COMMENTARY: IN A BLOG ENTRY A FEW DAYS AGO, THE MOST SERIOUS SHORT RUN ECONOMIC PROBLEM WAS HIGHLIGHTED–I.E. THE EMERGING 3RD ECONOMIC RELAPSE OF THE US ECONOMY. THIS IMMEDIATE ECONOMIC PROBLEM SHOULD BE CONSIDERED, HOWEVER, WITHIN THE CONTEXT OF A NUMBER OF LONGER RUN ECONOMIC CRISES CONFRONTING THE US ECONOMY AND POLITY. WHAT FOLLOWS IS THE 1ST OF 10 LONG RUN CRISES, ANY ONE OF WHICH WOULD BE SIGNIFICANT, IN ITSELF. THE FIRST, THAT FOLLOWS, IS THE CHRONIC LONG RUN PROBLEM OF INSUFFICIENT JOB CREATION IN THE US.–APART FROM AND IN ADDITION TO THE POOR JOB PERFORMANCE OF THE ECONOMY SINCE THE ECONOMIC CRISIS ERUPTED IN 2007. PARTS 2 TO 10 TO FOLLOW WILL INCLUDE TOPICS SUCH AS THE ‘INVERTED TAX SYSTEM’, THE COLLAPSING RETIREMENT AND HEALTH CARE SYSTEMS, THE DECLINE OF US GLOBAL ECONOMIC DOMINANCE AND OTHER TOPICS.
1. Chronic Failure to Create Jobs
The U.S. economy is having increasing difficulty creating jobs. Not just in the short term. Not just jobs lost due the recession that began in 2007 and the jobless recession that has followed. But jobs longer term even in non-recession periods, and especially in the last decade. This longer term problem is sometimes referred to as ‘structural unemployment’, meaning job loss or failure to create jobs apart from recession (cyclical) causes. Full time permanent jobs are being lost, churned, and replaced in the tens of millions by involuntary part time and various forms of temporary employment, sometimes referred to as ‘contingent’ employment. There are easily more than 40 million such ‘contingent’ jobs in the US today, out of a labor force of about 155 million. These are jobs that pay typically 50-70% of normal pay, with virtually no benefits. Another structural problem is the loss of jobs due to offshoring by multinational corporations. A closely related development is the loss of jobs due to free trade agreements. In the last decade alone, recent reports indicate multinationals cut 2.7 million jobs in the U.S. while hiring 2.4 million offshore. Free trade agreements since 1989 have resulted in more than 10 million jobs lost, mostly in high paying manufacturing and business professional services. Simultaneously, multinational tech companies have brought millions of non-citizens to the U.S. on H-1B and L-1 and 2 visas since the late-1990s. These are not unskilled, manual labor, agricultural jobs that Americans don’t want, but high paying technical jobs they do. New technologies are additionally displacing workers in the U.S. where jobs are not yet out- or in-sourced at rates of job loss about equal to that of free trade-offshoring effects. In general, structural forces have wiped out 20 million jobs in less than two decades.
Cyclical trends have impacted jobs no less. Following every recession the last thirty years, it has taken longer and longer to recover jobs lost. In the 1980s and 1990s, it took 25-35 months. After the 2001 recession it took 48 months. After the most recent it will take more than twice that, 96 or more months at best estimate. In recovery from every recession since 1947, hiring by state and local government has led the way, in effect offsetting and dampening private sector job loss and thereby shortening the recession. Not today. State and local governments are the ‘layoff leaders’. Nearly 700,000 such public sector jobs have been lost in just the past 3 years. Millions more workers have simply left the labor force this past decade. While the US population has risen since 2000 by more than 21 million, total private employment has not risen at all. There were 111.3 private sector jobs in May 2000; there are 111.3 million private sector jobs today.
This is not a picture of an economy able to create employment for its citizens. And stagnant job growth—short and long term—means stagnant income growth. Stagnant income means, in turn, increasing problems of maintaining consumption and economic growth in general. What is needed is a broad set of programs and policies to revitalize job markets in the U.S. by reversing the above negative long run job creation trends. In the short run, what is needed is a massive government jobs program funded by a fundamental restructuring of the tax system.