times, laid-off workers are unemployed an average of eight weeks. Today the future looks so bleak to so many unemployed workers that in December alone, 661,000 lost hope and gave up looking for a job. The labor force participation rate dropped to 64.6 percent from 65.2 percent from the previous month. Nearly 2 million workers have given up looking for jobs since May. Because they have effectively dropped out of the work force as measured by the Bureau of Labor Statistics, they are not reflected in the official unemployment rate, currently listed as 10 percent.
Washington policymakers have to understand the adverse implications of their actions on job creation, and they must reorder some of their priorities.
A year ago, the chairman of the Council of Economic Advisers promised that passing the trillion-dollar stimulus package would keep the unemployment rate from rising above 8 percent—through the next five years. Obviously, that prediction has not panned out. While job losses per month may be lessening, there is a stunning dearth of new job creation. The unemployment rate soared in the first quarter of 2009 compared to the last quarter of 2008, even though 53,000 fewer jobs were lost. Unemployment skyrocketed in the first three months of 2009 because job creation tanked—nearly 1 million fewer jobs were created than in the last quarter of 2008. This lack of job creation is a phenomenon that distinguishes this period from other economic downturns.
In the best of years, millions of jobs are lost. Even when America’s economy has been by all measures healthy and the unemployment rate low, some businesses suffer or fail and lay off workers. But nearly always a simultaneous and even greater burst of new jobs has been created to offset the jobs lost—millions of new jobs every year. Enough to provide jobs for those who have been laid off, as well as for new entrants like high-school and college graduates into our work force.
Just to keep up with population growth, the economy needs to create about 125,000 new jobs a month. Shortly after Friday’s disappointing report that 85,000 more workers lost their jobs in December, the White House announced that 17,000 “green” jobs would “likely” result from $2.3 billion in tax credits for the manufacture of wind and solar power equipment and batteries. That’s positive news, but it illustrates what a relatively tiny impact even billions of dollars of government spending to favored sectors makes in terms of job creation. Furthermore, Spain is considered the leader in trying to stimulate the creation of green jobs. Its unemployment rate ranks among the highest in the world, at 19.3 percent.
Meanwhile, all that private-sector employers see on the horizon are higher taxes, higher employment costs, more federal mandates, more punitive bureaucracies, and gigantic federal deficits that crowd out private-sector capital. Employers are not hiring because they fear that all these conditions will diminish their ability to maintain sufficient financial resources with which to hire more workers. In fact, just the specter of these increased costs has deterred increased hiring in the private sector.
This is not a road map for robust economic recovery.
America’s unemployed need a timeout on government actions that increase the burdens on the private sector and impede hiring. The economic shock of higher taxes needs to be avoided by not letting the 2001 and 2003 tax cuts expire this year. Unspent stimulus funds should be redirected to advance the broad-based tax incentives that promote expanding and launching private-sector enterprises. And we need to push for trade agreements that open new markets for American exports.
Much can still be done to promote across-the-board job creation. But Washington policymakers have to understand the adverse implications of their actions on job creation, a goal they profess to desire, and they must reorder some of their priorities.
Elaine L. Chao served as the 24th U.S. secretary of Labor from 2001 to 2009. She’s currently a distinguished fellow at The Heritage Foundation and a Fox News contributor.
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I don't believe a word this lady says, her credentials are shady at best. Secretary of Labor during the biggest decline of American jobs in history, Fox news contributor, Heritage foundation. Something tells me whatever this lady says we should do the opposite.
What did she write? I don't understand, was there a solution there?
Yeah, what a slap in the face to readers looking for real insight.
Job creation rhetoric repeatedly and glaringly fails to address the topic of what type of "jobs" are going to be created by any measure. Most analysis glosses over the deep structural flaws in the casino economy created by the securitization of mortgages. Large sectors of circular economic activity, especially in real estate, finance and home construction and services have been virtually idled by the loss of income derived from artificially inflated home prices. Losses in these sectors are relentlessly mushrooming into other sectors. What manufacturing and service sector jobs are magically going to fill the void? By green jobs does one mean marijuana production because clearly one is smoking it? The uncomfortable reality that most analysts seem loath to admit is that a protracted and painful restructuring of the global economy is underway and few palliatives exist. Advocates of more or less government intervention are carnival diversions intended to advance a political agenda. The speculative government bubble is doomed to burst as well.
If you have some insight into this situation and it sounds like you surely have a strong opinion, you should write an article to expound on it. You bring out, briefly two very good points - most if not all of the Washington response to the economic situation is based on Politics, not, well you didn't way what it is not based on. And, the world is going through a wrenching restructuring of the global economy, of which the US is about 25%. Tell us about this restructuring, and the results - speculate a little on the world of tomorrow (say 20-50 years from now).
The Internet is spawning an economic and cultural revolution that will manifest itself in a dismantling of old guard bureaucracies. Government sponsored military, law enforcement and education bureaucracies are experiencing a massive erosion of trust. Corporate bureaucracies which have essentially aligned themselves with government bureaucracies will fail alongside them. Smaller, more responsive entities will fill the void. Technology and automation will continue to reduce the amount of labor necessary to produce essential goods and services and people will have to work less as a result. The free flow of information is creating a more informed citizenry that is increasingly disenchanted with the two party system. Smaller more responsive political organizations will emerge. There will undoubtedly be chaos in the transition but a yearning for individual liberty is so ingrained in American culture that it will eventually triumph.
I agree, but mostly -- capitalism is running out of steam. Where are the NEW industries? Does anybody really think "green" will save our economy? I'm close to SS age, so at least I will have SOME income coming. But I want to work. I really do. The rules for getting SS is so convoluted....and we have to pay taxes on top of the taxes we already paid throughout our lifetime.
The funny thing is, is that these so-called "conservatives" whose motto's are "Govt. is evil" and "Govt. is never the answer/solution" and "Say NO to big Govt." are the same people whining that the Govt. isn't helping them, and that the Govt. isn't creating jobs. If they were serious about their claims they would stop whining and start their own businesses, take a risk, enter the marketplace, or are they just waiting for a Govt. solution? Oh, the RW hypocrisy.
The TDB suffers from the same odorous malady of much of the MSM. They think Republicans, even Republicans who were part of a failed administration, an administration that refused to enforce labor laws, anti-trust laws or SEC regulations are QUALIFIED TO SPEAK about unemployment because of a title they once held. It's outrageously stupid, and an insult to any reader's intelligence. Elaine Chao cares about as much about the American working people as she does for a gnats that bite her on the ass. She never did anything to help American labor when she was the "Labor Secretary," and she's still peddling her ass for Republican Party policy orthodoxy.
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