Unemployment in America - Wasatch Wave (3/13/13)

There are few things more devastating to an individual or family than a job loss. Unfortunately, many, if not most, of Americans are just a few pay checks away from financial ruin. Losing one’s job is not only a blow to self-esteem and solvency but also too often results in a loss of critical benefits such as health insurance.

The unemployment rate in American is currently 7.9%. This is better than in recent years but still means that 12 million citizens are currently looking for work out of a workforce of 158 million. Worse, perhaps, is the fact that 14.7% of Americans or 23 million people are listed as “underemployed” which accounts for both the unemployed and several other groups such as those unwillingly in temporary jobs or “marginally” employed. This latter number, as bad as it is, still doesn’t account for all those that have just given up looking for a job or are working in, sometimes menial, jobs for which they are overqualified.

It is small comfort that the average unemployment in Europe is even worse than in America or that China has an unemployment rate about half as high as ours. Creating demand is the best cure for unemployment. Corporations, currently flush with cash, have no incentive to hire more workers if there is no demand for their goods or services. People out of work have no spending power and can’t contribute to demand. Unemployment insurance, although good in concept, does little long term good when there are about four unemployed for every job opening. Does it make more sense to pay people to look for jobs that don’t exist or to create jobs to match their skills?

In the best of all possible worlds, the private sector should generate all the jobs that Americans need.

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Unfortunately, it isn’t doing so. We could argue over all the rationales why the private sector is partially failing but the bottom line is that it is.

One possible solution could be summarized in a single word: “infrastructure”. The country ranks a D+ by the American Society of Civil Engineers (admittedly biased until you look at the data). Our national infrastructure needs include an inefficient power grid, unmet water purification and treatment needs, a second class telecommunications structure, unsafe schools – the list goes on.

Instead of paying people to look for nonexistent jobs, wouldn’t it make more sense to use taxpayer money to provide productive new private sector jobs building the nations foundation to meet future needs? These jobs will create the demand for private sector goods and services that will eventually pull us out of our current malaise.