The Editors
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Rising unemployment and the stalled creation of new jobs are dampening morale on Main Street and threatening the nation’s economic recovery. More than 15 million Americans who want to work are now out of a job, nearly one in 10. According to the Department of Labor, the number of job seekers is six times the number of job openings, a situation much more dire than during the 2001 recession, when this ratio was two to one.

Two proposals now being debated in Congress would address these twin problems, and both proposals ought to be passed quickly. One bill already passed in the House would extend by 13 weeks the unemployment insurance payments scheduled to run out at year’s end, but only in states where unemployment is 8.5 percent or higher. A similar bill in the Senate (that would extend four weeks of payments to all Americans receiving unemployment and 12 weeks where the rate is 8.5 or higher) has stalled while lawmakers debate how to finance it. Either extension could assist more than a million jobless people whose benefits are expiring.

The second proposal would offer tax credits to businesses that either create new jobs or extend existing jobs from part time to full time. Substantial tax credits like this could help small businesses, which for the last 15 years have created some 80 percent of the nation’s new jobs. Quick passage of such a bill would overcome another possible hurdle: that businesses might postpone hiring now, when new jobs are critically needed, and instead wait for a future credit to emerge from Congress.

Much more must be done. During this recession, the country’s job market has contracted by nearly 6 percent. A higher percentage of jobs have been lost this year than in any year since 1939. Nor does the double-digit unemployment rate projected for next year tell the whole story, for it excludes persons working part time who would prefer a full-time job and those who have stopped looking for work. Job creation lags behind the early signs of a recovery because businesses must stabilize their operations before launching new rounds of job-generating investment.

Speedy action is critical. This year more than five million Americans have been out of work for six months or longer. Many have used up their savings, are living on credit and can no longer afford health insurance. Prolonged joblessness is pernicious. It not only increases credit card defaults and home foreclosures but also forces millions of children to grow up in poverty and weakens family ties as a consequence of alcoholism, addiction and domestic violence.

What else can be done without increasing the deficit? Some ideas: The federal government should immediately ratchet up pressure on banks, particularly those that accepted TARP monies, to extend more commercial credit to credit-worthy small businesses. Then it should work with Congress to pass new legislation (like the Glass-Steagall Act of 1933) that would restrict commercial banks to making loans and trading securities only for their customers. The goal is to make legal the distinction between investment banks and commercial banks and break up the giant holding companies.

The government should follow the infrastructure and environmental start-up monies it distributed to states with the stimulus and urge them to use more of this money for job creation during 2010. Lawmakers had expected such job creation to take time because these projects (bridges, roads, public transportation, alternative energy systems) are large and complex. But nearly a year has passed, and more projects—selected for their shovel-readiness—should move toward hiring.

Lawmakers should also direct the labor force in ways that will lead to long-term gains. That includes allocating money to states for job creation and job preparation. Community colleges, for example, are currently bulging with students—those who cannot find jobs, laid-off workers seeking new skills and returning veterans. Each of these categories includes thousands of people eager for the opportunities that increased stimulus funding would provide. Programs that teach English as a second language or prepare students for high school equivalency diplomas will also prepare workers who might otherwise be unable to compete when jobs return. Regarding health care, governments should find incentives now to increase the number of graduates in nursing, primary care medicine and gerontology, areas of medicine with critical shortages.

With recent projections showing that a full recovery may be several years away, the current job picture is discouraging. It will be costly to turn around, but delay or half-measures now will only prolong the pain. Better to employ all the tools at our disposal—monetary and fiscal policy, political leadership and ingenuity—to match the seriousness of the current unemployment crisis.

Comments

Christopher Mulcahy | 11/3/2009 - 12:05pm
Taxes kill jobs.  Regulation kills jobs.  Unemployment insurance preserves and encourages unemployment.  Government has no clue.  Urgency and an achievement mentality fit well with democratic capitalism, the only system that has even come close to providing three-bedroom two-bath houses with flush toilets to the majority of its citizens.
If you like refrigerators, central heating and air, and soft toilet paper you have to get this firmly embedded in your mind:  Taxes kill jobs.  Regulation kills jobs.  Unemployment insurance preserves and encourages unemployment.  Government has no clue.  Urgency and an achievment mentality fit well with democratic capitalism, the only system that has even come close to providing three-bedroom two-bath houses with flush toilets to the majority of its citizens.
 
