n the United States today we have about 5.5% known unemployment plus, at least, if not more than 5 percent hidden unemployment. That is much too much in a country as wealthy as the U.S. The known unemployed, register and are actively looking for work; the unknown unemployed have given up, feeling ultimate defeat they are no longer looking for jobs.
The existence of both these groups is a sad comment upon this country. For a nation as rich as ours, with all the needs it has for constantly improved infrastructure there is no excuse for this situation. We are a modern nation that is still living largely in the last century when most of our infrastructure was created. In a manner of speaking we are like the young man who has just acquired his first automobile and expects it to last forever without any real care or maintenance.
In late 2008, under a Republican Administration, after thirty some years of at first gradual and then accelerated economic growth in the Housing Market, the Real Estate Bubble burst and the entire economy of the United States was about to crash, beginning with the major banking houses within the country. The Treasury Department, under a Republican Administration, extended hundreds of billions of dollars in loans to these banks to keep them solvent and functioning.
In Europe and Asia, on a smaller scale, the nations there underwent the same crisis with similar solutions. Some of the nations of Europe like Greece and Spain, had lived richer than others on this new wealth that the banking houses had created and were far more in the red than others countries. This was particularly true in the Eurozone. Some of those nations underwent extreme austerity measures in order to be bailed out by the European Central Bank or the other nations in the Eurozone. This was done in 2009. They are still in extreme economic troubles.
In the United States we went from at least 12% unemployment in 2009 to 5.5% by 2015. What saved the country from falling into a deep depression, deeper than that of 1929, was the Federal Government bailouts of the banks and the auto industries, plus innovative use of Monetary Policy by the Obama Administration.
Unemployment today, in early 2015, is still a problem in the U.S., particularly for the young and unskilled. Another problem tends to be rates of pay. The Federal minimum wage in the U.S. is $7.25 per hour before social security, assorted taxes, and unemployment insurance are taken out. While many states have a higher minimum wage the Republicans in Congress refuse to raise the National minimum wage. It has existed for several years now while prices have gradually increased.
What’s interesting or odd here is that Scott Walker, the governor of Wisconsin, is attempting to gain the Republican presidential nomination on a platform of “right to work” laws. These laws mean that no business can have a closed union shop; no worker has to join a union where ever he works. The object of these laws is to break the power of the unions across the U.S. and he probably would like to get rid of the minimum wage, as was suggested during the Reagan Administration.
Henry Ford, in his early factories, discovered or realized that if you pay your workers enough they will buy the product they are producing. The same premise holds true today: if workers earn more they will spend more. In essence increased spending equals increased production, and consequently more profit for everybody. Growing productivity creates jobs and raises the standards of living within the country. And conversely the lower the national income distribution the lower the productivity and the higher the unemployment.
No one can buy goods and services with money they don’t have. Somehow the Republican understanding of the situation throughout the country is backward; their goal, regardless of what they say or believe, is actually to reduce productivity throughout the nation and increase unemployment. This they have very effectively done since 2011 when they achieved dominance in the House of Representatives.
If we look at their current goal of keeping the minimum wage at $7.25 an hour. Working at that rate for 40 hours a week allows an individual to earn $290.00 a week, which works out to about $1,160 a month, and $15,080.00 for a 52 week year before assorted government withholdings. This puts this person living alone slightly above the poverty line, which is $12,300 for one adult, $15,853 for two adults is slightly below the poverty line, $19,055 for two adults and one child is well below the poverty line, and $24,008 for two adults and two children. If that amount is doubled by both adults working full time at that rate of pay then their condition improves but who will take care of the child or children. It’s a sad comment upon a society that will not pay a goodly percentage of its workers enough to not live in poverty or to live just above the poverty level when they are fully employed. We are a nation with a good percentage of employed being working poor.
There is an interesting note of irony here. The working poor person earning the $7.25 an hour is almost below the legal poverty level. In most states this person qualifies for food stamps and government medical aid, as well as other programs. All these aid programs are paid for by tax dollars. Ultimately, then, the tax payers in the country are subsidizing those businesses or industries that pay the minimum legal wage. Consequently a good percentage of these companies’ profits are being paid indirectly by the American taxpayer.
In the April 16, 2015 issue of the L.A. Times there was an article dealing with this subject which cited a UC Berkeley Center for Labor Research study. They reported that 56% of all state and public assistance in the United States now goes to working families. That adds up to 153 billion a year, including 25 billion in state funding. Individually California spends 3.7 billion, New York 3.3 billion, and Texas 2 billion on public assistance programs. These go to, among others, fast food employees, child and home care workers, and part-time college faculty.
To quote the L.A. Times: “Last week the Colorado Fiscal Institute said 600,000 Colorado employees, or a quarter of the state’s working force earned less than $12 an hour. As a result taxpayers ante up about 304 million a year to cover their healthcare costs… It’s clear these big employers are shifting their costs to the taxpayers.”
George W. Bush’s presidency ended in 2008 and Barak Obama became president in 2009. Most of his early efforts were aimed at keeping a deep depression from happening. Unemployment still increased but it was minor compared to what it might have been.
Today are there enough jobs in the society to keep everyone who wants to work fully employed? There were jobs for everyone up until the end of 2008 before the Real Estate Bubble burst. At that time the banking houses in the United States were encouraging people to use their homes as bank accounts and constantly withdraw their equity from their homes and spend it. The society was flowing with money. Once the Bubble Burst there was an intense shortage of funds and unemployment was well over 12% overnight.
