Experts see rebounding economy shedding jobs

[DEDixon 39]

http://www.sfgate.com/cgi-bin/article.cgi?.../MNMR1A9PMQ.DTL

Forget a jobless recovery. The economy may be entering a recovery with job losses.

Third-quarter estimates this week are expected to show that the economy grew for the first time since the quarter ending in June 2008. Despite the estimated 3 percent expansion and a stock market that has been on a tear since March, hundreds of thousands of people are still being laid off each month.

Eight million jobs have been lost nationwide since the recession began two years ago, and by some measures workers face the worst job market since the Depression. The average laid-off worker has been without a job for 61/2 months, a post-World War II record. Many of those workers will never recover financially.

California's hole, deepened by a state budget mess and volatile tax system, is far worse: Unemployment is at

12.2 percent, third highest in the nation; and adding discouraged and part-time workers puts it over 20 percent.

"It's not even a jobless recovery; it's a recovery with more job losses," said UCLA economist Lee Ohanian. "The idea of having essentially no net job creation after a remarkably severe recession is a real pathology for the U.S. economy."

'Painfully weak' job growth

Top White House economist Christina Romer of UC Berkeley told Congress on Thursday that employment growth could remain "painfully weak" through next year, and that the largest effect from the $787 billion stimulus enacted in February, mainly aid to states, is past. By mid-2010, she said, the stimulus will no longer contribute to growth.

Alarms are ringing at the White House and in Congress. But with a mind-boggling $1.4 trillion deficit this year, Democrats have used up their bullets. The word stimulus has such a bad connotation that the term has been banished from new efforts to goose the economy and help workers, such as extending unemployment benefits, sending $250 checks to seniors and a program the White House announced to help small businesses get loans.

House Speaker Nancy Pelosi, D-San Francisco, and top House Democrats met for four hours with economists Wednesday, amid criticism from the left that the stimulus was poorly targeted on jobs. Calls have mounted for a tax credit to hire workers, much like one tried three decades ago during the Carter administration, but there is little appetite in Congress or the administration for more stimulus spending.

Romer and Vice President Joe Biden's economist, Jared Bernstein, cited high deficits in downplaying calls for a new stimulus. "Remember, stimulus by definition is temporary," Bernstein said. "In the interest of fiscal rectitude, we need to ramp the spending down no later than necessary."

Even under optimistic assumptions, it could take seven straight years of solid growth just to get employment back to where it was before the downturn, a Rutgers University analysis found.

Almost no one is expecting job growth to roar back, given its anemic increase in the last decade, when the economy generated on average 1 million jobs a year, less than half as many as during the booms of the 1980s and 1990s. Median income actually fell more than $2,000 over the decade.

Employment mystery

Economists are puzzled as to why job growth has slowed, citing everything from higher health care costs, to higher productivity, to Chinese currency manipulation.

"The answer is, we don't know," said Tim Bartik, a liberal economist with the Upjohn Institute for Employment Research in Michigan who is proposing a tax credit for employers who hire new workers.

At a cost of $21,000 per job created, he said, a tax credit is far cheaper than the average $112,000 cost of each job created by the stimulus, as calculated by the administration.

Michael Boskin, former top economist in the George H.W. Bush administration, favors a cut in payroll taxes. He said the current stimulus has been "marginally effective at best, and at immense expense," describing it as mainly a "patchwork of wish lists for various constituencies."

University of Maryland economist Peter Morici said the administration's efforts to restore growth by directing spending to such things as alternative energy are too expensive for the number of jobs created and ignore larger problems in the economy.

'70s French model

"If we're going to have 1970s French policies, we're going to have 1970s French unemployment," Morici said, referring to government direction of investment that many people blamed for chronically high unemployment in Europe. The rapidly weakening dollar should boost exports and reduce imports, helping U.S. producers, but because China keeps its currency, the yuan, artificially pegged to the dollar, U.S. competitiveness against China will not improve.

"You can't grow with a huge trade deficit," Morici said. "If you don't revalue the Chinese yuan against the dollar you can't get out of this mess, and if you don't do something about oil imports you can't get out of this mess. Industrial policies won't fix it."

[one...two...tree 2,762]

University of Maryland economist Peter Morici said the administration's efforts to restore growth by directing spending to such things as alternative energy are too expensive for the number of jobs created and ignore larger problems in the economy.

