The Great Ambiguity of the US Economy: Put America Back to Work! Wednesday, 04/21/2010 - 2:57 pm by James H.

Carr | Post a Comment

As the economy shows signs of recovering, how will we measure the recession? Jim Carr says think jobs. Earlier this year, New York Times reporter Peter Goodman wrote that the Great Recession has been replaced by the Great Ambiguity. This obscure, albeit apt, description of the U.S. economy seems still to be accurate today, as reflected by the action taken last week by the National Bureau of Economic Research (NBER). Despite consecutive monthly gains in employment and wages sufficient to declare an official end to the recession, NBER took the conservative posture of concluding that more data is necessary before it can call an official end to the economic downturn. That decision was unexpected although not surprising. Almost every major piece of economic news supporting the notion the economy has rebounded is fraught with qualifiers. Bank profits for the largest firms, for example, are tempered by ongoing distress in the real estate markets and a continuing failure to lend by those institutions. At the same time, bank failures for smaller institutions that were not prioritized in the financial system bailout remain high with 140 failing last year and 48 banks having been taken into receivership as of April 16. That compares to only 25 failures in 2008 and three failures in 2007. The welcomed increase last month of more than 160,000 non-farm jobs was offset by the reality that as many as 120,000 new jobs are needed each month just to absorb new entrants to the labor market and nearly 50,000 of the jobs created in March were temporary positions related to the 2010 Census. Meanwhile, long-term unemployment is at an historic high with the median length of joblessness exceeding 31 weeks. The economic survival of millions of unemployed workers swings in the balance as Congress wrenchingly extends long-term benefits on a monthly basis, as if the economy any day now will absorb those laid-off workers. Going back to 1982, each recovery has been slower to produce new jobs, reflecting structural shifts within the U.S. economy and international competitive challenges that have been long in the making. The New America Foundation estimates 330,000 new jobs are needed each month for the next five years to close the current jobs gap, yet the economy created only 100,000 per month on average between 2001 and 2007. Many of those jobs were in the bloated financial sector that has now subsided. And, strong business productivity gains over the past year suggest many jobs lost during this recession will not return.

Further, while unemployment is generally considered a lagging indicator of the health of the economy, it is currently the leading cause of foreclosures. Although delinquencies have fallen for the second consecutive month, foreclosures grew by nearly 20 percent between February and March of this year. RealtyTrac estimates foreclosures for 2010 will total nearly 3.5 million. Its difficult to envision a robust and sustainable recovery when the problem that unhinged the credit markets and economy continues to accelerate. Put America Back to Work Last year, the President Barack Obama articulated the need to put America back to work through a major infrastructure investment program. We should return to that idea and enact such a program. The nations infrastructure is aging and in dire need of repair or replacement. Investing in infrastructure could create important efficiencies to the economy, promote green jobs, improve the environment, and provide needed and targeted employment and training opportunities in disadvantaged urban and rural communities, as well as Native American Tribal Lands. More jobs would also reduce foreclosures. Infrastructure spending should not be limited to bridge and highway construction in the suburbs. Rather it should focus on improving or building commuter and high-speed rail lines, upgrading communications systems, renovating or building schools and community colleges, as well as state-of-the art job training facilities, investing in dams, waterways, and water treatment facilities, reclaiming key wetlands, and improving the basic livability of impoverished neighborhoods. Concerns about large deficits are legitimate. The debate, however, is not about whether deficits are good but rather when are they necessary and what spending acts as investments that help reduce them over time. Stimulating jobs while improving the nations infrastructure would be a more effective response to the current economic and deficit challenges than culling through reams of ambiguous economic data attempting to statistically demonstrate a recovery has ensued. Roosevelt Institute Braintruster James H. Carr is Chief Operating Officer of the National Community Reinvestment Coalition.

Navigating the Jobs Crisis: 3 Strategies for Real Economic Recovery Friday, 11/20/2009 - 9:30 am by James H. Carr | One Comment

In the wake of the highest unemployment rate in 25 years, the Roosevelt Institute asked historians, economists and other public thinkers to reflect on the lessons of the New Deal and explore new, big ideas for how to get America back to work. James Carr argues for targeting hardest-hit communities with job training and access. As this months unemployment numbers confirm, the nations economy continues to suffer despite recent positive and relatively impressive productivity numbers. Unemployment now exceeds 10 percent for the general population. Unemployment for African Americans and Latinos exceeds 15.5 percent and 13 percent respectively. For Native Americans living on reservations, it is just below the fabled and feared 25 percent of the Great Depression. For all families out of work, the economy is in a depression. Unable to find a suitable job, more than a third of those out of work are classified as long-term unemployed. The longer they remain out of the labor market, the more difficult it will be for them to reenter the workforce. It also makes them less likely to regain a job paying the same or higher wages than the job they have lost, and more likely to run out of unemployment insurance and potentially end up on the streets with few, if any, options. In fact, prior to the recent extension of unemployment benefits, roughly 7,000 people per day were losing their benefits. Many economists dismiss the bad news on the employment front arguing that unemployment is merely a lagging indicator. But a recovery without jobs is meaningless for families worried about paying their mortgages, purchasing food, affording health care, sending their kids to college, and saving for a decent retirement. And, a recovery without jobs presents the prospect for further damage to the financial system as growing numbers of households are unable to pay their debts. Most concerning, continued significant job losses open the door for a possible double-dip recession given the key role played by consumer spending. While there is legitimate concern over the size of the federal deficit, the threat to the economy of continued high levels of unemployment is more urgent. The foreclosure crisis which sparked the

collapse of the credit markets and economy continues to grow. But unemployment is now the leading reason families are losing their homes. Moreover, more than $13 trillion of household wealth has been lost since the crisis began. While its hard to estimate how much of that wealth was an illusion, much of it was real savings. So, more must be done to help the nation recover from its sudden and dramatic loss. Creation, retention, and access to jobs must be a focal point for additional recovery spending, as well as management of current available recovery dollars. Employment strategies should focus on three major efforts: Job training that translates directly into real jobs or careers - For those out of the labor market or marginally employed, we should create job-training programs in the form of apprenticeships that are directly linked with job placement and retention strategies or first-source hiring agreements with industry. Job training programs should also focus on long-term career opportunities (i.e. teach transferable skills, create opportunities for future training and education, technical assistance for those who want to start their own businesses), wrap-around services and ongoing case management. Increased access to existing jobs for the hardest hit communities - Every agency within the federal government has annual contracting goals to increase the participation of small, disadvantaged, and women-owned businesses. Adherence to these goals varies greatly by agency with some key programs poorly enforced. The US Department of Housing and Urban Development estimates that for one of its largest programs (Section 3 requirements), only 25 percent of HUD funded recipients report their compliance and 80 percent of those reporting fail to meet the minimum requirements. Compliance with these types of guidelines consistently across agencies could channel tens of thousands of jobs to the hardest hit families and communities in America. Rebuild the middle class - We should implement policies that encourage the creation of reliable and sustainable jobs that allow families to earn a living wage, receive reasonable benefits, build assets, and retire in dignity. Investing in clean energy and energy efficiency programs can replace many manufacturing jobs that have been lost over the past few decades and position the nation to be a leader in many industrial jobs of the future. Federal policies should also protect American workers from direct competition with countries that fail to respect worker rights and not reward firms that ship economic opportunities abroad. Roosevelt Institute Braintruster James H. Carr is Chief Operating Officer of the National Community Reinvestment Coalition.