"It's Jobs" Economist tells business writers
Meeting in Cambridge, Massachusetts Sunday, Economic Policy Institute President Lawrence Mishel told the Society of American Business Editors and Writers annual conference the economy suffers from "too few jobs;" business writers are focusing too much on gross domestic product...and even if it grows 2.4 percent this year, it is not enough.
Depending on the part of the country, where unemployment is anywhere from 5 to 8 percent, household income has been dropping for four consecutive quarters.
''Unless employment starts growing, President Bush will be the first president since Hoover to preside over an actual decline in employment,'' Mishel said in a speech that also criticized the president's economic policy for doing to little to help the economy this year.
Unemployment numbers are modest because some people stop searching for jobs or accept ''underemployment'' to earn a paycheck, he said.
The U.S. economy would have to create 140,000 jobs per month between now and the 2004 election to return to the employment levels of 2000. But even that would simply absorb workers entering the labor force; to move the unemployment figure below 5 percent would require 210,000 new jobs per month. (New York alone lost 300,000 jobs since September 11)
''(That) seems especially unlikely given the preference of this administration for back- loaded tax cuts,'' Mishel said.
Current estimates put GDP growth at 2.4 percent this year. Fishel that simply isn't enough growth to reduce unemployment and reverse the decline in household income.
That, he said, would require a short-term stimulus package. He said the administration's proposal to cut the dividend tax would do little to spur jobs in the short run.
''They care about long-term growth, not short-term growth,'' he said.
Instead, he suggested spending $175 billion or more to return money to lower- income taxpayers, provide fiscal relief to states or build and renovate schools which he suggested could create 1.5 million new jobs.
The $79 billion bill to fund the reconstruction of Iraq should provide some bonus, he said, adding perhaps 0.4 percent to GDP this year and accounting for 15 percent of its growth.
Despite the swift end to the war in Iraq, Fishel said, it did little to solve underlying economic problems related to the wage and labor issues that most families care about.
''Those who are trying to tell us that the problem with the economy is war are distracting us from the more fundamental problems that need to be addressed here,'' Mishel said.