Unemployment and Production Stagnation

by Dollars and Sense

According to recent reports on unemployment, the U.S. economy shed an additional 62,000 jobs in June bring the yearly total to a frightening level. The total amount of jobs that have disappeared from the economy for this year is now close to half a million, at 438,000, with almost all those missing jobs showing up in an increase in applications for jobless benefits, which was last at 404,000.

The construction industry shed 43,000 jobs and manufacturing 33,000 despite the latter being almost double the size of the construction industry. The significance of this shows in the fact that workers in these industries have a labor intensive skill set and are faced with difficulties when trying to find jobs in other sectors without retraining, which costs money, or taking a significant pay cut. With the country’s job growth coming mainly from information technology, health care, government jobs and service sectors (government jobs accounted for the most job growth in June at an increase of 29,000), construction and manufacturing workers will be hard pressed to diversify into those sectors without sacrificing their standards of living and accepting a new way of life.

The trend of growth in jobs in the service based sectors (health care, government, food service) as opposed to the decrease in production based sectors (construction and manufacturing) underlies an increasing trend of economic stagnation in production. As investments are more often made in volatile financial markets that offer quick profits instead of long term pay off, our economic base will continue to be degraded at the cost of real production output and trained, well paying jobs. This is exemplified in the previously mentioned report of construction job losses that are based primarily in the lack of need for buildings and factories that, if built or being built, would represent growth in real production capacity and output. But, as the housing market crash showed, real economic growth cannot be based upon extended credit lines that are treated with insignificance by lenders. Production growth must be centered around sustainable and practical long term needs, not just luxury consumption on credit. The solutions to unemployment will need to involve radically different ways of creating jobs and ensuring a healthy economy.

Plans to address the unemployment problem might include something along the lines of what Ryan Dodd’s article suggests in our March/April Issue, entitled; A New WPA? An Introduction to the Employer of Last Resort Proposal, in which unemployment is ended “...via a government promise to provide a job to anyone ready, willing, and able to work.” Additionally, according to the American Society of Civil Engineers, the country’s nationwide basic infrastructure (roads, water supply, waste disposal, energy) is in shambles and need of massive overhaul, repair and restructuring that could (or rather, needs to) provide numerous economic benefits and stimulation. Investing in new energy alternatives and updating our roads and sewer systems could constitute a new wave of job creation, increased efficiency, health and safety, and consumer spending that could lift the country to new heights of prosperity. All that is stopping such a need from being met is a large price tag that could, in theory, be easily met through decreased military spending or a reneging on the Bush tax cuts that favor the superrich. Unless something is done soon we may see the increased and unnecessary suffering of thousands of workers continue to be a symptom of an eroding economic base.

Labels: construction, Employer of Last Resort, infrastructure, stagnation, unemployment

 

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7/03/2008 02:25:00 PM