Yesterday, I reported on the latest NCB News/Wall Street Journal poll which, along with other recent data, highlights key role that economic anxiety is likely to play in this November’s election. Today’s Washington Post has a front page article on how the Bush economic team keeps making mistake after mistake in responding to voters’ economic concerns.
Advantage Democrats. But what is to be done to turn this advantage into the maximum number of Democratic votes? That’s where things start to get tricky.
Start with the idea that there is something very odd indeed about the current pattern of job loss and failure to create new jobs. Charlie Cook expressed it well in his March 9 column:
For almost a year, I have been on a tirade about the political importance of the jobs issue in this election, even before I saw an eye-popping August report by the Federal Reserve Bank of New York on the subject. The New York Fed study showed that during the twin economic downturns of the mid-1970s, 49 percent of the job losses were cyclical — or temporary job losses — such as letting a shift go at the plant. Meanwhile, 51 percent of the job losses were structural, permanent job losses. The study went on to show that during the next downturn — in 1981 and 1982 — the percentages were exactly the same, 49 percent were cyclical, 51 percent were structural. The 1991-92 downturn was somewhat different, with only 43 percent of the job losses cyclical, and 57 percent structural.
What about this downturn? A measly 21 percent of the job losses are cyclical ones, while a whopping 79 percent are structural, permanent job losses. Why is this bad? It’s bad because we know that it always takes longer to create a brand new job than it takes to call a shift back at the plant.
In December, the CEO of a California-based high tech firm told me that “there is no amount of overtime that we will not pay, there is no level of temporary services that we will not use, there is no level of outsourcing or offshoring that we will not do, in order to prevent us from having to hire one new, permanent worker in the U.S.” As I travel around the country, meeting with business leaders, I hear similar, though less succinct thoughts in almost every sector and every part of the country. U.S. wages, health care, and other benefit costs have gotten so high — and the press by investors for high stock prices is so great — that the premium is on wringing every last bit of work out of as few employees as possible, to do anything but incur the costs of adding permanent employees.
If this description is roughly accurate, then this dynamic is going to be hard to counter by getting a bit tougher on trade, cracking down on “Benedict Arnold” corporations or providing a tax credit for manufacturers. Instead, it appears to call for a more direct role for the government in fostering job creation through direct spending (likely to be more effective in the short term) and socializing costs like health care and pensions that put US firms at a competitive disadvantage (likely to be more effective in the long run). Kerry does have some ideas along these lines–for example, his state tax relief and education fund, his energy independence plan and his plan to socialize and control some health care costs–but, perhaps because they don’t lend themselves as easily to applause lines in speeches, we hear less about them.
That may have to change. A Democratic approach to job creation, in the end, has to sound like it would work. And my guess is that American voters will applaud the lines about Benedict Arnold corporations, unfair trade and the evils of outsourcing, but won’t find them convincing as a way to create jobs. They will be looking for a more serious program that gets to the root of the current jobs crisis and the Democratic campaign has to be ready to give it to them.
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Look around – who doesn’t have jobs? They are everywhere – if you are willing to work. I was out of the workforce for 3 years staying home with my kids and then my husband lost his job. We used this as an incentive to start a business – so he stayed home with the kids while the business is getting started and I went back to work. It took me 4 weeks to find a job. I looked hard and found one, maybe not my dream job, but it’s a opportunity to get back into the business world. I am paying the bills, my husband is starting a good business – that is bringing in money already and I’m still getting phone calls about work – and with the increase in Manufacturing I expect to find a better paying job by the end of the summer. Of course, my husband is counted as unemployed, but he’s contributing to the economy in a very important and undermeasured way – as a small business owner. Get used to it, as the Summer approaches, more stories like ours will come out and the optimism of the American Dream will sound out the pessimism of the Kerry frown!!!!!!
The CEO cited hit the nail on the head as to why jobs aren’t being created: there is no confidence in this recovery. If business picks up, they will do anything but hire, lest they get hung with new employees in another downturn. Business knows the economy is running on caffeine, and the growth is not sustainable. Although Bush can’t be really blamed for the loss of jobs, he can certainly be blamed for the conditions under which nobody wants to hire.
Joe Zainea’s comments are on target. Kerry ought to commend the president for FINALLY taking the capture of Osama seriously, an urgent task sidelined by the invasion of Iraq. As with the Dept. of Homeland Security, the president once again drags his feet on national security.
Kerry should use Bush’s opposition to stem cell research as a jobs issue. The next wave of technology jobs will be in genetics/biotech. We need to encourage scientific research in this area, not let it go to other countries like the Bush admin has.
I think Kerry has legitimate economics on his side — I would appreciate more from the professor from Texas. Trade and trade agreements are good for America, but they are only good for all Americans if they include provisions to help displaced workers. You sell free trade by redistributing the increased risk that workers take on in a free trade environment.
