There is a gaping hole in our recovery and more and more of Main Street America is falling through it. And that gaping hole is JOBS. Or more accurately, the place where JOBS should be.
In the current recession, economists say high unemployment is likely to persist at least another four years. In Michigan, home to the battered U.S. auto industry, nearly 13 percent of jobs may be wiped out, according to research firm IHS Global Insight, and the state’s labor market probably won’t return to its pre-recession strength until after 2015.
Retraining is the usual prescription, but pay and benefits in newcareers are often far worse.The housing crisis has worsened the situation for job seekers because areas with high unemployment also have high foreclosure rates, making it hard to sell up and move on.The pain of joblessness extends well beyond the workers themselves, hitting their families and entire communities as home foreclosures mount, neighborhoods decay and crime rises.
For Main Street America, jobs are the gods on which we sacrifice our lives. Jobs are not just what we do. Jobs are how we live. Literally. Jobs are the sole source of income for most of Main Street. That means there is little or no rainy day fund to tide one over. No lifetime investments to fall back on. No family wealth to ease the pain. Just a steady paycheck that is earned day-in and day-out.
So when Main Street America becomes cut off from that life giving paycheck, it quickly finds itself making tough choices over the most basic of necessities.
A classic measure of Americans’ financial distress: U.S. consumer bankruptcy filings totaled 126,434 in July, the highest for any month since Congress rewrote bankruptcy laws in October 2005.
The July figure, reported today by the American Bankruptcy Institute, was up 34% from July 2008 and an 8.7% increase from the 116,365 filings in June.
So far this year 802,000 consumer bankruptcies have been recorded, up 36% from the 589,000 in the first seven months of last year, institute data shows.
So what does this mean for the rest of America? Quite simply, there can be no Main Street Consumers without Main Street Jobs. And without Main Street Consumers there can be no real recovery for our economy. A recovery by definition means going back to what was normal. And in a consumption-based economy, where consumption comes primarily from Main Street (not Wall Street who got bailed out to the tune of $13.9 – 23.7 trillion in tax payer funds), normal ain’t going to happen without jobs.
As Robert Reich sees it, When will the recovery begin? Never
In a recession this deep, recovery doesn’t depend on investors. It depends on consumers who, after all, are 70 percent of the U.S. economy. And this time consumers got really whacked. Until consumers start spending again, you can forget any recovery, V or U shaped.
Problem is, consumers won’t start spending until they have money in their pockets and feel reasonably secure. But they don’t have the money, and it’s hard to see where it will come from. They can’t borrow. Their homes are worth a fraction of what they were before, so say goodbye to home equity loans and refinancings. One out of 10 homeowners is underwater — owing more on their homes than their homes are worth. Unemployment continues to rise, and the number of hours at work continues to drop. Those who can are saving. Those who can’t are hunkering down, as they must.
… This economy can’t get back on track because the track we were on for years — featuring flat or declining median wages, mounting consumer debt, and widening insecurity, not to mention increasing carbon in the atmosphere — simply cannot be sustained.
… All we know is the current economy can’t “recover” because it can’t go back to where it was before the crash. So instead of asking when the recovery will start, we should be asking when and how the new economy will begin…
And yet, strangely, shockingly, the vital role that jobs play in building the very foundation of our economy, seems to elude too many in the media and in government. Oh, the MSM reports that Job woes sap U.S. consumer confidence in July and that Analysis finds that companies that were not too big to fail are going under. But in the very next breath they tout the latest up tic on wall street as confirmation of our economy is doing well.
But as Nobel Prize winning economist Professor Joseph Stiglitz points out, talk of a robust recovery is “premature”.
“While there’s been some recovery there are lots of reasons to be worried, lots of reasons to believe that unemployment will continue to grow and, so long as that is the case, it is hard to believe that we will have a robust recovery.” …
“Even if the housing market levels off, we have problems in commercial real estate. Millions of Americans are likely to see foreclosures particularly if the unemployment rate remains high,” he added.
“Consumer spending is likely to remain weak and as long as consumer spending remains weak, investment is going to remain weak.”
And what about this administration? How concerned are they about jobs? Well, this weekend Obama’s team of economic cheerleaders – Geithner, Summers and Greenspan – made the rounds on the Sunday talk shows, touting signs that the recession was easing. But they seemed more concerned about the looming deficit and easing the way for tax increases than the lessening the ranks of the unemployed. (Though one has to wonder how they expect the unemployed to pay taxes – increased or not.)
Geithner Says Unemployment May Peak in Second Half of 2010 he apparently sees no crisis or urgency to help the millions of Americans facing long term unemployed. No Main Street bailout in his talking points.
Another extension in unemployment benefits “is something that the administration and Congress are going to look very carefully at as we get closer to the end of this year,” Geithner said in an interview yesterday on ABC’s “This Week” program.
Definitely, not the confidence building words that Main Street wants to hear considering that on top of everything else Jobless Checks for Millions Delayed as States Struggle
“The unemployment insurance system before the recession was as vulnerable as New Orleans was before Katrina,” said Representative Jim McDermott, Democrat of Washington, who is chairman of a House panel with authority over the program.
Can the simple basic necessity of jobs for Main Street America really be beyond the comprehension of this administration and this Congress.? Do they really not know or understand what jobs mean for our economy? Or is it that they just do not care?
How can they not see that we are failing as a country when Wall Street rebounds with bonuses in the billions, while Main Street continues to hemorrhage jobs, houses, health insurance and retirement plans in the millions?
Main Street America is the heart and soul of this country. But as more and more Americans stare down the jobless abyss, they are losing their belief in the basic fairness of a capitalist society. They are losing the last remnants of their faith and trust in their own government. And they are losing their pride and honor at being the backbone of the American economy.
And as a country, how exactly do we come back from those kind of loses?
[A version of this was crossposted at No Quarter on 8/05/09 ]