Jobs Not Well Done

By David Moberg, In These Times. Posted February 26, 2004.

The presidential election this fall may hinge on what happens to people like John Mahoney and Robert Daems. Both are in their 50s, lost their jobs in December 2002 and still haven't found work. If President Bush continues to oppose renewing federal extended unemployment benefits, their compensation soon will run out.

"I don't think the Republican Party even cares," says Daems, who worked for Intel as a systems analyst in Phoenix. "I even feel the Democratic candidates don't have an understanding of what's happening out there."

A Democrat could win in November, however, if he can prove to Daems and other voters that he understands and can manage the economy better than Bush. Polls show that the economy is now the top issue with voters, roughly half of who rank unemployment as their major economic concern.

Both parties show strengths -- the Democrats on Social Security, healthcare and the federal budget and Republicans on national security and terrorism -- according to a review of polls by Democracy Corps, a Democratic strategy group.

But there is no clear advantage for either party on jobs and prosperity.

Despite signs of growth and a stock market rebound, this has been the weakest economic recovery since World War II. Even though the Bush recession officially ended in November 2001, the economy continued to lose about 700,000 jobs through last September. Jobs have grown by an average of 76,000 a month since then, but that's still half the number needed to account for new workers. It's also a far cry from what Bush promised his tax cuts would deliver. The Economic Policy Institute (EPI) calculates that Bush has fallen short by 1.85 million jobs.

Rigged Numbers

The traditional signal of distress -- the unemployment rate -- has been surprisingly low, dropping by one-tenth of a percent in January to 5.6. But the figure is misleading. Many discouraged workers have simply dropped out of the labor force. The percentage of men in the workforce, for instance, dropped by about as much in the last three years as it did over the previous 20. At the same time, workers like Daems and Mahoney -- an auto parts factory worker in Battle Creek, Michigan -- are remaining out of work much longer than normal and long-term unemployment, more than 27 weeks, has increased most rapidly for workers with at least a college degree. As a result, a record number of unemployed workers in January lost unemployment benefits, according to the Center on Budget and Policy Priorities, plunging roughly half into poverty.

But the problem isn't simply the loss of 2.4 million jobs since the recession started -- the greatest sustained job loss since the Great Depression, according to EPI -- and anemic jobs creation. There's also a shift for the worse in the kinds of jobs available. On average, the jobs being lost pay 21 percent more than those in growth industries, say EPI researchers Michael Ettlinger and Jeff Chapman.

The long period of job loss also is taking its toll on people who are still employed: Real hourly wages fell for middle- and low-wage workers last year even as economic output grew, say Jared Bernstein and Lawrence Mishel of EPI. But not everyone lost out. Profits have grown dramatically, claiming a share of the growth in the corporate sector more than double the average of past recoveries.

Skewed Stimulus

This reprises a familiar theme for the Bush regime: Most workers are worse off whether they have a job or are unemployed, and big corporations are profiting. But it should be no surprise. It was designed that way.

"When they passed the tax cuts, every economist argued this is not how you structure a stimulus," Bernstein says. "You can't expect to stimulate job growth by cutting taxes on dividends and capital gains and failing to implement direct spending on job creation, fiscal assistance to the states and other spending."

There were several fatal flaws in Bush's plan, but it was not the swing from a big budgetary surplus to deep deficits. It makes sense for the federal government to run a deficit in a recession to provide economic demand that sustains employment. But the Bush tax cuts were skewed to the rich, not low- and moderate-income workers and the unemployed, who needed the aid and would immediately spend it. Bush was simply determined to cut taxes for the rich. First he justified it as returning the surplus to taxpayers. When the recession deepened, he justified the same policy as a stimulus.

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