An attempt to understand the world of current events, finance and the economy on a level that allows me to teach it. I'm a journalist. Oh and the occasional post about family, life and kids!
I’ve heard both President Obama and his challenger Mitt Romney make their point about jobs. Romney addressed the world at the RNC recently and talked specifically about jobs. “What America needs is jobs, lots of jobs” was his key point on the economy in his speech. On the other side, the President also promises jobs. Just today he was in Iowa promoting his plan to make sure veterans are able to secure jobs when they come back from active duty.
I couldn’t agree more. Both the President and Mitt Romney absolutely must energize their respective bases by promoting job growth. Not just growth, but lasting, durable growth in the private sector.
Here’s where I scratch my head, where I don’t understand the discrepancy between creating more jobs and increasing our already incredible quality of life. The issue we need to address is NOT simply job creation. It’s more important. It’s the issue of the erosion of middle-class incomes. We need quality, good paying jobs and not more retail jobs.
A recent study put out by the National Employment Law Project reveals some seriously disturbing trends. We’ve all heard the statement “the widening gap between the rich and poor,” but what does that mean exactly? Does it mean the rich are making more money and paying less in taxes than the middle class? The report breaks it down pretty well.
First, the trend has been happening for a long time but the polarization has recently increased. In the great recession, the United States lost jobs in all sectors, but the majority of losses were concentrated in the middle-wage areas, such as construction, manufacturing, real estate and insurance.
Contrasted with the recovery, the majority of new jobs created in the past few years have been lower-wage jobs. The industries growing the most recently are retail, food preparation, freight workers and waitstaff. Herein lies a huge problem. In the recession, 60% of job losses were in the mid-wage category. Throughout the recovery, 59% of the total net jobs created have been low-wage jobs.
How does the President or his challenger really fix this? That I do not know, but what I do know is the claim that we must “create jobs” is a gross understatement, regardless of which candidate makes the claim. What we need is to stop the hollowing-out of the workforce and create legitimate, long-term growth. A huge boost would come from real estate recovering, an act that may well take a decade or more to solidify.
President Obama is ideologically opposed to his challenger Romney. The President believes the government is the key to recovery. He believes the government needs to be involved to drive the recovery. His plans to spread incomes through higher taxes on the rich and additional subsidies to the middle and lower-class is due to a genuinely liberal ideology, and that’s fine. He believes that’s what our country needs to recover and i’m certainly nobody to criticize or disagree. The issue I take with this is with the economics. People respond to incentives, economically and otherwise. When the government increases capital expenditures and spending to increasing welfare and food stamps, people are less inclined to work hard. Why strive for a $300-a-month raise in a better job when the individual will lose part of his or her $250-a-month food stamp allotment?
I believe the same general idea for Romney’s ideology. “Get the government out of our way, let the private sector run un-encumbered and create jobs” does NOT mean we’ll be better off. That just means more jobs will be created, but if they’re 59% low-wage positions then the government will still increase spending on food stamps and other items due to the continued erosion of the workforce.
At the end of the day, dig deeper than what’s reported on TV. Ask more questions. Don’t just listen to a presidential debate or a pundit on a network news station tell you what to think. Challenge and analyze what they say and think independently. It’s easy to tell the American people we need to create jobs, but another thing entirely to lay the fundamental groundwork to rebuild and follow through.