'70s French model

"If we're going to have 1970s French policies, we're going to have 1970s French unemployment," Morici said, referring to government direction of investment that many people blamed for chronically high unemployment in Europe. The rapidly weakening dollar should boost exports and reduce imports, helping U.S. producers, but because China keeps its currency, the yuan, artificially pegged to the dollar, U.S. competitiveness against China will not improve.

"You can't grow with a huge trade deficit," Morici said. "If you don't revalue the Chinese yuan against the dollar you can't get out of this mess, and if you don't do something about oil imports you can't get out of this mess. Industrial policies won't fix it."

I disagree. There have been studies into the potential number of jobs if we get a new economy built on alternative energies and energy conservation technologies, but the an explosion of job growth in those fields will not happen overnight. Cap and Trade legislation needs to further propel the new economy, but I predict it will be the driving force behind our economy within the next 3 years provided there's enough support in Washington. The traditional energy brokers are fighting hard to prevent such a huge transfer of power.

[Heracles 417]

I disagree. There have been studies into the potential number of jobs if we get a new economy built on alternative energies and energy conservation technologies, but the an explosion of job growth in those fields will not happen overnight. Cap and Trade legislation needs to further propel the new economy, but I predict it will be the driving force behind our economy within the next 3 years provided there's enough support in Washington. The traditional energy brokers are fighting hard to prevent such a huge transfer of power.

I don't know about that. Putting all your eggs into one basket is a bad move. 30 or 40 million people cannot be employed in this one industry. Even IT couldn't pull that off.

If the country (the government) is serious about creating jobs, from coast to coast, they need to invest in large scale 21st century projects to rejuvenate the country. I am talking about hundreds of thousand of jobs here. I am not just talking about paving roads, which is all I see going on. Large scale = interstate highway system, railways, hoover dam, going to moon etc. After all, thousand of such billion dollar projects is what is propelling the communist rival China. Example: rapid transit throughout CA.

The only thing I would like to ask you is, how do you expect people to get on their feet or even have a chance, when you also condone illegal aliens? How is an unemployed or homeless American supposed to compete with an illegal alien who will do the job for half the price? It's definitely not a coincidence that every single country with a phenomenal quality of life (higher than the US), has a strict legal immigration policy and a non-existent illegal alien issue.

Edited October 26, 2009 by Booyah!

[one...two...tree 2,762]

I disagree. There have been studies into the potential number of jobs if we get a new economy built on alternative energies and energy conservation technologies, but the an explosion of job growth in those fields will not happen overnight. Cap and Trade legislation needs to further propel the new economy, but I predict it will be the driving force behind our economy within the next 3 years provided there's enough support in Washington. The traditional energy brokers are fighting hard to prevent such a huge transfer of power.

I don't know about that. Putting all your eggs into one basket is a bad move. 30 or 40 million people cannot be employed in this one industry. Even IT couldn't pull that off.

If the country (the government) is serious about creating jobs, from coast to coast, they need to invest in large scale 21st century projects to rejuvenate the country. I am talking about hundreds of thousand of jobs here. I am not just talking about paving roads, which is all I see going on. Large scale = interstate highway system, railways, hoover dam, going to moon etc. After all, thousand of such billion dollar projects is what is propelling the communist rival China. Example: rapid transit throughout CA.

The only thing I would like to ask you is, how do you expect people to get on their feet or even have a chance, when you also condone illegal aliens? How is an unemployed or homeless American supposed to compete with an illegal alien who will do the job for half the price? It's definitely not a coincidence that every single country with a phenomenal quality of life (higher than the US), has a strict legal immigration policy and a non-existent illegal alien issue.

It would have a cascading effect, much like any driving force of the economy. For example, the housing boom effectively created jobs that extended beyond the housing market. I'm willing to bet that this economist quoted above doesn't take into effect the cost of Climate Change, of our continued dependency on Foreign Oil. There are always hidden costs, especially the cost of not addressing Climate Change and lowering our dependency on Foreign Oil. It would be foolish not to factor those very important elements in moving our economy into the future. What will the new economy be built on? I don't see any other viable alternative.

As for undocumented workers - I would create a work visa program for low-skilled laborers that would be mediated by businesses themselves. They would be responsible for the costs of sponsoring low-skilled laborers. Our economy needs low-skilled workers and unless we are willing to start paying those types of jobs a living wage, many of these jobs will just not be sustaining for most Americans who wish to move up the economic ladder. There will always be low-skilled jobs, so there always be a demand.