Nancy Folbre is an economics professor at the University of Massachusetts Amherst.
High unemployment has become the new normal. Two years after the official end of the recession, the monthly refrain of poor jobs reports showing an unemployment rate stalled at about 9 percent does little to increase any sense of political urgency.
The monthly employment numbers, released Friday, were more bad news, showing that for the second month in a row, employers added barely any jobs in June.
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The sound of indignation can be heard outside of Washington. Twenty-six percent of Americans surveyed in the latest New York Times/CBS News Poll named unemployment the most important problem facing the country (27 percent cited the economy in general).
The A.F.L.-C.I.O. and other unions keep demanding “Good jobs now!” Progressive think tanks like the Economic Policy Institute carefully monitor employment trends. Many economists, including the professionally prominent members of the Employment Policy Research Network, insist on the need for more attention to the issue. As Till von Wachter of Columbia University put it, “Unemployment is the No. 1 economic problem facing the country today.”
Some business leaders have spoken up. Last summer, Andrew Grove, the former chief executive of Intel, wrote a passionate commentary for Bloomberg BusinessWeek calling for a “job-centric” economy.
But this is not something the country can achieve with jobs-oblivious politicians. Why isn’t unemployment reduction front and center on the policy agenda? More specifically, why has the debate over deficit reduction shoved it aside?
Here are three possible reasons.
First, unemployment is concentrated among the less educated, blacks and Hispanics who lack political or economic clout.
Second, high unemployment is not hurting overall business profits, which have soared to historic heights. In the 1930s, joblessness reduced the demand for consumer goods, idling many businesses as well as workers, creating economic incentives to support public job-creation efforts.
Today, our largest corporations and richest investors are well positioned to take advantage of growing demand in emerging markets far from our shores, whether in the form of increased exports or new investment opportunities.
As a small-business owner explained in a recent Wall Street Journal article, he only sells domestically and does not have the opportunity to “exploit foreign markets that are growing faster.”
Third, the jobless individuals, public employees and small-business owners who could, in theory, form a strong political coalition to support more active job creation are constantly subjected to a barrage of arguments that we should do nothing but cut government spending and hope for the best.
A recent Bloomberg BusinessWeek article, for example, asserted, “There’s vanishingly little that policy makers can do to create jobs for their citizens.” Yet solid research based on analysis of differences in state and county spending shows that some components of President Obama’s initial fiscal stimulus were quite effective at creating jobs. Unemployment would have soared higher without them.
A conspicuously large repertoire of more targeted job-creation proposals could significantly lower unemployment, including public investments in energy-saving projects and cheap credit for small businesses (both developed by economists at the Political Economy Research Institute at the University of Massachusetts, my academic home) and increased investment in infrastructure (advocated by the Economix blogger Laura D’Andrea Tyson, among others).
But political interest is low among most Democrats, and Republican governors and Republicans in Congress are pushing to cut unemployment insurance benefits, proclaiming that this would help the economic recovery. I’ve tackled this argument before, and a detailed critique can be found in this article by David R. Howell, an economist at The New School, and Bert M. Azizoglu, a graduate student there, forthcoming in the Oxford Review of Economic Policy.
On the state level, many efforts to expand employment involve attempts to woo businesses from other states with tax breaks, hardly a process that is likely to increase jobs for the nation as a whole. A fascinating “This American Life” episode on public radio, “How to Create a Job,” describes a special government office in Arizona that does nothing but try to persuade California businesses to relocate.
How can advocates for public job creation reach a wider audience? We need to keep making the case wherever and whenever we can.
If you or someone else you know (employed or not) needs some fun summer reading, I recommend the new graphic novel, “The Adventures of Unemployed Man.” It describes a heroic search for work that requires an epic battle against the Just Us League.
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