ECONOMIC RECOVERY ACT FORUM: Three-Pronged Approach to Job Creation

By Lauren D. Appelbaum*

Despite two quarters of GDP growth and a declining unemployment rate, 20,000 jobs were lost last month. Without 33,000 temporary Census jobs, 53,000 jobs would have disappeared. Job loss has slowed since the 583,000 jobs per month lost on average between January and June, and ARRA has certainly played a role. But effects of that stimulus are fading. More needs to be done or the potential gains from a budding recovery will disappear and we will see continued job loss.

However difficult the national situation is, many states are in worse shape. In California the unemployment rate is 12.4% and the state is nearly $20 billion short of balancing its 2010-2011budget. While the recession has disproportionately thrown men out of work, efforts by states to balance their budgets will mean job losses for women. Without an influx of federal money to the states and federal efforts focused on direct job creation, the situation will only get worse. Families throughout California, particularly those headed by women, will continue to suffer.

Public sector jobs cut by states tend to be disproportionately women’s jobs. State cutbacks will mean teacher layoffs, reductions in library hours, closures of homeless shelters and centers protecting women from violence. States will reduce healthcare jobs, including home health aides and public health nurses. Without an influx of money into the states, these public sector jobs will begin to disappear. The federal government, which can run deficits, must send money to the states, which cannot, so that states can maintain these essential services.

Direct job creation is also crucial. Direct spending on jobs through programs like YouthBuild or AmeriCorps provides relief to the unemployed – especially young people. The unemployment rate for those aged 16-19 was 26.4% in January. Recent increases in funding for both YouthBuild and AmeriCorps suggested by the President need to be implemented immediately.

Finally, all predictions are that we will have high unemployment for years to come. To return to full employment and provide relief to the tens of millions who are out of work we must have worksharing. Despite being hit hard by the recession, the Netherlands and Germany have kept unemployment rates from rising through worksharing : employers reduce the hours of current employees and use the savings to hire new workers. Employees whose hours have been cut are compensated by the government so their pay and purchasing power are maintained.

Revenue sharing with the states, direct job creation and worksharing are proven policies for preserving and creating jobs in a recession.

*Lauren D. Appelbaum, PhD, is the Research Director of the Institute for Research on Labor and Employment at the University of California, Los Angeles

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