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Monday, October 18, 2010
Stop the pain at 8.5 percent unemployed
I read in the news today that charitable giving was down nationwide by 11 percent in 2009 compared with 2008, and that the lingering end of the Great Recession might have had something to do with the decline.
The recession officially ended during the early part of last year, and yet most news stories that mentioned it also point out a stubbornly high, 9.5 percent national unemployment rate and anecdotal evidence from most everyone that they don't feel like they've recovered from the economic shock of the past three years.
Maybe we should redefine a recession, which currently is described by sustained negative economic growth over a period of time. Any sustained positive growth, no matter how small, officially ends the recession.
Maybe we should automatically consider the United States in recession as long as the national unemployment rate is at or above 8.5 percent. That way public pressure could be maintained on both business and government leaders to create jobs that increase consumer spending.
Consumer spending has been regarded as the only true savior of American workers and owners during all of the recessions and near recessions during my life.
When consumers spend their money, workers and owners, managers and employees, even government officials prosper. Fewer children remain in poverty. Fewer food stamps are distributed to feed the hungry.
Some might say 8.5 percent is a bit high. But during my lifetime, full-employment for the nation was once described at a 5 percent unemployment rate, until, during boom years and after welfare mothers were forced to go to work, even lower unemployment rates were accomplished in many states of the union.
Lots of people are working and tons of money is being made when the national unemployment rate dips below 5 percent. But real pain starts to be felt among middle- and lower-income people at around a 6 percent rate.
Yet pain has never been a signal to the rich in this country that middle- and lower-income people deserve some economic relief. When someone else is feeling economic pain, our American-Calvinistic work ethic kicks in, and we blame joblessness on a lack of character among the poor and uneducated.
So 8.5 percent, though high, seems an appropriate level to consider the workforce automatically worthy of a little bit of aid from the nation's pool of wealth.
It doesn't seem unreasonable at that point to increase taxes on the top 1 percent of earners in the country, as well as on those who earn money purely from their invested assets. We could hold those taxes in place at least until enough jobs are created to allow the middle class and working-class poor to regain the economic footing necessary to boost consumer spending again.
Middle-class spending will, as usual, give the economic engine of the country enough momentum to warrant pulling back again on any extraordinanry taxing of the rich.
That's a 63-three-year-old non-economist's perspective of the world on this Monday morning.