Now, more than ever, it”™s time to get to work on creating jobs.
Following the grim news that the nation only gained 18,000 jobs in June and the unemployment rate rose to 9.2 percent came the sobering reminder the U.S. was set to default on its own debt come Aug. 2.
As the debt-ceiling debate raged on at the Capitol, with caveats on both sides ”“ cut spending or raise taxes ”“ economists warned of a national default should no action be taken.
And speculators opined on the resultant effect on the global economy, bringing to mind images of another worldwide recession.
Here, we feared the impact on the local level would be proportionate, particularly in the wake of the U.S. labor market report showing employers only created a fraction of the number of jobs economists were expecting.
This could only serve to further knock confidence, impacting everything from stocks to hiring.
The Wall Street Journal last week cited a U.S. Chamber of Commerce report: “Almost two-thirds ”“ 64% ”“ of small-business executives surveyed said they weren”™t expecting to add to their payrolls in the next year and another 12% planned to cut jobs. Just 19% said they would expand their work forces.”
Frightening and foreboding.
Steering away from the debt debate ”“ although we do agree any plan to reduce the national debt will have to involve changes to spending and taxes ”“ we”™ll stay focused on jobs.
This is a critical issue for our region.
New York state”™s economy lost 21,200 private-sector jobs in May. Unemployment stands at 7.9 percent.
What are we doing about it?
In Connecticut, Gov. Dannel Malloy is vowing to focus on job creation and economic growth. That comes as the Nutmeg State reports unemployment at 9.1 percent and a loss of 2,900 jobs in May.
The governor said he will travel across the state on a “listening tour” to hear from business “about ways state government can aid in job creation.”
He also has asked legislators to return to the Capitol in the fall for a special session on jobs.
It”™s up to the private sector there now. The same goes for New York. Business groups must hammer home the message that taxes and other high costs of doing business are impeding economic growth.
And Albany must listen. We need to restore confidence in the business community to encourage investment, expansion and job creation.
We have been critical of the government on this front ”“ at all levels. We”™ve maintained that the Obama administration should be focused on the economy and jobs creation, which it really hasn”™t done.
To get another perspective, we asked Surendra K. Kaushik, a finance professor at Pace University in White Plains. He had just arrived in India, so he discussed the topic with us via email.
“It was such a grand mistake by the outgoing Bush administration and the incoming Obama team to focus mainly on saving the financial system and not enough to save the real economy. All the lessons of the Panic of 1907 and the Great Depression of the 1930s were ignored and missed in 2008, 2009, 2010 and 2011. We are in another round of deliberately lowering demand and yet (we) hope that supply will increase!
“It is assumed that business today is more foolish than in the 1930s. Hooverism is becoming Obamaism.”
Can this be stopped? Kaushik believes it can if certain steps are taken.
He cited an immediate need to give “life to housing investment, which is the biggest capital investment in the economy.”
“All underwater and foreclosure properties must be refinanced at the current market value. Any losses in the face value of mortgages must be shared by banks, federal and state government and the owner to restart the housing industry to create jobs and incomes.
A 9.2 percent unemployment (rate) coupled with a 35 percent loss of property value since 2006 represent not just a Great Recession but a true Depression.
“Second, industry should be given incentives to create jobs. Third, education and infrastructure investment should be increased to increase total capital investment so as to add to the multiplier effect.
“Westchester and other, richer counties where leaders like Bill and Hillary Clinton, George Soros, IBM, Pepsi and other business, industry and political big thinkers and doers make (their) home should take the lead and show the path in making policies to move the economy up and stop it from sliding down further. It can be done now when the president”™s economic team is changing by attrition.”
Calculations, he said, should be economic and not political.
No doubt, we”™ve got our work cut out for us.