Tip of the Iceberg

And we’re not talking lettuce, unless you mean the kind you can spend. 8.2% unemployment sounds nasty but not like those 25% numbers in Spain or the 21.9% in Greece. Even at 14.8%, the so called “alternative measurement” propounded by the Bureau of Labor Statistics (U.S. Dept of Labor) which adds in those wanting full time work but stopping the search in frustration or those only able to get part time jobs, the number suggest that 85.2% of Americans are properly and fully employed. Not exactly.

No matter what you call the extended economic malaise that has coated our economy since 2008, it doesn’t take much of an onion peel removal to see how deep the lingering pain. Too many of us are working at below our skill-sets or for wages that make us wince. “Recessionists” claim late 2007 was the official beginning, and that the actual recession ended in 2009 when the U.S. economy experienced technical growth, which seems to have benefited only a limited few in hot cities or in certain sectors like finance. With a rapidly contracting middle class, the majority of American workers are either terrified about their employment future or experiencing a significant downgrade in actual earnings and available benefits. Europe’s “economic malpractice” only makes us shudder more at the potential devastation that could be just around the corner.

Looking at those Americans with jobs, and eschewing the 1%-ters, the picture isn’t very hopeful. “These are anxious days for American workers. Many… are underemployed. Others find pay that is simply not keeping up with their expenses: adjusted for inflation, the median hourly wage was lower in 2011 than it was a decade earlier, according to data from a forthcoming book by the Economic Policy Institute, ‘The State of Working America, 12th Edition.’ Good benefits are harder to come by, and people are staying longer in jobs that they want to leave, afraid that they will not be able to find something better. Only 2.1 million people quit their jobs in March, down from the 2.9 million people who quit in December 2007, the first month of the recession.

“‘Unfortunately, the wage problems brought on by the recession pile on top of a three-decade stagnation of wages for low- and middle-wage workers,’ said Lawrence Mishel, the president of the Economic Policy Institute, a research group in Washington that studies the labor market. ‘In the aftermath of the financial crisis, there has been persistent high unemployment as households reduced debt and scaled back purchases. The consequence for wages has been substantially slower growth across the board, including white-collar and college-educated workers.’” New York Times, June 18^th.

For younger and less-skilled workers, the news can be devastating, and even in the professions, entry-level jobs can be hard to come by. Take for example my area, the law. Bar Association Journal (June 19^th), for example, looked at the plight of recent law school graduates: “[A]ccording to an analysis of new ABA data by Law School Transparency, 55.2 percent of grads had full-time, long-term legal jobs, while 26.2 percent were underemployed. Law School Transparency defines underemployed as unemployed and seeking work, pursuing an additional advanced degree, in a nonprofessional job, or employed in a short-term or part-time job.” It is factors like these that continue to devastate consumer confidence, and a scared public just doesn’t spend enough to accelerate us into any sort of real recovery. The crumbling euro zone has eaten heavily into American industries that export into that market.

With continuing pressures to reduce spending at a governmental level – still the major source of market demand in the United States – without a concomitant increase in private sector demand (unlikely as long as consumer confidence and buying power remain low)… these suggest that the austerity promises that are popular in election year rhetoric from both sides of the aisle could actually plunge this nation into something worse than we have seen to date. Countries like China, even with their massive cash reserves, have moved to bolster internal demand from its own citizens to steady their economic ship. We have to balance an untenable budget and control an absurd deficit, especially given our proclivity to self-destruct with an addiction to military spending that still has the United States responsible for north of 40% of the earth’s military budget, with the need to provide some demand stimulus in our tortured economy to keep from sinking any lower.

Indeed, for most Americans, the feeling of well-being has simply vaporized, perhaps never to return. “[H]ousehold wealth is dropping. The Federal Reserve [in mid-June] that the economic crisis left the median American family in 2010 with no more wealth than in the early 1990s, wiping away two decades of gains. With stocks too risky for many small investors and savings accounts paying little interest, building up a nest egg is a challenge even for those who can afford to sock away some of their money.” NY Times. For policy-makers, the answers lie in funding activities that provide the backbone for long-term growth into high-value-added sectors and not to waste money on elements that look and smell like pork or fuel our involvement in expensive military expeditions with blowback and unintended negative consequences.

According to the BBC, China spends 9% of its GDP on infrastructure building and repair, India 7% and the U.S. 2%. Approximately 700+ of this nation’s bridges are near collapse (as their permitted weight limits are constantly reduced), most of our levees are in dangerous condition and we have potholes and failed roads that slow our nation’s traffic and increase our slorping of costly gasoline and diesel fuel. Our schools are falling in quality and producing only a fraction of the value-added engineers, scientists and mathematicians we need. Our trimmed research budgets leave future innovation to other countries with the willingness to invest in their future competitiveness. These arenas are each investment opportunities – government spending that actually pays hard cash dividends in new industries and more efficient work flow across the country. They should be our new priorities. But instead, they appear to be sacrificial lambs in a downward spiral that a polarized political machine seems powerless to stop.

I’m Peter Dekom, and the lack-of-common-sense leadership is rising in the United States as the number of “I’ll do whatever the latest polls tell me I should do” politicians is swelling.