There has been a large percentage of recovery since 2009 but the bulk of the National Income has gone to the upper echelon of society with very little going to the middle class and even less than that going to the bottom of society. The distribution of the National Income is completely out of kilter. It is encouraging, with Republican help, a shrinkage of economic prosperity. If it were not for the creative Monetary Policy the Federal Reserve used this country would now be in the doldrums with everyone, all Republicans and Democrats, currently well off and otherwise, suffering considerably.
The odd part of all this is that the country could easily be well off with full employment and everybody having at least a decent standard of living. The key here is expending money in Fiscal Policy which Congress controls. The Republicans are loath to spend money on things other than the military. They are very conscious of the National Debt that they have mushroomed since Reagan took office but for which they claim no credit.
Interestingly the Federal Government currently owns well over 50% of its own debt. Legally, it seems, no one, with the exception of the Federal Government, can owe itself money.
The infrastructure of the United States is still in the 20th Century. Some of it was installed over a hundred years ago. Underground pipes and sewers are continually breaking down and being repaired to the level where they are just usable again. It’s currently a Band-Aid approach; barely maintaining but no really improving anything.
President Obama had a plan in 2011 to drop unemployment that the Republican House of Representatives chose to ignore for two reasons: one, He presented it and two, it cost money, which they are loath to spend on anything except the military and business expansion like the Keystone project.
The prime example of Fiscal Policy is the New Deal that Franklin D. Roosevelt inaugurated in 1933 when he became President during the Great Depression. While the Republican, Herbert Hoover was President when the Great Depression broke in 1929, he was incapable of such massive spending Roosevelt began in 1933.
Roosevelt was able to fund the New Deal by doubling the money supply in the nation. He had government officials collect all the gold coins in circulation and replace them with paper money. The value of the gold was then doubled from $18 an ounce to $36. And suddenly the money supply doubled; there was twice as much money in circulation.
While this did not get the country out of the depression it did significantly improve economic conditions. In order to end the Great Depression the Roosevelt Administration would have had to, at least, quadruple the money supply beyond that level. That situation occurred during the 1940s when World War II broke out.
The New Deal was a series of domestic programs encompassing Relief, Recovery, and Reform and enacted from 1933 on. It included laws passed by Congress and executive orders issued by the President. Programs like the Works Progress Administration (WPA), the Civilian Conservation Core (CCC) made the government the largest employer in the nation. Others like Social Security, the Fair Labor Standards Act that set maximum hours and minimum wages for most categories of workers and the Tennessee Valley Authority (TVA) are with us today. Banking reform was reconstituted after the 2008 Banking Debacle. There were a myriad of other agencies mostly denoted by the letters; all of which created jobs, upgraded whole sections of the nation, and brought about
Did the government have to do this? Obviously not; but in so doing the Federal Government took on the responsibility of providing for the common man (forgotten man) where he could not then provide for himself. It was in the mind of Roosevelt and his administration necessary in order to save our free capitalistic society.
This is what the current Republican Congress seems to be incapable of doing. They feel this country cannot afford this luxury today. I suspect they also feel that the unemployed are really themselves responsible for being in that condition. Whether there are jobs available or not is immaterial.
Fiscal Policy is something the Federal Government is going to have to get involved with sooner or later whether they want to or not. The infrastructure of the United States was built during our period of urbanization and industrial development, from the late 19th Century through the 20th Century. Our growing needs then were a lot smaller than they are now. We grew then from a country of 140 plus million to over 350 million people today. Some of the sewerage pipes in many cities are over 100 years old. Roads, freeways, and interstate highways have to be maintained and improved. The electric grid that runs throughout the nation has to be upgraded. Many schools are antiquated and should be replaced or upgraded.
All of this is mentioning only a small portion of what needs to be done. We can take a piece-meal approach, fixing things as they break down and wait until a point comes when much of the infrastructure can no longer be repaired or the Congress can begin a process of bringing the infrastructure into the 21st Century, rebuilding for today’s population..
Money is not really the problem for the Federal Government since it owns most of its own debt. Actually spending money would increase government tax receipts. In fact it would significantly increase the amount of taxes received on all levels of government, city, state, and federal.
What the Republican Congress is doing by refusing to even consider fiscal policy is exacerbating unemployment, encouraging the growing wealth of the upper ten percent, working to shrink the middle class, and radically increase the lower classes. They are working to bring back the conditions of the 1880s and 1890s when there were massive divisions between the different classes within society.
Interestingly Grover Norquist, the president of Americans for Tax Reform, who has successfully gotten the Republican members of Congress to sign a pledge that they will, under no circumstances, raise taxes, has stated that his favorite period in U.S. history was the last two decades before the 20th Century. It would seem he has been working very hard to bring us back to that period of inequality.
More jobs are needed. The current Congress will do nothing to alleviate the problem; instead they will by their actions increase it. What will determine our future direction will be decided by the 2016 Presidential Election. If we reelect a Republican Congress and also vote for a Republican President then conditions will continue as they are now, probably getting far worse. If, on the other hand, both Houses of Congress are Democratic, then fiscal policy should bring about a radical lowering of unemployment and an overall return of prosperity for all levels of society.
It will be all in the hands of the voting public. If they all vote their interests then the problem can be solved or, at least, move in the direction of a solution. If enough people vote their beliefs or prejudices or stay at home and refuse to vote then the country will continue as we are now and probably go downhill economically.
To me the unemployment problem is ridiculous. It can so easily be solved. We can have full scale employment and solve our infrastructure problems at the same time.