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Bailed-Out Banks Won't Create Jobs: What Next?

Tuesday, 07 February 2012 04:29 By Jack Rasmus, Truthout | News Analysis
Bailed-Out Banks Wont Create Jobs What Next

Lower Wall Street, New York City. (Photo: Barton Silverman / The New York Times)

After more than four years since the start of the recession in December 2007 and three years after President Obama assumed office, the jobs crisis continues to be the US economy's number-one problem.

Based on the US Department of Labor's more accurate latest "U-6" unemployment rate, at the official end of the recession in June 2009, there were 25.4 million jobless; today, more than 30 months later, there are still 23.4 million people without work. That means  only approximately 67,200 jobs were created each month over two and a half years - a monthly number barely half of what is needed merely to absorb new entrants into the labor force.

Most of the 2 million jobs created in the private sector since Obama assumed office three years ago have been lower-paid service jobs, part-time jobs and temporary forms of employment - all of which have lower wages and few benefits. Higher-paying jobs and jobs with benefits in manufacturing and construction have, in contrast, continued to decline since the June 2009 recession low point. Today, there are still 79,000 fewer jobs in manufacturing and 680,000 fewer jobs in construction than at the June 2009 recession low point. There were 21.1 million manufacturing and construction jobs when the recession began in 2008. There are only 17.3 million manufacturing and construction jobs today.

Unlike during all of the previous 11 US recessions since 1945, the government sector has not created jobs to offset private-sector job loss during the recession. Instead, the public sector has become a major contributor to job destruction. Local governments has laid off 643,000 workers since June 2009, nearly a quarter million of whom were teachers. Public workers and teachers continue to be laid off at a rate of 20,000 a month or more. At that pace, by the end of his first term, President Obama may have presided over a loss of nearly a million public workers' jobs.

Other indicators of the sad state of the US job market three years into the recession further corroborate that the crisis is ongoing. For example, the numbers of long-term unemployed - that is, those out of work for 27 or more weeks - has continued to rise steadily since June 2009, from 24 percent of unemployed people to the current more than 40 percent.

Another indicator, the employment-to-population ratio - which measures job creation in relation to population growth - shows the US economy is growing fewer and fewer jobs as the US population rises. At the start of the current recession, 63 percent of the US population was employed; today, that number is 58.5 percent. Not least, the job-opening- to-labor-turnover (JOLT) ratio shows there are 4.2 workers for every job vacancy - well more than double the pre-recession 1.8 to 1 ratio.

Congress's and the Obama administration's job creation programs have proved dismally inadequate. In January 2009, the administration promised to create 6 million jobs if Congress passed its first, $787 billion stimulus program, 40 percent of which was composed of tax cuts. In June 2009, there were approximately 25 million unemployed; by mid-summer 2010, there were still 25 million unemployed, and job losses began to rise again that same summer.

The administration's answer was to propose $802 billion in tax cuts for corporations and investors, including a two-year extension of the Bush-era tax cuts to the tune of $450 billion. Then the administration added another twist to its jobs strategy in late 2010: it brought in corporate CEOs like GE's Jeff Immelt and bankster Bill Daley to run the president's new "jobs council." Their corporate answer to a jobs program was more free trade agreements, a halt to new business regulations, lower corporate tax rates for offshore multinational companies hoarding their profits in foreign subsidiaries to avoid paying US taxes, patent-law reform, and a payroll tax cut made possible by looting hundreds of billions in funds from Social Security. That corporate-designed jobs program failed, too.

The administration's business tax cuts, its corporate friendly and job-destroying free trade deals, and its raid on Social Security to give workers with jobs a paltry tax cut at the expense of retired workers' deferred wages have all failed to put a dent in the 23-24 million unemployment figure. The stimulus and tax cut programs of the past three years have bailed out big business and big banks but created only a trickle of jobs. What was once a "trickle down" approach to job creation has become a "drip-drip" policy.

While the Democrats have thus far failed to provide any effective programs to restore the millions of jobs lost since the recession began, Republicans continue to propose retread solutions that destroyed millions of jobs over the past decade, including all those addressed earlier in this article - all the while increasing defense spending. Republican programs have not only failed to produce jobs, but have actually eliminated them by the millions.

The historical record shows that $3.4 trillion in Bush-era tax cuts, given mostly to business and investors, were not associated with job creation during his term. The number of private-sector jobs when Bush came into office in January 2001 was over 111.6 million. The number of private-sector jobs when he left office in January 2009 was about 20,000 shy of 111 million. The US economy, and taxpayers, paid $3.4 trillion to lose over 650,000 jobs. Three years later, in  December 2011 and after another year's extension of the Bush tax cuts, there were about 109.9 million private-sector jobs. And still, Republicans continue to beat their broken drum that "tax cuts create jobs," when, in fact, there are still 1.7 million fewer private-sector jobs in the US than there were a decade ago.

