Our Jobless Recovery | The Nation


Our Jobless Recovery

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Editor's Note: This is an updated version of the article that appeared in the July 13, 2009, issue of The Nation.

About the Author

Leo W. Gerard
Leo W. Gerard is international president of the United Steelworkers and a member of the executive council of the AFL-...
Leo Hindery Jr.
Leo Hindery Jr., chair of the Smart Globalization Initiative at the New America Foundation and an investor in media...

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Our economic recovery depends on a massive national plan aimed at full employment.

President Obama just told us that the economic stimulus plan has "already saved or created" 150,000 jobs and that another 450,000 will be "saved or created" by the end of the summer, including 125,000 summer-only jobs for students. It's hard for us to see how this will be the case--we hope it is--but, more important, there's a huge difference between a job that is saved and one that is created. Just ask the 30.2 million workers who are already unemployed.

Obama has spoken forcefully about laying a new foundation for the economy, one that creates good jobs and rising incomes and that moves us from an era of borrow-and-spend to one where we save and invest and are able to produce more at home than we consume. And we agree these are the right goals for the nation. However, we do not believe that the policies the administration is pursuing will get us there, nor is the administration's economic stimulus plan likely to move us toward anything approaching full employment.

By the administration's own estimate, the stimulus plan will "save or create"--there's that phrase again--just 3.5 million jobs over the next two years. But this amount represents less than 30 percent of the unprecedented 14.5 million jobs that have been lost since the recession began in December 2007, and it is just 12 percent of the workers already unemployed.

And yet this is only part of the story of the job-creation deficit we face. Just as worrying as the massive jobless numbers is the fact that our economy is bleeding jobs in the very sector that must grow in order for us to move away from debt-financed consumption as the principal engine of economic growth. Since this recession began, manufacturing has lost 13 percent of its workforce, reflecting a further downsizing of our tradable goods economy.

If these conditions continue, we will head not just toward a jobless, and a manufacturing jobs-less, recovery but also toward an even more weakened economic base that is incapable of sustaining a vibrant middle class. And yet the conditions will continue unless the administration addresses two serious shortcomings in its economic program.

First, aside from its emergency restructuring of Chrysler and GM, the administration has not outlined a national manufacturing and industrial policy designed to ensure the competitiveness of US-based businesses.

Second, the administration has yet to begin the promised reform of our trade policies with China and the other economies that do not play by the same rules we do.

The Manufacturing Jobs Crisis

The current jobs crisis is in part a reflection of the misplaced priorities of previous administrations, which let America's manufacturing sector decline vis-a-vis our services economy. As a result, manufacturing industries now represent just 11.5 percent of GDP; the number of people working in manufacturing accounts for only 8.7 percent of the jobs in the country; and we have run an average trade deficit in manufactured goods of more than $500 billion over the past five years, all of which contributed to the huge buildup of US debt in recent years.

This almost complete neglect of our manufacturing base relative to our service sector represents the height of irresponsibility, because compared with those in manufacturing, service jobs pay below median wages, do very little to help America's balance of trade, have a much smaller multiplier effect on other parts of the economy and mostly just move incomes around the country.

Regrettably, however, some in the Obama administration have extended this neglect by essentially taking the position that a job is a job, whether it is in the manufacturing or service sector.

And it is just as wrong for them to assume that new jobs associated with exported services will make up for past and future manufacturing job losses, because high-quality service jobs are often dependent on a strong manufacturing sector and thus do not readily substitute for good manufacturing jobs.

Even if the administration does not understand and accept these basic realities, America's main trade competitors certainly do. Germany, Japan and South Korea are doing everything possible to preserve their manufacturing bases during this economic downturn. And China, which accounts for 60 percent of the US trade deficit in manufactured goods, is aggressively accelerating its efforts to grow its manufacturing sector.

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