Time For a New Plan: Frightening Jobless Numbers Show Flaws in GOP Austerity Agenda


Republicans say government cannot create jobs. It certainly seems capable, however, of eliminating them.

The jobs numbers for June are out and to call them “bad” would be an understatement. The jobless rate is up to 9.2 percent; if you include those who stopped looking for work (what the Labor Department calls “marginally attached” to the labor force) and the underemployed (those with part-time work who need full-time work), the rate is a staggering 16.2 percent, up from 15.8 percent last month.

To put it in perspective, the economy added only 18,000 jobs—and 14.1 million people are unemployed. Those numbers will barely keep up with population growth. Workers are currently more likely to drop out of the labor force than find a job.

And the cause of much of the drop? Public sector layoffs, caused in part by ideological cuts in state and local budgets. Though the New Republic's Jonathan Cohn argued on Twitter ”...loss of gov't jobs absolutely preventable. All it would take is more fed aid to states,” it should be noted that some of that aid was refused by Tea Party-backed governors like Rick Scott and John Kasich.

And those same states are passing through tax cuts for corporations while taking the money from pension funds, salaries and health insurance for their workers—the idea being that private companies will create jobs that will more than outweigh the jobs lost by public workers, which is simply not the case. Arguing that cutting government at the same time as the private sector is not hiring, David Leonhardt at the New York Times wrote, "the state and local austerity of the last two years has cost the economy about one million jobs."

Nate Silver of FiveThirtyEight noted, “Employment in 'local government education' down 180K from a year ago. Lots of teachers losing jobs. Among worst-affected sectors." It was not so long ago, during Obama's State of the Union speech, that he argued we were going to “win the future” through education. But it's hard to do that when you're laying off teachers—and not just firing the “bad teachers” that the school reform crowd likes to crow about, but eliminating teaching positions entirely, cramming more students into a classroom or closing schools outright.

Those public sector jobs cuts have been falling harder on women, who are overrepresented in government employment. Mike Konczal of the Roosevelt Institute bitterly joked, ”...Employment-population ratio for women is at lowest rate since 1988. Remember those End of Men stories?”

Matt Yglesias pointed out:

In total, we have about 500,000 fewer people working for the government since Obama’s inauguration even though the national population is larger than it used to be.

So much for big government causing the recession.

Heather Boushey, an economist with the Center for American Progress, tweeted “Wow, hourly earnings fell in June. This rarely happens. This is both a jobless and no wage growth 'recovery.' Sheesh.” But that's a feature, not a bug, of high unemployment. Workers are squeezed into working longer hours or taking on more. Consider the teacher who suddenly has to teach 60 kids as her colleagues are laid off around her. Does she complain and find herself the next one with a pink slip? And forget about asking for a raise. People are accepting any job they can find, wages are being dragged down—from $791.20 a week on average for private sector workers down to $788.56—and meanwhile, those at the top are rewarding themselves.

Heidi Shierholz at the Economic Policy Institute wrote “This is a remarkable, across-the-board backslide. The president and Congressional leaders need to stop talking about deficit reduction and start talking about job creation.”

The president, fresh from his Twitter summit this week, obviously wasn't reading Twitter or the blogs this morning, as economists and economics reporters exploded in anger, disgust and despair. The official response from the administration called for, among other things, the swift passage of free trade agreements—agreements that are estimated to be a net loss of 159,000 jobs to Korea and 55,000 to Colombia.

On the White House blog, Austan Goolsbee called for an extension of the payroll tax cut and the creation of an infrastructure bank to help put Americans back to work. In addition, he wrote, “It also underscores the need for a balanced approach to deficit reduction that instills confidence and allows us to live within our means without shortchanging future growth.”

That the White House continues to accept the conservative narrative about deficits as the economy creaks along should be troubling, particularly as the administration continues to offer compromises on cuts to Republicans as they wrangle over the debt ceiling. Indeed, Obama's speech sounded at times more like another step in that process than a genuine attempt to address the public about jobs.

Rather than noting that corporate profits and executive salaries are sky-high and their taxes at an all-time low, Obama left the fat cats out of the fight, instead arguing “The problems in Greece and in Europe, along with uncertainty over whether the debt limit here in the United States will be raised, have also made businesses hesitant to invest more aggressively.”

As wages stall and workers struggle, the administration's floating of Social Security cuts seems more irresponsible than ever. People who've been unemployed for months and even years aren't adding to retirement funds and will wind up more dependent on their Social Security and Medicare even if that is years in the future.

So what to do? Former administration economist Jared Bernstein echoed what many were saying today when he wrote, “Washington needs to quickly and aggressively shift from its long-term debt obsession to the much more immediate jobs problem. To do otherwise at this point would be deeply irresponsible.”

Yet Bernstein's out, Geithner remains for the time being, and the GOP and corporate backers have so thoroughly controlled the debate over the economy that free-trade deals are being passed off as a jobs plan. The only solutions this morning came from former Clinton administration labor secretary Robert Reich, who tweeted a six-part jobs plan calling for, along with a payroll tax exemption, loans to the states, and amendments to bankruptcy law, a reinstatement of the Works Progress Administration and the Civilian Conservation Corps.

Putting millions to work directly sounds like a wonderful plan. And as those millions continue to suffer, as public-sector layoffs don't magically produce jobs and public opinion turns against anti-labor governors like Scott Walker and Chris Christie, perhaps some space will finally open up for a discussion of a real jobs program.

There's little time to waste.

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