Working In These Times
Unemployment Toll: $1 Trillion in Lost Wages
That’s underscored by new research from John Schmitt and Dean Baker of the Center for Economic and Policy Research showing that American workers are likely to lose $1 trillion in wages before the job market recovers. And the biggest share of that loss is yet to come: since the downturn started in 2008, unemployed workers have lost only about a third of the total. Schmitt and Baker estimate total losses in 2009 and 2010 will be greater than in 2009.
Friday’s unemployment figures are not likely to affect the estimate by much. Baker writes:
On the whole, this report is much better news than what we have seen since the decline accelerated last September. Still, there is no evidence in this report of anything resembling a robust recovery. It is likely that the economy will continue to shed jobs for at least another month or two and it may be several more months before job growth is fast enough to keep the unemployment rate from rising. And there are many risks that could make this picture less pleasant.
The $1 trillion estimate of wages lost is quite conservative. It doesn’t count health insurance or pension payments employers previously made. It also doesn’t include cuts in hours or wages and benefits imposed on people still at work.
The loss would more than pay for a decade of health reform as now contemplated by Congress. Such a huge and growing damper on demand will depress the economy even more if there’s no further action to stimulate job growth.
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Comments
Well, no shit, Moberg. What was your first clue?
Now that you understand the cost to workers, what are you going to do about it? Marxist politicians and commentators, wrapped in their confining ideological cocoons, seldom achieve even your limited level of understanding. Or they create a crisis in order to do things they could not do before.
First, you might start with the dynamics of previous downturns. In 1965, LBJ passed the War on Poverty as a part of the Great Society programs. That sounded good. Everyone is opposed to poverty, right? But the Democrats’ War on Poverty did not work out too well, did it?
LBJ paid our tax money to women and children, but only if there was no male in the household. This produced a monetary incentive for males to become scarce. In 1965 at the start of the War on Poverty, over 80% of Black children lived in family units with two parents. After thirty years of the War on Poverty, less than one-third of Black children lived in family units with two parents. And where did all the Black males go? On the street, and into drugs, crime, and prison, mostly. That had a high cost as well, above and beyond the budgeted cost of the War on Poverty, not to mention the human cost. But, then, destroying the family and family values is a principle of Marxist theory, so maybe you think destroying Black families was a great success.
The cost of the War on Poverty over thirty years was $6.6 trillion, an average of $220 billion per year. The cost of the War on Poverty went to the general fund, and to the national debt. At a modest 3% interest rate, the cost of the War on Poverty is equal to the national debt just two years ago, $9 trillion. And for our money, we got waste, fraud, corruption, the same amount of poverty as we started with, and all that debt.
When LBJ first passed the War on Poverty, he made no plans to pay for it. Consequently, the War on Poverty sucked up available capital and poured it down a rat hole, and there was no investment capital to create jobs; the economy and the markets went flat for seventeen years, with three recessions culminating in the Carter Catastrophe. Each of those recessions cost workers wages, as you have pointed out in the present context, and the Carter Catastrophe had a much greater relative cost than the present disaster - so far.
President Reagan cut taxes and confining regulations, restored investment capital to the economy, and growth and jobs took off like a rocket, solving the problem that you have acknowledged in the article. Democrats complained bitterly that Reagan raise the national debt, but mathematically, the increase in the national debt during the Reagan years was almost exactly the amount of required spending on LBJ’s War on Poverty, $220 billion per year. If Reagan had not created growth, the economy would have continued to stagnate as Old Europe has done for the last twenty years and as our economy did for seventeen years after LBJ.
The dynamics of the Bubba Bubble crash were different than the LBJ fiasco. Money was pouring into the economy after the War on Poverty was ended in 1995, and as a result of the Cold War dividend engineered by President Reagan. But Clinton had no more plans for the economy than did LBJ, and the resultant asset bubble grew way, way, way out of control. The DOW P/E ratio was at 46 (higher by far than it has ever been in history) during Clinton’s last year, and the NASDAQ P/E ratio was an astronomical 65. And even that ignores thousands of dot.com stocks that were priced sky-high, and that had never earned a penny and would never earn a penny. The NASDAQ fell $2-1/2 trillion during Clinton’s last year full year in office, the DOW started down, GDP growth went flat, and government revenues were dropping like a rock before Clinton left office.
The resultant bust was, at the time, the third largest economic crash in history after the Great Depression (lasted thirteen years, ended by WWII) and the Japanese crash of 1991 (still ongoing). But President Bush cut taxes and confining regulations, and the Bubba Recession was short, mild, and was followed by robust growth from 2003 to 2007.
The end of the Bush economic growth at the end of 2007as not unlike the LBJ mismangement of the economy, except that the LBJ crash was like a slow motion train wreck, but the Democrats’ Mortgage Follies in 2008 was more like the end of a high-speed auto chase.
Now we have Obama wasting more money than LBJ, Carter, and Clinton could have ever thought of, and the result will be the same but an order of magnitude greater, at least. And the corruption is also greater by far. But every time we have a stupid Democrat waste our money, a Republican comes in and cleans up the mess.
The big difference this time is that the Marxists, after a century of trying, have made their move and blown their cover. The repudiation of Obama wll be an order of magnitude greater than the repudiation of Carter.
Enjoy.