May 23, 2013

Sequestration is a Job Killer

The day I wrote this article a bridge fell in the Seattle area... Thousands of bridges built in the middle of the last century or before are at risk in the United States.

Congress has danced around Sequestration for over a year when they really should be worrying about the long term unemployed and job creation. In a New York Times column in late April, Nobel Prize winning economist, Paul Krugman, called Sequestration “debt hysteria” – “dubious statistics, reinforced by bad arithmetic.”

Sequestration involves automatic, across-the-board spending cuts in the event of annual federal budget deficits. Krugman, believes that the mad drive to fiscal solvency is highly over rated. Krugman calls the long-term unemployed the real “economic disaster”. “ Potential employers assume that something must be wrong with people who cannot find a job even if the real reason is simply the terrible economy.”

Deficit reduction or jobs? - Jobs or deficit reduction? That is the question that Congress really needs to work on soon or Sequestration will drag the recovering economy down all over again, and the long-term unemployed and newly graduated with it. The Director of the Congressional Budget Office, Douglas Elmendorf, testified in mid February on the 2013 federal budget and economic outlook. He said that 750,000 jobs would be lost in 2013 due to sequestration. Regarding the improving economy, “Any improvements would be offset by cuts to federal spending that Congress would be forced to enact.” 

It is pretty ugly out there for the long-term unemployed – the people out of work for more than 6 months. These people face serious discrimination and are frequently seen as “tainted goods” by employers. Resumes with more than a six-month gap since the last job are ignored and discarded according to a study done by economics doctoral student, Rand Ghayad, and William Dickens, Distinguished Professor of Economics and Social Policy and of Northeasten University identified an “unemployment cliff” over which job candidates out of work more than 6 months fall. I have seen that phenomenon. It is a tough place to be and a hard situation to recover from.

How does it affect new college graduates? How long do you have to get a job before you are at a disadvantage? How long do you have before your resume is tossed aside for no other reason other than that you could not find a job in the months immediately following gradation? People who graduated longer than 6 months ago struggle much harder to find work … as employers consider “What’s wrong with you if you didn’t get a job when you graduated?” It doesn’t matter that you are well qualified for the job – you are looked over. It is not your imagination…

Sequestration looms large in this picture. In July of 2012 defense industry executives told Congress that hundreds of thousands of jobs would be lost if they did not stop the cuts the Pentagon would suffer due to Sequestration. It will toss tons of experienced people out of jobs. Executives from Lockheed Martin, EADS North America, and Pratt & Whitney painted dire consequences if Congress fails to act.

Congress has pointed the finger at the White House and the White House blames Congress… while the long-term unemployed continue to suffer.

Sequestration kicked in after the election… and its full effects are yet to be known. In February the government laid-off 10,000 workers and thousands of workers were laid off or furloughed in March. The current unemployment rate stands at 7.5%. Government cuts have slowed economic growth and the recovery to a crawl. The Congressional Budget Office projects that 1.4 million workers in total could lose their jobs due to Sequestration – stalling out the recovery.

What we really need to do is get more people back to work not create more unemployment. Too many people have been unemployed for far too long with no real hope of returning to work. Many have given up looking for a job. Fewer people working means fewer people paying taxes slowing Congress’ much sought after fiscal solvency.

Krugman aptly points out that money is cheap right now and if the government borrows money for large, much needed infrastructure projects – like roads, bridges, highway repair, airport improvements and schools, it could put tons of people back to work. The US Government can borrow at an incredibly low rate right now, according to Krugman. It is foolish, if not criminal, to leave the long-term unemployed and underemployed in the dumps where we have left them for far too long.

Nothing is wrong with the long term unemployed that could not be fixed with some projects that would benefit all Americans. People need jobs and they need them now. The country desperately needs infrastructure improvements to help grow and sustain the economy.

Members of Congress should be forced to take an economics class and to suffer at least 6 months of no paycheck to fully appreciate the damage that the Sequestration is wreaking on the people who really want and need a job!

At the end of April 11.7 million people were unemployed. This is a policy decision. Lets put Congress to work putting people to work fixing the things that need fixing already!