National Unemployment – A Reality Check

November 10, 2009

By Padmini Arhant

According to the latest reports, the current jobless rate is 10.2% with 16 million Americans competing for 3 million jobs. Apparently, this figure does not include the underemployed. The Corporate related unemployment is further expected to rise up to 10.8% by the end of next year. Another grim factor is the joblessness among the self-employed and the small business retrenchments reportedly escalate the figure to an alarming 17.5% resembling the severe depression era.

Growing unemployment is a major impediment as consumer spending is directly linked to the job market posing a downside for the entire economy. Despite, the economic growth at 3.5% along with the 9.5% annual productivity for the recent quarter, the American workforce is yet to benefit from the surge in these areas.

The most affected sectors appear to be construction, manufacturing and retail. Although, the recent stimulus signed by President Obama extends unemployment benefits for 14 weeks and 20 weeks to the worst hit states combined with the tax credits for the first time and other home buyers, the problems confronting the industries required to generate jobs is attention worthy.

Construction industry is obviously dependent upon the housing sector and the housing market revival methods are due for review with respect to foreclosures and lending practices by the finance sector.

In fact, the credit crunch is predominantly responsible for the sluggishness in the respective areas of the economy. Unless and until the bailed out finance industry honor the commitments made to the American public during the substantial bail outs, the industries tied to credit market particularly the housing, manufacturing and retail cannot emerge from the recession.

If the various bailouts approved thus far have the built-in transparency and accountability factor then the oversight committee ought to investigate the recipients on the investments of those taxpayer funds legislated for providing jobs and stimulating the economy. Regardless, the trillions of dollars accumulated to the national deficit from the banking sector and automobile industry bailouts deserve scrutiny in terms of actual allocation that is not conspicuous given the depressing jobless data.

On the other hand, the government must provide a legitimate reason for not moving forward with the committed investments held in the $787 billion stimulus package including the remainder from the Bush administration passed TARP funds. When the controversial economic stimulus took place at different times, the purpose was to revitalize the economy with the desperately needed job growth besides enabling the relevant productivity levels and overall economic performance.

Any delay in energizing the job market would adversely affect the broader economic prospects for all industries with the consumer base lagging in the necessary spending, the fulcrum of the economic cartwheel.

Manufacturing industry has been harshly hit with the corporate executive failure in the automobile industry precipitated by the finance sector’s liquidity freeze that triggered the economic meltdown in the shadow of the hedge funds and sub-prime debacle. It is imperative to jumpstart the manufacturing sector macro economically to achieve the targeted employment goals.

Evidently, the prevailing policies and the applied mechanisms are either inadequate or ineffective. Perhaps, the additional or aggressive measures could bolster the weak sectors in promoting the anticipated job growth, the real indicator of the economic pulse. Nevertheless, the consolidated interjection of the monetary reserves and management resources from the private and the public sector is paramount to resuscitate the ailing job market.

A disturbing aspect of the impressive 9.5% productivity report is the executive attitude towards the workforce. In spite of the workers’ significant contribution, i.e. limited labor force tripling the mass production, the management has categorically denied wage increases, additional hiring or other compensations in the form of bonuses etc. claiming that it would be detrimental to the organization ‘s profit oriented schemes.

It is elaborated as corporations aimed at increased earnings in the backdrop of weak dollar, declining exports, business decision to operate on lower inventories and other economic woes. As reasonable as they might be, somehow the conditions seem to apply only towards the labor force explicitly stated by the industry spokesperson that the workers should remain content with the fact that they have a job in the gloomy economy.

Meanwhile, the CEO’s salary package maneuvered from the Congress chided bonuses to lucrative shares and stock options with immediate encashment irrespective of the corporate results; the disingenuous modesty is adequately serving the highest in the hierarchy. Never mind the exploitation of the workforce, the human capital in this context.

In terms of the businesses with cash reserves operating on small inventories, the strategy is counterproductive, not to mention the catastrophic impact on the wholesale, small businesses and the retail industry. The wholesalers relying on the medium and large corporations’ inventory purchases forced to carry out massive layoffs potentially having a ripple effect on the economy with a possible inflation.

The swift passage of the ‘Cap and Trade’ bill boosting the green technology sector would be a phenomenal job growth subsequently alleviating the burden on the national deficit.

In light of the available facts, it would be appropriate to attribute the unemployment status to the myriad of activities or the lack thereof by both private and the public entities. It could be highlighted as the culmination of stringent corporate policies, limited private and public investments, reining credit flow, uncontained foreclosures and lack luster home sales in the housing market…causing the precarious unemployment situation.

Therefore, the government and the free market thorough evaluation of the status quo are essential to invigorate the frail job market.

A jobless economic recovery ultimately leads to a negative economic trend in the absence of robust stimulants explained above. Jobs represent the nerve of the economy with serious economic and political ramifications.

Contrary to the rhetoric echoed in the chambers of Congress and the media, the health care reform is equally important in the equation because it bankrupts the small businesses and individuals alike. Both groups are constantly struggling to make ends meet with the atrocious health care costs prohibiting investments in other necessities.

Economy and health care matter are intertwined and partisan politics has no place at the critical moment debilitating many American lives.

It is incumbent on the United States Senate to rise to the occasion and overwhelmingly approve the health care bill with the federal run health care program titled as the ‘public option’ in recognition of the American plight.

The simultaneous actions by Washington and free market are vital in curbing the rising unemployment statistics. Job assurance to every American translates into job security for the legislators and the executives. Since jobs create taxpayers and consumers,

Washington and Wall Street cannot thrive without progress in the main street.

Thank you.

Padmini Arhant

Written by Padmini Arhant · Filed Under Business, Economy, Featured 

Comments

Got something to say?

You must be logged in to post a comment.