Rudy Rau | 11/2/2009 - 9:46pm
Mark Zandi's October report on the economy is probably one of the more objective and realistic reports. So many people use their opportunity to make suggestions by getting into name calling. I see nothing 'marxist' or 'communist' about the recovery program nor do I see anything 'facist' in the failures of the previous administration. Nor do I see any merit in continuing with the production of military hardware that has outlived its usefulness, or is over-priced and contains kickback systems galore. Time to rid ourselves of phony prosperity and get back to a decent value system.
I, like most retired persons hope our working generations can find work soon so they can care for their families and meet their obligations. Unfortunately, a good share of our manufacturing or employment base is connected to the sale of junk-the very materialism the Church has been warning about. Stores in malls are closing and most of them merchadised squiggly, fuzzy, battery operated objects which no one had any need for. They were and still are part of the bubble in our economy that has burst and hopefully will not rebuild itself.
The downside is that their demise has meant the loss of millions of jobs. Hopefully, businesses will re-direct their skills and efforts towards the manufacture of more meaningful and worthwhile products and services thus creating work with longevity.
6466379 | 11/2/2009 - 2:22pm
My working days are over, but based on personal experience I agree with Samten (Letters "Help Wanted") that males in their 50s and 60s are least likely to find work. This is true now as it was 16 years ago when at 62 I was forced into early retirement because I couldn't find work. I had hoped to work for another 8 years. Of course there were many "nibbles" but invariably follow-up calls brought the refrain, "Sorry, the position has been filled!"  Finally in frustration I asked an employment agent what was the problem. His candid response was, "I'm not supposed to say this, but it's your age!"
It's true I wasn't involved in "shovel ready" work in my later years, yet  hard work was not unknown to me. But at age 62 I couldn't find employment even  pushing a pencil within my expertise, or at any level. However,  I must add I did get a parttime job when my good Pastor shortly after I my forced into  retirement hired me to look after the Sacristy and later Pastor  knowing of my experience in Food Production Managment, hired me as Rectory Cook.  So I managed to keep busy for additional years and make an additional few dollars as well. The jobs were helpful and I am always grateful to the compassionate good priests who kept me working, well after 62! But the business world? It didn't give a damn!
JOHN WALTON MR | 11/2/2009 - 8:42am
Now "...restrict commercial banks to making loans and trading securities only for their customers" is a truely bone-headed idea.  Are you to prevent banks from purchasing money market instruments from A-rated credits for their own account?  Are you to prevent banks from trading Treasury securities for their own account to balance their interest rate exposure?  Are you to prohibit banks from investing in services which are tangential to their operations?  Are you to prevent small regional banks from purchasing and then selling a syndicated loan?  Would you like the mortgage securities business to go away?
As far as a new Glass-Steagall - let the shareholders decide.  Citibank, Bank America, J.P. Morgan have to compete with Deutsche Bank, Hong-Kong Shanghai, Credit Agricole, Royal Bank of Canada not the Bailey Building and Loan.
If the pols were serious about getting the economy going they would immediately desist from creating the climate of uncertainty which casts a pall over business activity.  The Obama motif is to keep the pot boiling, but this has predicatable and unfortunate economic consequences.   (Economic theory recognizes the cost of uncertainty).  Who is going to purchase capital equipment if your industrial electric costs are going to increase 90% under cap and trade, who is going to purchase bonds from a health insurance company if the health care plan contemplated by Pelosi prohibits sale of private insurance after 2013?  Who will invest in new technology for medical devices if they don't know how the demand curve will be tilted by a non-deductible excise tax.
If you want to get the economy growing again, get government out of the way.
E.Patrick Mosman | 11/2/2009 - 6:36am
Government spending does not create private sector jobs, only more government bureaucrats to oversee the massive spending on legislatures' favorite social engineering programs(more government employment) and temporary make-work jobs. This administration is not serious about job growth in the private sector at all.FDR's big government spending did little or nothing to end the depression as his Secretary of the Treasury wrote in his diary after eight years. The 19% unemployment of 1938 and 15% in 1940 ended as the millions of unemployed volunteered or were drafted into the military,women were added t othe work force and government spending went into real jobs in factories, shipyards producing planes, tanks, trucks ships,jeeps,guns and other military needs.All guns, no butter. No monies for more welfare moms and unwed mothers, no monies for more government bureaucrats to ration healthcare, no monies for ACORN and other community organizers, no monies for spend thrift states to continue their profligate ways.
Good high paying jobs could have been created immediately by issuing the contract to build the much needed Air Force tankers in the US, continue the F-22 building program, rebuild our navy, contract with GM, Ford,Chrysler, Caterpillar etc to reopen their closed plants to repair, rehab and or build new tanks, trucks and other vehicles.
Allow energy companies to begin exploration drilling for oil onshore and offshore, coal companies and power companies to construct clean coal facilities and coal to fuel plants as SASOL has in South Africa and allow power companies to start planning for nuclear powered plants as the lead times for containment vessels is over five years.
Instead they offer one of the biggest tax increases on business in history as part of the government socialistic/communistic health care bill and lies about jobs created or saved as unemployment continues to rise.
Steven Deedon | 10/31/2009 - 11:03am
Unfortunately, "shovel ready" jobs building infrastructure are largely worthless to males in their fifties and sixties, who are the least likely population to be able to find new work during this recession.   One can hardly explect men in their late fifties and up to do construction work, etc.

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