The Zero Economy
September 2, 2011
The Bureau of Labor Statistics reports today no jobs
were created in August. Zero. Nada.
Well, not quite. The strike at Verizon reduced the labor
force by 45,000. Minnesota government employees returned
to work, adding 22,000. So in reality, America added
23,000 jobs. Almost zero.
In reality, worse than zero. We need 125,000 a month
merely to keep up with population growth. So the hole
continues to deepen.
Since this Depression began at the end of 2007,
America's potential labor force - working-age people who
want jobs - has grown by over 7 million. But since then
the number of Americans with jobs has shrunk by more
If this doesn't prompt President Obama to unveil a bold
jobs plan next Thursday, I don't know what will.
The problem is on the demand side. Consumers (whose
spending is 70 percent of the economy) can't boost the
economy on their own. They're still too burdened by
debt, especially on homes that are worth less than their
mortgages. Their jobs are disappearinig, their pay is
dropping, their medical bills are soaring.
And businesses won't hire without more sales.
Republicans continue to claim businesses aren't hiring
because they're uncertain about regulatory costs. Or
they can't find the skilled workers they need.
Baloney. If these were the reasons businesses weren't
hiring - and demand were growing - you'd expect
companies to make more use of their current employees.
The length of the average workweek would be increasing.
But the length of the average workweek has been
dropping. In August it declined for the third month in a
row, to 34.2 hours. That's back to where it was at the
start of the year - barely longer than what it was at
its shortest point two years ago (33.7 hours in June
It's demand, stupid.
So what does a sane nation do when the consumers and
businesses can't boost the economy on their own?
Government becomes the purchaser of last resort. It
hires directly (a new WPA and Civilian Conservation
Corps, for example). It helps states and locales, so
they don't have to continue to slash payrolls and public
services. (The help could be structured as a loan, to be
repaid when unemployment drops to, say, 6 percent.)
And it hires indirectly (contracting with companies to
rebuild our crumbling infrastructure, including school
buildings, to take another example.)
Not only does this create jobs but also puts money in
the hands of all the people who get the jobs, so they
can turn around and buy the goods and services they need
- generating more jobs.
Get it? Not exactly rocket science.
So why don't Republicans get it? Either they're knaves -
they want the economy to stay awful through next
Election Day so Obama gets the boot. Or they're fools -
they've bought the lie that reducing the deficit now
creates more jobs.
Every time you hear anyone say we're "broke" or "can't
afford to spend more," tell them we'll be in worse shape
if we don't. If the economy remains dead in the water,
the ratio of public debt to GDP balloons.
And remind them that the federal government can now
borrow at fire-sale rates. Interest on the ten-year
Treasury bill is 2 percent.
Do you hear me, Mr. President? Please - be bold next
week. And if, as expected, Republicans refuse to go
along, take it to the people. Mobilize the public. Use
the bully pulpit. That's what you have it for.
One more thing, Mr. President. You also have to tackle
inequality. When so much income and wealth continues to
flow to the very top, America's vast middle class still
won't have enough purchasing power to boost the economy.
Priming the pump is necessary but won't be sufficient
without enough water in the well.
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