That Gaping Hole in Our Recovery is Called Jobs!
By Linda Anselmi on August 5, 2009 at 1:20 PM in American Consumers, Economy, Linda Anselmi, Unemployment/Jobs
There is a gaping hole in our recovery and more and more of Main Street America is falling through it. And that gaping hole is JOBS. Or more accurately, the place where JOBS should be.
The price of U.S. recession is paid in jobs
In the current recession, economists say high unemployment is likely to persist at least another four years. In Michigan, home to the battered U.S. auto industry, nearly 13 percent of jobs may be wiped out, according to research firm IHS Global Insight, and the state’s labor market probably won’t return to its pre-recession strength until after 2015.
Retraining is the usual prescription, but pay and benefits in new careers are often far worse.
The housing crisis has worsened the situation for job seekers because areas with high unemployment also have high foreclosure rates, making it hard to sell up and move on.
The pain of joblessness extends well beyond the workers themselves, hitting their families and entire communities as home foreclosures mount, neighborhoods decay and crime rises.
For Main Street America, jobs are the gods on which we sacrifice our lives. Jobs are not just what we do. Jobs are how we live. Literally. Jobs are the sole source of income for most of Main Street. That means there is little or no rainy day fund to tide one over. No lifetime investments to fall back on. No family wealth to ease the pain. Just a steady paycheck that is earned day-in and day-out.
So when Main Street America becomes cut off from that life giving paycheck, it quickly finds itself making tough choices over the most basic of necessities.
Consumer bankruptcies soar 34% in July from a year ago
A classic measure of Americans’ financial distress: U.S. consumer bankruptcy filings totaled 126,434 in July, the highest for any month since Congress rewrote bankruptcy laws in October 2005.
The July figure, reported today by the American Bankruptcy Institute, was up 34% from July 2008 and an 8.7% increase from the 116,365 filings in June.
So far this year 802,000 consumer bankruptcies have been recorded, up 36% from the 589,000 in the first seven months of last year, institute data shows.
So what does this mean for the rest of America? Quite simply, there can be no Main Street Consumers without Main Street Jobs. And without Main Street Consumers there can be no real recovery for our economy. A recovery by definition means going back to what was normal. And in a consumption-based economy, where consumption comes primarily from Main Street (not Wall Street who got bailed out to the tune of $13.9 - 23.7 trillion in tax payer funds), normal ain’t going to happen without jobs.
As Robert Reich sees it, When will the recovery begin? Never
In a recession this deep, recovery doesn’t depend on investors. It depends on consumers who, after all, are 70 percent of the U.S. economy. And this time consumers got really whacked. Until consumers start spending again, you can forget any recovery, V or U shaped.
Problem is, consumers won’t start spending until they have money in their pockets and feel reasonably secure. But they don’t have the money, and it’s hard to see where it will come from. They can’t borrow. Their homes are worth a fraction of what they were before, so say goodbye to home equity loans and refinancings. One out of 10 homeowners is underwater — owing more on their homes than their homes are worth. Unemployment continues to rise, and the number of hours at work continues to drop. Those who can are saving. Those who can’t are hunkering down, as they must.
… This economy can’t get back on track because the track we were on for years — featuring flat or declining median wages, mounting consumer debt, and widening insecurity, not to mention increasing carbon in the atmosphere — simply cannot be sustained.
… All we know is the current economy can’t “recover” because it can’t go back to where it was before the crash. So instead of asking when the recovery will start, we should be asking when and how the new economy will begin…
And yet, strangely, shockingly, the vital role that jobs play in building the very foundation of our economy, seems to elude too many in the media and in government. Oh, the MSM reports that Job woes sap U.S. consumer confidence in July and that Analysis finds that companies that were not too big to fail are going under. But in the very next breath they tout the latest up tic on wall street as confirmation of our economy is doing well.
But as Nobel Prize winning economist Professor Joseph Stiglitz. points out, talk of a robust recovery is “premature”.
