Posted 12/18/2010

UNEMPLOYMENT: THE CAUSE

Unemployment did not come upon the USA suddenly. The trend toward joblessness at all levels started in 1970.

Forty years ago, a high school graduate could choose from among five or six jobs. College graduates were confronted by a dozen job opportunities.

Today the job opportunities have largely disappeared. Over 10 percent of high school grads are fruitlessly seeking work. Five percent or more have simply given up. College graduates are not doing well either, with 5 percent being unemployed.

The deterioration of the middle class hit home at the turn of the new century when a surplus of middle-class workers met a shortage of jobs that had growth opportunities. Middle-class incomes stagnated from 2000 to 2010 as lifestyles continued to expand. The shortfall between middle-class spending and income was made up with debt. With two market busts in the last ten years, the middle class has had to downsize everything from housing to spending in order to pay down debt.

What caused our now chronic unemployment situation?

There were many negative effects caused by change.

Globalization meant jobs and whole industries abandoned the USA for countries with cheap labor. They ought to offer an award for anyone who can find a pair of shoes, a toy or a shirt made in the USA.

Corporate cost reduction and automation destroyed ten jobs for every one lost to outsourcing. In 1970, every executive had a secretary. Now they have computers and voicemail.

Too many Americans have become too lazy to take the available jobs. The latest data shows 2.5 million unemployed unwilling to take the 3.5 million available jobs – many offering solid middle-class wages.

The government has made unemployment too comfortable with all its substantial jobless benefits. Forty years ago, if you lost your job, you had only one alternative: Find work.

The two-income family is better able to survive the loss of one job than the single income family of 1970 – which further discourages the motivation to find work.

All of the above are surface causes. They do not in aggregate amount to the root cause of all of our unemployment troubles.

The root cause is simply the fact that the United States Government has never made full employment a priority in the past forty years.

Currently there are 15 cabinet officers in charge of everything from commerce to foreign relations to housing. Yet not one of these departments deals with job creation. Washington cares more about an endangered worm species than it does about jobs or the companies which create them.

If you step back and look at our world, what should be more important to us than jobs?

Possibly national defense.

But what else? The environment? Interstate commerce? Foreign relations? Energy? Labor relations? There are departments for all of these, but none for middle-class job creation and preservation.

Yet, nothing is more important than the creation of middle-class jobs and the preservation of a large, healthy, vibrant middle class.

Without a strong tax-paying middle class, all government activities founder on the shoals of underfunding.

Without a strong middle class, the rich prey on the poor and the poor prey on the rich.

Without a strong middle class, the basic fabric our society is stained and torn.

For forty years, Washington has had no solution. Instead it has adopted the age-old philosophy of General Motors – throw money at the problem. But that approach is failing America’s unemployment problem, just as it failed General Motors all the way from blue chip corporation down to bankruptcy and bailout.

What can Washington do to solve the problem?

The first step is to make Jobs the nation’s number one priority.

The second step is to mobilize the USA’s huge economic advantages and put them to work creating businesses and jobs.

The third step is to create a cabinet level office for Jobs which would be on an equal level with the Departments of State and Defense.

That’s the outline of the Jobs Plan.

The specifics will be in the next article. UNEMPLOYMENT: THE SOLUTIONS.

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