The cost of health care for employees as an inhibitor to hiring is a good story that is, I think sellable to voters. It is more of a relative cost than the story gets across, but a strong message aimed at ameliorating the health care costs of businesses might be doubly advantageous. Soon, non-health care business leaders will start getting serious about gettiing out of the health care business, and it would be nice to align with them.
In support of Kerry’s positions we only need to point out the actuary who was threatened with firing if he gave honest answers to Congress over the Prescription bill. His findings were that the “privatisation” aspects of the bill would increase the cost for those that wanted to stay in traditional Medicare- see http://www.calpundit.com/archives/003481.html for more
To do what Ruy suggests would certainly require increased government spending and tax increases, not decreases. To avoid, as much as possible, these falling on middle-class people, things like shutting down the offshore tax havens will have to be contemplated. Hence, the “Benedict Arnold” rhetoric still has a role. These tax-dodgers need to be vilified. They’re part of the problem.
Also, someone will have to take on the argument that says every contract must go to the low-cost bidder, such as India today for programming work. The government can adopt a jobs-for-Americans-first stance, but they’d better be prepared from some Wall Street flak if they do.
Sorry, but “quieting down the Benedict Arnold rhetoric” is a recipe for surrender to Wall Street.
Joe,
Oh, you meant Barney Frank. Whoops…
Joe,
On the contrary, my blueprint leaves all possible heavylifting to the private sector — I’m a CLLCS entrepreneur, after all — and merely calls for an enlightened version of the manfacturing czar that the Bush administration has pledged to appoint.
So nothing impolitic about the approach…
Best,
Frank
Ruy, good for you, for calling attention to this issue.The problem will not be solved as it was beginning in 1993, by a deficit-reduction plan. Keep writing about it. Jamie
For an interesting take on the jobs front and why they’re not being produced in this recovery, read David Broder’s column in this morning’s Washington Post. He gives a lot of credit to Barney Frank (Dem. MA) for his candor on the structural changes in the economy which does not augur well for job increases.
Frank sees a much bigger role for government to cope with the problem and his views are not easily adopted by Democratic candidates without running the risk of catching a lot of adverse blowback from conservatives.
If that excerpt is true, nothing but protectionism or some sort of fair trade will work. Even if the federal government pays for the benefits, new jobs will still go overseas.
You mean campaign on policy that will actually address the problem — rather than being a demogogue!?
Well, duh! Exactly !!!
Joe-
I think Kerry can give a very succint and appropriate comment to the hunt for Osama- “It’s about damn time. What took you so long?” Bush answering that leads to the morass of Iraq.
Agree — Kerry needs to CLEARLY lay out his differences on National Security with the Bush WH, and drive his points in over and over again. He doesn’t have a long time to work on this — otherwise Bush will nit pick him to death with one old vote after another, and make it impossible for him to define himself as competent on Foreign Policy, National Security, Homeland Security — and how these all integrate with each other.
And without question, he should express his great confidence in the US forces now in Afghanistan, that if Bin Laden is there to be found, they will do their upmost to find him. High Hopes in the troops, sympathy with their tasks in rugged country, but at the same time Kerry has said in the past we could have gotten him at Tora Bora, but we were shy about using the 10th Mountain Division and Marines, and instead hired locals, who took money from both sides, and led him to Pakistan to safe haven. Kerry should remind — and hope for a better outcome this time.
Homeland Security — I think that covers Trains that have not gotten much attention. Kerry ought to be doing some rasberry on this one. Likewise busses, school busses, Intercity Busses. I heard one Republican say this week that security is difficult on subways because they are for the Public. If there were someway to deconstruct the underlying attitude (and class bias) here, Kerry should run with it.
What I fear is that Kerry has not pulled together his foreign policy – Security team and given them their marching orders for papers and speeches.
Following Ruy’s advice of yesterday, I read Ron Brownstein’s LAT article on jobs and came away more impressed with the points made in that article about how national security concerns could trump even a solid Kerry strategy on adding jobs. I said it before here and I’ll say it again. Events between now and election day will move America’s voters to one candidate or another.
Kerry needs to say something significant now regarding a successful effort in finding Osama bin Laden. To look presidential, he can’t be seen as being surprised at that event; especially since Rumsfeld has very publicly gone to a full court press on this effort. Kerry needs to be on the rightside ahead of time if bin Laden is captured or killed in the next few weeks. If the effort fails, Bush can catch it from Kerry and others.
If Kerry and his people think that jobs and the economy will be determinative in this election because the situation in Iraq, Afghanistan, Europe and the Americas will remain static between now and November, he will be taking a terrible risk.
He must, very soon, begin to say the kinds of things regarding national securuty that can immunize him against the “I told you so” he and the voters will hear from the Bush campaign; no matter if the event is awful (as Madrid) or triumphant (success in Afghanistan).