“While there’s been some recovery there are lots of reasons to be worried, lots of reasons to believe that unemployment will continue to grow and, so long as that is the case, it is hard to believe that we will have a robust recovery.” …
“Even if the housing market levels off, we have problems in commercial real estate. Millions of Americans are likely to see foreclosures particularly if the unemployment rate remains high,” he added.
“Consumer spending is likely to remain weak and as long as consumer spending remains weak, investment is going to remain weak.”
And what about this administration? How concerned are they about jobs? Well, this weekend Obama’s team of economic cheerleaders - Geithner, Summers and Greenspan - made the rounds on the Sunday talk shows, touting signs that the recession was easing. But they seemed more concerned about the looming deficit and easing the way for tax increases than the lessening the ranks of the unemployed. (Though one has to wonder how they expect the unemployed to pay taxes - increased or not.)
Even when Geithner Says Unemployment May Peak in Second Half of 2010, he apparently sees no crisis or urgency to help the millions of Americans facing long term unemployed. No Main Street bailout in his talking points.
Another extension in unemployment benefits “is something that the administration and Congress are going to look very carefully at as we get closer to the end of this year,” Geithner said in an interview yesterday on ABC’s “This Week” program.
Definitely, not the confidence building words that Main Street wants to hear considering that on top of everything else Jobless Checks for Millions Delayed as States Struggle
“The unemployment insurance system before the recession was as vulnerable as New Orleans was before Katrina,” said Representative Jim McDermott, Democrat of Washington, who is chairman of a House panel with authority over the program.
Can the simple basic necessity of jobs for Main Street America really be beyond the comprehension of this administration and this Congress.? Do they really not know or understand what jobs mean for our economy? Or is it that they just do not care?
How can they not see that we are failing as a country when Wall Street rebounds with bonuses in the billions, while Main Street continues to hemorrhage jobs, houses, health insurance and retirement plans in the millions?
Main Street America is the heart and soul of this country. But as more and more Americans stare down the jobless abyss, they are losing their belief in the basic fairness of a capitalist society. They are losing the last remnants of their faith and trust in their own government. And they are losing their pride and honor at being the backbone of the American economy.
And as a country, how exactly do we come back from those kind of loses?
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Don’t worry, Obama’s on it! All you need to do is hope. But remember that it was Bush who ruined the economy and it would be unfair to assume Obama could fix the economy in just 4 years. That’s why every person who cares about the economy should vote for Obama in 2012.
If we’re lucky, we’ll get Michelle’s 2 terms starting from 2016. She’s such a hands-on person! She’s got 22 personal assitants when Hillary only had three, Jackie Kennedy one and Laura Bush one. If that’s not dedication, then I don’t know what is!
Last Monday my brother and my son both got laid off. My daughter told me that 2 people (men) where she works were laid off on the same day. My other son, who works for a huge Midwestern utility company, said one man got laid off at his place. That is five men who lost their jobs last Monday, what else did/will they loose? The family’s health care, their homes, for sure their savings?
Thanks so much for this post, Linda. I live in a state which currently has 12.3% unemployment. That’s pretty darn high. And it has effects that ripple throughout the state.
I know my family has certainly been affected by the loss of jobs.
You mentioned that those in the media and the government seem to lose sight of the importance of jobs. I guess because they HAVE jobs (and Obama has increased the size of government), they are oblivious, or just don’t care. I wonder how many of those people have been in the position of literally not knowing from where they were going to get their next meal, or where they were going to live.
Ozero and his cronies all have jobs. What’s the problem? (/snark)
I watched as the Secretary of Transportion spoke today on FOX and told the the world that Cash for Clunkers program will change the automobile industry someone should ask him what about the jobs lost in the auto industry already.
Glenn Beck Watch Dog
http://www.youtube.com/watch?v=M_4p6htWJIo
Sure, who is going to buy a new car that doesn’t come with the government teats on them?
we need jobs not handouts.