Republicans continue to chant for more cuts in social programs when countless studies show it will result in the loss of millions more jobs. They continually call for more defense spending and wars as a job creation strategy. But again, the facts call for the opposite approach. Increasingly, defense spending results in more expensive high-tech weapons systems, which only further boost the bloated profit margins of defense giants like Lockheed Martin, Raytheon, Boeing and others, and result in more outsourcing to the companies' foreign defense contractor partners in Japan, Germany, Israel, the United Kingdom and elsewhere. 

The S&P-Fortune 500 largest corporations today sit on more than $2 trillion in cash, and they refuse to spend and invest it in America and create jobs here at home. The big-tech, big-bank and pharmaceutical companies sit on another cash hoard of more than another $1 trillion sheltered offshore and refuse to bring it home to create jobs. Nineteen big banks sit on still another $1 trillion and refuse to lend to small businesses to create jobs.

If big banks and big business refuse to create jobs with their cumulative $4 trillion bailout cash hoard, then the government must tax it, take it back from them and directly create jobs itself. The US needs a 21st-century New Deal, including an immediate creation of a Civilian Conservation Corp (CCC) program similar to the one created in 1933. In just 90 days, the CCC created the equivalent of 1.2 million jobs in today's economy. In the mid- and longer term, what the economy needs now is a 21st century Works Progress Administration (WPA), which created, between 1935 and 1940, the equivalent of what would be 25 million jobs today.

More specifically, the US needs a new Alternative Energy Public Investment Corporation (AEPIC), in which the government would invest directly in alternative energy infrastructure. The modern-day CCC would be called the Civilian Reconstruction Corporation (CRC) and would directly build, repair and maintain urban areas and implement urban renewal measures. Today's US economy needs a Community Health Services Administration (CHSA) to build medical clinics in communities and provide direct health services to the working poor, those on Medicaid, and the 50 million uninsured. And the 21st Century Works Progress Administration (21WPA) should target job creation in non-infrastructure and non-health-services employment across all other industries and occupations.

The $4 trillion to fund these direct job creation programs is there. There's no need to raise the deficit or debt. If the super wealthy and their big corporations and banks won't spend the trillion-dollar bailouts US taxpayers provided them, the only alternative is for the government to reclaim those trillions and spend it on direct job creation programs itself.

Jack Rasmus

Jack Rasmus is the author of Obama's Economy: Recovery for the Few, 2012, Palgrave and Pluto Press. His web site is: www.kyklosproductions.com. Rasmus blogs at jackrasmus.com. Follow him on Twitter at #drjackrasmus.

 


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Bailed-Out Banks Won't Create Jobs: What Next?

Tuesday, 07 February 2012 04:29 By Jack Rasmus, Truthout | News Analysis
Bailed-Out Banks Wont Create Jobs What Next

Lower Wall Street, New York City. (Photo: Barton Silverman / The New York Times)

After more than four years since the start of the recession in December 2007 and three years after President Obama assumed office, the jobs crisis continues to be the US economy's number-one problem.

Based on the US Department of Labor's more accurate latest "U-6" unemployment rate, at the official end of the recession in June 2009, there were 25.4 million jobless; today, more than 30 months later, there are still 23.4 million people without work. That means  only approximately 67,200 jobs were created each month over two and a half years - a monthly number barely half of what is needed merely to absorb new entrants into the labor force.

Most of the 2 million jobs created in the private sector since Obama assumed office three years ago have been lower-paid service jobs, part-time jobs and temporary forms of employment - all of which have lower wages and few benefits. Higher-paying jobs and jobs with benefits in manufacturing and construction have, in contrast, continued to decline since the June 2009 recession low point. Today, there are still 79,000 fewer jobs in manufacturing and 680,000 fewer jobs in construction than at the June 2009 recession low point. There were 21.1 million manufacturing and construction jobs when the recession began in 2008. There are only 17.3 million manufacturing and construction jobs today.

Unlike during all of the previous 11 US recessions since 1945, the government sector has not created jobs to offset private-sector job loss during the recession. Instead, the public sector has become a major contributor to job destruction. Local governments has laid off 643,000 workers since June 2009, nearly a quarter million of whom were teachers. Public workers and teachers continue to be laid off at a rate of 20,000 a month or more. At that pace, by the end of his first term, President Obama may have presided over a loss of nearly a million public workers' jobs.

Other indicators of the sad state of the US job market three years into the recession further corroborate that the crisis is ongoing. For example, the numbers of long-term unemployed - that is, those out of work for 27 or more weeks - has continued to rise steadily since June 2009, from 24 percent of unemployed people to the current more than 40 percent.

Another indicator, the employment-to-population ratio - which measures job creation in relation to population growth - shows the US economy is growing fewer and fewer jobs as the US population rises. At the start of the current recession, 63 percent of the US population was employed; today, that number is 58.5 percent. Not least, the job-opening- to-labor-turnover (JOLT) ratio shows there are 4.2 workers for every job vacancy - well more than double the pre-recession 1.8 to 1 ratio.

