Sad news on the jobs front this week. Of course, the most tragic is the passing of Steve Jobs, who changed the world of personal computing, music, mobile computing, and so much more. His products had a style and substance to them that is hard to find in this copycat world. When was the last time that you remember so much of the world mourning over the passing of a CEO?
When our politicians, Wall Street executives, and Fed chairmen like Alan Greenspan pass on, we’re much more likely to see citizens dancing on their graves than to have any semblance of worldwide grief. These types of people are more interested in enriching themselves and their friends than they are in helping the country or actually producing anything. Of course, they congratulate themselves on what they think are valuable contributions while criticizing those who would doubt them.
During the first half of the last decade, the U.S. economy seemed strong and companies were raking in profits. My own industry of companies buying one promissory note or multiple promissory notes at a time also zoomed. The leaders of Fortune 500 companies, among others, took all of the credit for the successes of their firms and demanded ever higher salaries and bonuses. When those same businesses started declining, I don’t recall any of those executives offering to return their bonuses or to tie their pay to the lower performance figures. This is the style-over-substance culture that our society is evolving toward.
A case in point is the new jobs program proposed by the administration and estimated to cost $447 billion. In a blog last month, I spoke of how federal job training programs over the last few decades wasted billions of dollars with little to show for them. I would argue that every economic recovery program launched by the Feds over the past three years has been a failure. Think of “cash for clunkers” or the Fed’s two quantitative easing programs, and tell me how those did anything other than waste billions of dollars.
The President’s proposed jobs program consists of cutting payroll taxes, extending unemployment benefits, giving money to schools, and boosting spending on public works projects. This initiative would provide a temporary reprieve for a small segment of workers, but would ultimately fail and do nothing more than increase our debt (yes, I know that he plans to pay for it by taxing the rich, but that won’t happen). Fortunately, there is little political support for the program, so it probably won’t see the light of day. It seems like mostly political grandstanding for the 2012 election anyway.
Of course, this doesn’t mean that we don’t need more jobs, just that the government is much less effective than private enterprise at creating jobs. The jobs picture is dismal and far worse than the official 9.1% unemployment rate. Some economists have been excited that the September jobs report showed 103,000 new jobs. However, according to Mish, 45,000 of those were Verizon workers returning from strike and many of the rest were lower-paying service jobs. For comparison, the economy lost 8.8 million jobs between January 2008 and February 2010. In the last year of the weakest recovery on record, the economy averaged 116,000 jobs a month. The real unemployment rate, which adds in part-timers wanting to work full-time and the longer-term unemployed, is 16.5%. Over the past 12 months, average hourly earnings have increased by 1.9% while the consumer price index for all urban consumers was up 3.8%. So, even those who have a job are not keeping up with inflation.
Improving the jobs picture is no easy task. In my opinion, reducing the nation’s debt and having a more pro-business administration would provide needed stability for employers worried about the future. Even then, the process will be long and painful, as there is no quick and easy fix. As individuals, we need to save as much as we can so that we have a rainy day fund when it is most needed.