Mark Thoma over at Economist's View has an interesting graph on the topic of "how long will it take the labor market to recover?" (Oct. 9, 2011). Although September's news was not as bad as expected--110,000 jobs created and thus official unemployment rate of 9.1% holding steady--it is still a far cry from good news.
I'm pleased to report that Detroit is doing better than expected. While its unemployment rate is still above the national average, it has come down faster from its exceptionally high rate. And the people that I know best that were hardest hit are now back at work. One worked for a business that made auto parts, and had been laid off for three years. He got his old job back three weeks ago and has been estatically working overtime until he is too tired to get up on a Sunday morning! The other is a construction worker who has suddenly gotten more potential jobs than he can handle. Great news. They and their families can now breathe somewhat of a sigh of relief. They can afford a few new things for the kids and can worry a little less about where the next mortgage payment is going to come from. They are out there buying groceries and clothing and gas at a higher rate than before, and that puts more dollars in the cash registers of local businesses. A win all the way around.
That's why the most important thing for Congress to focus on right now is jobs. That means funding unemployment insurance to keep the long-term unemployed on their feet looking for jobs and still buying food and clothing for themselves and their kids. It means thinking about PROVEN measures that stimulate jobs should be up there with fairness in thinking about tax policies. So Congress should continue the most important tax breaks for the part of the working middle class that is struggling the most--payroll tax reductions. It ought to mean paying attention to labor laws and redressing the current imbalance that allows employers to intimidate workers who want to unionize and make it close to impossible for the union organizers to meet with the workers. Unionization rights need to be updated to account for the fact that we are no longer a close-knit bunch of workers in the same geographic space but often communicate more by email than by talking in person--so card voting should be allowed. And guess what--it also ought to mean ensuring that the already struggling middle class does not have to worry about the potential loss of Social Security and Medicare benefits. The government should reaffirm that these earned benefits are earned, and not going to be taken away.
Of course, one of the best ways to do that for Medicare would be to move to a "medicare for all" system that would (i) allow the government to be much more effective in controlling price increases; (ii) ensure that everyone had decent health care, whether or not they had a job; and (iii) permit employers to let the government handle health care while the savings mean more employees can be hired.
But that does NOT mean passing more tax breaks for businesses as indirect (and not very cost-effective) stimulus for jobs. Prime example--the ineffective, costly, and Big Company-favoring "repatriation tax holiday" for which multinationals like Google and Cisco have been so assiduously lobbying--the very companies that have most easily artificially shifted their income offshore by claiming to sell their intellectual property cheaply to offshore affiliates (and getting by with it because of ridiculous transfer pricig rules that make it possible). We already know repatriation is a very ineffective way to create jobs. It would be foolish to repeat a past mistake that simply led more companies to offshore more money in anticipation of successfully lobbying for yet another repatriation holiday.
It should even mean cleaning up some of the obvious fairness problems in the tax code that favor the rich and uberrich--e.g., the carried interest provision (a no-brainer, since there's really no logic in private equity fund managers getting capital gains treatment for their managerial work, the treatment of profits interests in partnerships has long been rife with self-interested Wall Streeters setting the scope of the rules, and when ordinary workers have troubling just making ends meet, it is obscene for professional asset managers to be preferentially treated as to their compensation income).