What America Wants and Needs: Jobs
I can guarantee you that a key point of discussion in the build-up to the presidential election will be the jobs market.
In my view, despite all the fuss about the July job numbers, job creation is dead.
Just ask the 12.7 million or so Americans searching for work or the over 23 million or so who are unofficially unemployed. These are real people looking for appropriate work in the jobs market. Moreover, there are also the millions working part-time or underemployed.
Wall Street is not hiring, technology companies are firing, and manufacturing is losing jobs to cheap overseas plants, where workers are willing to work for dirt-cheap wages.
We are seeing more college graduates working at low-level jobs just to pay the bills. And the reality is that given the dire situation in the jobs market, it could take years to resolve. There are also the mounting student loans that will take decades to pay, but then that’s another story.
The media pointed to the July jobs market numbers showing the creation of 163,000 new jobs, but the unemployment rate edged higher to 8.3%. The chart shows the inconsistency and the fact there needs to be a steady rise in jobs to cut into the unemployment rate.
Chart copyright Lombardi Publishing Corporation,
2012; Data Source: Bureau of Labor Statistics
The jobs market is even worse when you consider that the consensus among economists is that the country would need to add 500,000 jobs monthly to make a dent in the unemployment rate and get it moving towards full employment at around six percent.
President Barack Obama has asked Congress to extend the Bush-era tax cuts to those making under $250,000 a year, which represents the majority of working Americans. The current plan is scheduled to end at the end of December. Republican candidate Mitt Romney wants the cuts to apply to all income earners. While I’m not here to take a side, the importance of the tax cuts are critical especially to the low- to middle-class Americans. Without the extra cash, this key spending group will likely be hesitant to spend, which in turn would restrict the money flow into the retail sector and ultimately the economy,
While the extension of tax cuts is hopeful, there continues to be deeply rooted structural issues that need to be addressed in the jobs market, such as the movement of jobs to outside the country. Look at India and the Philippines, and you’ll see tens of thousands of lost American jobs. Move to the assembly lines in China, and you’ll realize the amount of lost jobs. The reality is that America’s jobs market is failing. Of course, you can always tell yourself how much better we have it compared to the massive unemployment in the eurozone, including over 25% unemployment in Greece, Spain, and Italy.
The problem is that the government will be hard-pressed to fund significant capital for projects and the jobs market given the nearly $16.0 trillion in U.S. national debt.
Unfortunately, the road to fix up the economy and jobs market will lie with the next President, and in the meantime, we will continue to hear the bickering between the parties.