These liars, Geithner, Summers, BO and the rest are absolutely corrupt. What about those of us who are at middle age working, trying to hang on to our jobs at the same time trying to help our 20 somethings who can’t find a job or who have been laid off(I have 5, one has been laid off, 1 can’t find work, the others are still in school)All my extra disposable income is going to help my family as I suspect other parents are doing the same. This is not a handout to my children, they are hard workers, ever since high school–this is helping them survive. Mr. hope and change boasted all last year how he would create and save jobs and then they said it wouldn’t go above 8%–if he couldn’t handle the mess he shouldn’t have ran all over the country with Greek columns telling everybody that “he was the one we’ve been waiting for.’ What a joke. The only thing that comforts me now is that I did not vote for this total fake fraud and neither did any of my 5 children.
The word is ‘gaping.’
Yes, Thanks!
your article was right on, linda. america needs lots of GOOD jobs, not bailouts for bankers.
Use of the word “recovery” is, at best, premature. The economy hasn’t stopped shrinking yet. And when it does hit bottom, how long will it stay there? You can’t call it a recovery until the economy starts growing. Even then, you might get a quarter of modest growth before another downturn — the so-called double dip.
But only economists would call a quarter of modest growth a “recovery.” With unemployment likely to continue rising for a year and a half after the “recovery” begins (as it has done in the past), you won’t find job seekers calling it a recovery for quite some time. In addition, unlike past recessions where the economy picked up speed as people found employment, we have something more than an loss-of-income based recession. I’ve heard it described as a balance sheet recession as well. People who’ve lost 40% of their stock portfolio and/or 30% - 40% of their home equity won’t soon be returning to their past spending levels.
I agree 100%. I only used the term “recovery” because that is what is being touted in the media. We really are not going to “recover” we will be dealing with a whole new economy. But even that won’t happen without Jobs. Lots and lots of jobs!!
But Linda. Please! We’ve been told this will be a “jobless recovery.” Get with the program. We’re suppose to buy this hook, line and sinker.
Until “we” lose our jobs, I guess.
“Jobless recovery.” When I first read that, I wondered: is that a sick joke? Or maybe a oxymoron [stress on the moron part]. People without jobs means no spending and business failing, people losing everything they’ve worked for [meaning defaulting on loans, mortgages, etc.], a withering tax base, an uptick on social services like unemployment. But then, the states are crumbling under the weight of the need. Why? Withering tax base, and increase in social services and the huge losses they took as a result of all that bankster love.
The solution? Give the banks more money and pretend they’re solvent–so we have to fudge the books. Call it “creative,” then it’s all good. Extend unemployment benefits, run up the national debt, call a cash for clunkers program a wild success to the tune of $1 billion [chump change] and keep the happy juice flowing. For those who refuse to drink, call them a mindless, disgruntled mob.
Bread and circuses.
To add insult to injury, let’s propose an increase in taxes [VAT tax, health tax, whatever] on those still working and the businesses that manage to keep their doors open. And, of course, keep spending that borrowed money because as Joe Biden said [another slip]: we’ve got to keep spending money to stay out of bankruptcy.
Maybe Obama and his crew ought to take a look at Jefferson County in Alabama. The state is talking about calling in the National Guard because the county, home of Birmingham, is in danger of complete collapse and civil unrest.
Jobless recovery = alot of ticked off citizens. And frankly, I don’t think our National Guard is big enough.
Excellent rant Peggy Sue. Spot on!
The second gaping hole is all the money that is going to pay for interest on the trillion dollars of consumer credit card debt, approximately 15 billion to 25 billion dollars a MONTH are going to fat cat credit card companies in the form of interest rate charges, interest rate charges they recently amped up to make sure people could not afford to pay off their cards but instead simply slowly tread water until they give up and drown in a sea of debt.
http://www.robotsagainstchasebank.com
Help! Had another spam gobble, Linda. Sent in the requisite email.
