As Unemployment Skyrockets State and Federal Governments Have No Recovery Plan for Working Families
It's amazing to watch Massachusetts slide into economic depression. Indicator after indicator goes south, and the state government - like the federal government - continues to do what it knows, rather than what is necessary. What it knows is the neoliberal shell game. A simple game indeed. Pretend "The Market" is the basis for economic prosperity, rather than the font of economic instability. Continue to push policies that nibble away at the edges of vast social problems - virtually always to the benefit of some corporation somewhere rather than to a general principle of social welfare. And always, always find a way to give huge amounts of public cash to private interests ... usually at the worst possible moment for the public good. Nowhere is this process more clear or more destructive than in the worsening unemployment situation statewide.
Earlier this week, the state announced that between December and January Massachusetts unemployment jumped from 6.4 percent to 7.4 percent. That's the seasonally adjusted numbers, mind you. And that's a full percentage point increase in unemployment in 1 month. Which translates to thousands more people out of work. Unfortunately, these statistics use a similar methodology to the one federal labor economists have been saddled with since the Reagan administration took power; so they are not as useful a "canary in a coal mine" as they might be.
Reagan's people didn't like all the high unemployment numbers making it look like handing the U.S. government over to the resurgent free market hordes of the time wasn't quite as great a plan they were cracking it up to be. So they simply started cooking the books. They made the U.S. Department of Labor undercount unemployment statistics by ceasing their practice of including the number of "discouraged" workers - who had been unemployed for more than a year and had essentially given up looking for work - in the total unemployment count. And federal and state level labor statisticians have never been great at including "underemployed" workers - especially temp, part-time and other contingent workers - in their unemployment totals; so the pre-Reagan figures had always been low-balling unemployment anyway.
These omissions, according to sources like shadowstats.com, result in a deliberate distortion of unemployment numbers which they say keeps the official unemployment numbers around 50 percent lower than they should be. That's right, many economists and statisticians across the political spectrum believe the state and federal unemployment statistics are seriously undercounted. Corrected statistical estimates of unemployment vary, but it would be fair to say that the real Massachusetts unemployment level is about double its official figure.
However, let's be conservative and say that the real unemployment figure is only undercounted by 25 percent. In that case, we'd say that the real figure would demonstrate that somewhat over 10 percent of Bay State workers are unemployed right now. 1 in 10 workers in the state. Many for over a year already. A casual outside observer of this scene - say from Mars or maybe Bermuda - would say "wow, 10 percent unemployment definitely constitutes an employment crisis!" They'd want action to be taken by the state and federal government right away. Fair enough.
And what action is forthcoming from state and federal government - admittedly a new federal government - months into the growing crisis? From the Obama administration we have one new program, a big one ... the recently-passed $787 billion American Recovery And Reinvestment Act of 2009 a.k.a. "the stimulus act." The omnibus law does many things for many constituents - especially the same big banks and corporations that created the economic crisis to begin with - but it does indeed contain some useful programs for working families.
And what is this giant stimulus package going to provide for the growing ranks of Massachusetts unemployed workers?
For each unemployed person, the Act will
* Increase unemployment checks by $25 per week,
* Exclude the first $2,400 of unemployment benefits from federal tax,
* Allow more individuals to qualify for extended unemployment benefits by extending the deadlines for application and payment,
* Provide a federal subsidy of 65 percent of monthly COBRA premiums for up to nine months.
Nice, but hardly what's needed. Not even close. But seriously, come on. 25 extra bucks a week? With even the Commonwealth's supposedly wildly overgenerous weekly benefits - most recipients can't get more than $400 a week. And these benefits are taxed. COBRA health benefits have always been incredibly unaffordable for those few that qualify for the infamously bad extension of employer-based health plans, and it's not at all clear how this particular benefit will interact with Massachusetts' doomed-to-fail market-based "universal" health plan.
The reform allowing more people to apply for extended unemployment benefits is fine, but won't even scratch the surface of the need - especially since it isn't retroactive to those people who've already had to drop off of the unemployment rolls. And excluding the first $2400 of benefits from federal tax is another bad neoliberal joke. Why are such benefits taxed to begin with? We know we shouldn't ask the free marketeers that still run American government at all levels such a question because they'll all just start mumbling phrases from the Milton Friedman playbook like "free rider problem" and "moral hazard" and so on. In any case, let's press on to our main point, shall we?
What is the Commonwealth of Massachusetts doing to stem the rising tide of unemployment? Forget about what it can do, given financial constraints. Let's just look at what it's actually doing.
Well, in a word, nothing. Not a thing. Nothing that we can see that relates in any significant way to dealing with unemployment has changed anywhere in the bureaucracy of the Mass. Executive Office of Labor and Workforce Development. Well one thing. They're going broke - another casualty of regressive taxation policy that favors the rich and corporations. As unemployment rises, less people are working, and employers are paying less into the state unemployment fund. State government is predicting a shortfall in the fund for at least the next 3 years - and the federal government is loaning money to the state to hopefully cover the difference.
But such stopgap measures are not what's called for in such a crisis. They are not fully fleshed-out full employment plans designed to put people back to work at decent wages. And they are certainly not the kinds of plans that progressives put forward in the 1930s during the fight for what became Social Security and other New Deal programs like the modern Unemployment Insurance programs. Far from it, given that the welfare and unemployment "reform" plans of the 1990s left our state employment system largely in the hands of corporations that cherry-pick skilled middle-class workers for small numbers of decent jobs, exploit less-skilled workers in ways too numerous to mention, and dump poor people through huge gaps in what was once a social safety net.
The American left in the mid-1930s, by way of contrast, had the following ideas about unemployment. They said that it was built into capitalism because any market-based economic system will always have a "reserve army of the unemployed" in the absence of any kind of government economic planning. They further said that capitalists take advantage of this "reserve army" to keep wages down and to frighten workers away from efforts to form unions and political parties to protect their rights.
Without getting bogged down in the details, suffice to say that the left pushed the American government to institute a cradle-to-grave living wage to mitigate the ravages of systemic unemployment - reasoning that as long as we're going to have a capitalist economic system, the only way to prevent periodic depressions from destroying the nation (and now the planet) was to make sure that everyone got decent government work in down times ... and failing that, everyone got a paycheck to keep food in their mouths and roofs over their heads. From birth to death. This social democratic plan was actually instituted to varying degrees in post-WWII Europe. But in the U.S., workers ultimately had to settle for lesser plans like Social Security that still were vastly more comprehensive and useful than anything proposed by state or federal governments since the 1960s.
Given that unhappy state of affairs, it is incumbent on Massachusetts progressives to start pushing Gov. Deval Patrick and Pres. Barrack Obama to give us more than crumbs on the employment front. We need massive government jobs programs that provide useful core services to our population. We need direct subsidy to huge numbers of working families. And we need to start thinking big about how to stem the tide of unemployment in the short term. And how to end unemployment once and for all in the medium-to-long term.
Anything less than this kind of thinking will lead this state and this nation down the road to a perdition of a very real and non-metaphysical type. Such thinking is not forthcoming from Democratic or Republican politicians at the moment, nor is it likely to unbidden. So the task of the American left is twofold: pressure the existing political establishment for more significant employment reforms, and start getting left-wing politicians elected at every level as soon as possible to push the political envelope in more salutary directions for working families.
It's a tall order, but at Open Media Boston we have faith in the growing possibility of a progressive renaissance in the U.S. So let's get to work.
