Big changes needed to reach full employment
Posted: Tuesday, June 15, 2010 8:01 pm
By TOM GIBSON
Who has responsibility for guiding our country toward full employment?
Who’s in charge of analyzing the information collected and determining which policies are helping and which are hindering the building of an economy where everyone who wants to work can find a job?
Our political and business leaders don’t talk about it so perhaps they don’t feel responsible.
Full employment was last approached in the United States in the late 1990s, and the benefits were wonderful.
The unemployment rate hit a 30-year low of 4 percent; and, for the first time in decades, we had a federal budget surplus.
The pay of low-income families grew from $22,000 to $25,000 between 1995 and 2000 and that of middle-inco me families increased more than during the whole of the 1980s.
Income grew by 11 percent for white families, 16 percent for African American families and 25 percent for Hispanic families as racial income gaps shrunk.
So what happened during the last 10 years that brought us to our current sorry state: 9.9 percent unemployment, 7.5 percent underemployment and falling family incomes?
A series of bad decisions by our political and business leaders allowed the building and bursting of the housing bubble, the subsequent financial crisis of 2008 and the loss of 7 million jobs. In addition, job-destroying decisions were made in trade, infrastructure, development and immigration.
Last year our imports of merchandise were allowed to exceed exports of $500 billion, the worst trade deficit in the world. (By contrast, Germany had a surplus of $200 billion and China’s was $175 billion).
Robert Scott of the Economic Policy Institute estimates that each $1 billion of trade deficit destroys 9,500 jobs, so our huge deficit eliminated almost 5 million American jobs.
What’s so maddening about the flood of merchandise imports is that most of them don’t come from plants owned by foreign companies. Instead, they come from plants built or leased in other countries by U.S. multinational corporations to take advantage of low-cost labor. (General Electric makes spiral light bulbs in China; Ford makes Taurus parts in India; U.S. appliance companies make refrigerators in Mexico.)
Because consumer purchases now make up 70 percent of our Gross Domestic Product, it is difficult to see how we will ever approach full employment unless the manufacture of products Americans need is brought back to our country.
During the last seven years, had just 25 percent of the money spent on the unjustified, unprovoked war in Iraq been allocated to infrastructure development, we would be a stronger and more competitive nation. The state of our crumbling roads, bridges, and dams would be improving and our rail and broadband networks expanding. And at least 2 million more Americans would be working.
Eleven million illegal immigrants (60 percent from Mexico) now live in the United States. Studies by the Mexican government suggest that, because of low wages and social inequality in their country, another 8 million will try to cross into the United States during the next 15 years.
With 34 million either unemployed or underemployed American citizens needing jobs, could it be moral to force them to compete with millions of illegal immigrants? Nothing short of a crisis-level, cooperative effort between American and Mexican leaders to halt the illegal influx seems appropriate.
So what are the chances of overcoming these problems that prevent full employment?
It is probably naive to plan on saner, more stable banking and investment systems too far into the future. However, with new leaders who are less greedy and more committed to serving the common good, we can probably eliminate the merchandise trade deficit, build a world-class infrastructure and stop illegal immigration.
Such things have happened in our country before.
Tom Gibson is a retired marketing manager from the DuPont Company. Contact Tom at email@example.com. This column has been edited by the author. Representations of fact and opinions are solely those of the author.
Published in The Messenger 6.15.10