Congress's and the Obama administration's job creation programs have proved dismally inadequate. In January 2009, the administration promised to create 6 million jobs if Congress passed its first, $787 billion stimulus program, 40 percent of which was composed of tax cuts. In June 2009, there were approximately 25 million unemployed; by mid-summer 2010, there were still 25 million unemployed, and job losses began to rise again that same summer.

The administration's answer was to propose $802 billion in tax cuts for corporations and investors, including a two-year extension of the Bush-era tax cuts to the tune of $450 billion. Then the administration added another twist to its jobs strategy in late 2010: it brought in corporate CEOs like GE's Jeff Immelt and bankster Bill Daley to run the president's new "jobs council." Their corporate answer to a jobs program was more free trade agreements, a halt to new business regulations, lower corporate tax rates for offshore multinational companies hoarding their profits in foreign subsidiaries to avoid paying US taxes, patent-law reform, and a payroll tax cut made possible by looting hundreds of billions in funds from Social Security. That corporate-designed jobs program failed, too.

The administration's business tax cuts, its corporate friendly and job-destroying free trade deals, and its raid on Social Security to give workers with jobs a paltry tax cut at the expense of retired workers' deferred wages have all failed to put a dent in the 23-24 million unemployment figure. The stimulus and tax cut programs of the past three years have bailed out big business and big banks but created only a trickle of jobs. What was once a "trickle down" approach to job creation has become a "drip-drip" policy.

While the Democrats have thus far failed to provide any effective programs to restore the millions of jobs lost since the recession began, Republicans continue to propose retread solutions that destroyed millions of jobs over the past decade, including all those addressed earlier in this article - all the while increasing defense spending. Republican programs have not only failed to produce jobs, but have actually eliminated them by the millions.

The historical record shows that $3.4 trillion in Bush-era tax cuts, given mostly to business and investors, were not associated with job creation during his term. The number of private-sector jobs when Bush came into office in January 2001 was over 111.6 million. The number of private-sector jobs when he left office in January 2009 was about 20,000 shy of 111 million. The US economy, and taxpayers, paid $3.4 trillion to lose over 650,000 jobs. Three years later, in  December 2011 and after another year's extension of the Bush tax cuts, there were about 109.9 million private-sector jobs. And still, Republicans continue to beat their broken drum that "tax cuts create jobs," when, in fact, there are still 1.7 million fewer private-sector jobs in the US than there were a decade ago.

Republicans continue to chant for more cuts in social programs when countless studies show it will result in the loss of millions more jobs. They continually call for more defense spending and wars as a job creation strategy. But again, the facts call for the opposite approach. Increasingly, defense spending results in more expensive high-tech weapons systems, which only further boost the bloated profit margins of defense giants like Lockheed Martin, Raytheon, Boeing and others, and result in more outsourcing to the companies' foreign defense contractor partners in Japan, Germany, Israel, the United Kingdom and elsewhere. 

The S&P-Fortune 500 largest corporations today sit on more than $2 trillion in cash, and they refuse to spend and invest it in America and create jobs here at home. The big-tech, big-bank and pharmaceutical companies sit on another cash hoard of more than another $1 trillion sheltered offshore and refuse to bring it home to create jobs. Nineteen big banks sit on still another $1 trillion and refuse to lend to small businesses to create jobs.

If big banks and big business refuse to create jobs with their cumulative $4 trillion bailout cash hoard, then the government must tax it, take it back from them and directly create jobs itself. The US needs a 21st-century New Deal, including an immediate creation of a Civilian Conservation Corp (CCC) program similar to the one created in 1933. In just 90 days, the CCC created the equivalent of 1.2 million jobs in today's economy. In the mid- and longer term, what the economy needs now is a 21st century Works Progress Administration (WPA), which created, between 1935 and 1940, the equivalent of what would be 25 million jobs today.

More specifically, the US needs a new Alternative Energy Public Investment Corporation (AEPIC), in which the government would invest directly in alternative energy infrastructure. The modern-day CCC would be called the Civilian Reconstruction Corporation (CRC) and would directly build, repair and maintain urban areas and implement urban renewal measures. Today's US economy needs a Community Health Services Administration (CHSA) to build medical clinics in communities and provide direct health services to the working poor, those on Medicaid, and the 50 million uninsured. And the 21st Century Works Progress Administration (21WPA) should target job creation in non-infrastructure and non-health-services employment across all other industries and occupations.

The $4 trillion to fund these direct job creation programs is there. There's no need to raise the deficit or debt. If the super wealthy and their big corporations and banks won't spend the trillion-dollar bailouts US taxpayers provided them, the only alternative is for the government to reclaim those trillions and spend it on direct job creation programs itself.

Jack Rasmus

Jack Rasmus is the author of Obama's Economy: Recovery for the Few, 2012, Palgrave and Pluto Press. His web site is: www.kyklosproductions.com. Rasmus blogs at jackrasmus.com. Follow him on Twitter at #drjackrasmus.

 


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