Wednesday, August 12, 2009

The Stimulus and Job Creation

Jobs and More Jobs, Now and Forevermore by Frank Stricker

Obama's stimulus plan is not doing enough to bring economic recovery, especially in the area of job creation. Among the explanations I have seen are these: most of the money has not been spent; the stimulus was too small; the depression is worse than expected; many projects were not, after all, shovel ready; and the recovery program was never meant to create or save more than 2 or 3 million jobs.

We do not know how many jobs the stimulus program is creating and saving. We do know that most of the stimulus money was not dedicated to job creation. For most of the job problem, the administration is really asking us to hold on until a general economic revival.

But how long do we have to wait and what will general recovery bring us? It is widely agreed that the return of prosperity will take a long time. History supports that view. In the Great Depression it took twelve years and big war-time budgets to bring full recovery. Even in the 2001 slump, a short one that ended in 8 months, jobs declined for 32 months, and it took another 16 months - a total of 4 years - for job levels to get back to pre-recession levels. That woeful job performance meant that the Bush recovery had only two or three years to expand the job base before the next economic slump began.

We need to add about 2 million jobs a year just to keep up with an expanding labor force. From January of 2001 through January of 2007 we added fewer than 4 million non-farm private sector jobs. So we were already behind millions of jobs when the financial meltdown began in 2007. In the current depression we have already lost 7 million jobs, and there are 9 million part-timers who want full-time work. The real unemployment rate is over 18% and a range of estimates about our short-term and long-term job deficit is between 15 and 30 million jobs.....

If the Civil Works Administration could usefully employ 4 million people in just a few months in 1933-1934, and if the WPA employed 2 to 3 million people every month for six years, we can do more, with our much larger labor force.....

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Frank Stricker is on the Advisory Board of the National Jobs for All Coalition and the author of Why America Lost the War on Poverty and How to Win It (2007). He is Emeritus Professor of History at California State University, Dominguez Hills.

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