Monday, October 24, 2011
Brian Walborn Multi-modal Essay (Rough Draft)
October 21, 2011
In the United States, both today and in the past, the unemployment rate has been an extremely controversial and problematic topic. Currently, the unemployment rate in the States is trapped at 9.6% and could be growing. What can be done to stop this obvious problem, and how long may it take? Many researchers and economists believe that it could be a while to completely repair it, but there are a multitude of ways that it could be done.
According to the Bureau of Labor Statistics, the unemployment rate in the United States hasn't been above 9.6% since 1982, when it was at 9.7%, or during the Great Depression when it ranged from 14-14.6%. Why is unemployment a problem? When people dont have jobs, they can't purchase things. When people can't purchase things, businesses have a hard time making money. When businesses can't make money, they must lay off workers, which starts the entire process over again. This is extremely dangerous for our economy when the unemployment rate is high, and right now, this is exactly what is occurring.
There are many ways in which this crisis over the unemployment rate could be repaired. One of these ways, as stated in a blog by Liz O'Neill, is to educate Americans more. It sounds so simple, yet it's not. O'Neill states that there are in fact jobs available to fill, but most Americans don't have the general education to take the job and be successful. As the graph shows on the left, it's quite clear that those Americans with a higher form of education have significantly higher employment than those who do not have as high of an education. O'Neill goes on to say that just getting a higher education will not fix the unemployment rate by itself. The fact that there are failing industries in some areas, such as Detroit, means that those types of places will not attract as many higher educated people, thus will have trouble making the unemployment rate budge. In a report by Brookings analysts, places with unsteady industries need to expand their job markets by adding stable and steady industries that would have a better chance of flourishing.
In an article in the Washington Times, it is stated that the government themselves can do a lot to create new jobs to a great extent. The article talks about the notion of "green jobs." A green job is simply a job that is aimed towards the improvement of the environment, since it is a growing concern in the world today. However, Peter Orszag insists that "limits on carbon dioxide emission in cap-and-trade regulation before Congress would 'reduce demand for energy and energy intensive goods and services and thus create losses...'" The government can also incorporate the idea of deregulating and loosening the constrains on the operation of industries. Deregulation could create jobs because by not having governmental set parameters, industries could hire more people, in turn making more job availability. The article also talks about a bill introduced by Senator David Vitter (R-LA) entitled the "No Cost Stimulus." It is said that this legislation could open up to three million jobs in the United States after it is passed. The "No Cost Stimulus" would create jobs by "opening closed areas of the Outer Continental Shelf for oil and gas exploration, and streamlining the licensing of nuclear power plants" (The Washington Times).
Another way of creating jobs, which is proposed by The Daily Beast, is to increase infrastructure spending. As seen in the graph to the left, the increasing of infrastructure spending is the most popular way seen to increase jobs in the United States. Infrastructure spending is basically the option of the government to spend more money on things needed in order to operate society. In the excerpt from the Daily Beast, it's said that the Economic Policy Institute calculates that for every dollar spent on infrastructure, there is a $1.59 economic benefit. This seems small, but could make a drastic change in the economy and produce a multitude of jobs. The article also states that now out of all times would be a fantastic time to start spending on infrastructure because materials and obviously labor are exceptionally cheap at this moment in time. Although it is very promising that infrastructure spending will create jobs and boost the economy, it is not promised that it will ne a quick transformation. It's likely that this particular solution to the unemployment problem would take several years to fully blossom, making it one of the lower solutions on the totem pole.
There is, however, a solution that looks extremely promising and can happen in the short term. This solution is proposed by the Center for Economic and Policy Research (CEPR) and states that the government could subsidize the employers who, instead of laying people off, would simply lower their hours, and pay them a certain percentage of the hours they are getting cut. The government of Germany already displayed the success of this particular solution to unemployment. The unemployment rate in Germany was 7.4% just before 2008, when their recession began, and it is now at 6.7%. With that in mind, it's also important to remember that Germany was much worse off than we were at this point. Germany's government, if the employer reduces the hours rather than laying the worker off, give the employee 60% of the lost pay for the hours they lose. To me, this seems like the most efficient way to lower the unemployment rate. 60% of the lost pay does seem a little steep, though. Maybe we could start a little lower like 40% or 50%, and see where it takes us. It's very likely that, much like Germany, our unemployment rate could greatly decline.