A huge part of the problem is that for the last 40 or so years, the economic plan for the rest of the world was to overproduce and sell the excess (or in some cases the total production) to the United States. Then, the companies in America decided that it would be cheaper to move the production to other countries and ship it back here to sell. That only works when American’s have good paying jobs to pay for things. In the 1970s, women moved into the workforce. And, for a while, having two incomes covered up the fact that male income had been falling. Then, in the 80s, with the tech boom, everyone thought that they would be able to make up income by putting money into the stock market (this was when the idea of day trading was promoted so heavily). After the tech crash, everyone started looking at their homes as a way to pull out money by refinancing their mortgages and pulling out equity with lines of credit. Well, now the housing bubble has burst, people’s credit has been maxed out, and we are told that the jobs that have been lost are not coming back. But still we are told that it is necessary for us to pull the country (and world) out of recession by consuming. But the goose that layed the golden egg has been slaughtered. Unless the United States starts producing something and creating real jobs, the world will just have to learn to buy their own production — we no longer have the money.
Thank you lahana!!!
What a great comment.
You give a wonderfully concise and telling summary of how main street had its financial pockets cleaned before being dropped off the jobless cliff.
word, lahana; america has been dumping good jobs and screwing working people for years, if not decades. the dire straits we are in now can not be corrected by giving the rich more money or tweeking the financial systems a little bit this way or that.
we need a massive reconstruction of the economic foundation of this country, which is GOOD, manufacturing/agricultural/tech VALUE-ADDING jobs. we can not run the “greatest country in the world” by selling each other burgers.
I also liked your comment.
Central to everything is the American middle class. The American middle class is what generated the wealth that causes businesses to produce products for it.
In the 1950s, America was self sufficient and its large middle class produced most, if not all, of the goods that other Americans bought. This was the key. The money American workers earned was spent within their local communities and thus supported other middle class American jobs and businesses. Basically a dollar would pass thru 4 or 5 hands before leaving a community. I can’t put a table in this comment, but starting with $100, 20% taxes, 10% savings, and passing the money thru 4 or 5 hands, the actual taxes collected are over $50 and savings are over $25. That’s why life was so good. Taxes allowed local governments to build and maintain services. Savings allowed banks to have money to loan for investments.
But the objective of business is to make as large a profit as they can. Having American goods made by cheaper overseas labor increased profits but what was not taken into account was that laying off each wage earner really affected 4-5 other wage earners resulting in a much greater loss of taxes and savings; i.e., closing a plant and laying off 1000 workers has the effect of actually laying off 5000 workers.
For a business, this is not their problem. There is a belief that the American middle class is large and can handle such an impact … so they say. In addition, the business’ offers these foreign built products at a reduced price in convenient large shopping malls. Also, they’ve paid workmen’s comp and offered re-training courses. Not one of these things are an equivalent full time job to replace the one the worker was laid off from.
Also, thinking that the now wealthier business owners and shareholders will spend their increased income in the local communities is naive. Do they even live in the local communities? How many limos have you seen in Walmart and Target parking lots? How many nannies, cooks, and gardeners can these people hire to be equivalent in pay and skills to the skilled wage earners that are no longer working?
To fix this economic downturn, the American middle class must start working again to have the income to buy things and to pay off any loans. In order for the middle class to do this, they must have real jobs irrespective of the impact on foreign countries. If the foreign economies were in good shape, then they would be weathering the American financial screw up with minimal impact on their own economies. The foreign economies actually depend on the American middle class to buy the goods they produce.
What is needed is a form of “Environmental Protection” for the American middle class worker.
I don’t have a job. My unemployment ran out ages ago…before they decided to extend benefits. SOL I am.
[...] As Linda pointed out below, we need jobs, jobs, jobs FIRST before the President and Congress embark on any new programs that will increase our national debt. [...]