Rose-Colored Glasses Don't Help the Jobless

Opinion pieces and speeches by EPI staff and associates.

[ THIS PIECE FIRST APPEARED IN THE FORWARD (NY) ON JANUARY 2, 2004.]

A lot of people are wondering, what could explain why President Bush and Republican leaders in Congress decided to cut off the program of special federal benefits for the long-term unemployed? And especially, what could explain their killing the program in the middle of the holiday season? One might answer that they have come to believe their own rhetoric that the economy is out of the woods and the unemployed no longer need special help. But the truth is that they know better.

The White House's own economists are well aware that the economy is growing in a strangely unbalanced way. Therising tide is leaving millions of boats behind by failing to create jobs (there are almost 9 million jobless workers still looking for work), and more than in any other postwar recovery, the rebounding economy is creating profits that aren't being shared fairly with workers. During the average recovery over the past 50 years, 61% of corporate-income growth found its way into employees' hands as increased wages and benefits, while 26% increased corporate profits. Today, the figures are reversed: Employees have seen only 29% of the increased corporate income go to their paychecks, while investors have taken the lion's share.

The president's advisers know the economy is tilting dangerously, but they can't admit it publicly. They don't want to undermine the cheery news about productivity and strong GDP growth. That's why they've refused to approve additional unemployment benefits. To do so would be to admit that the recovery is stumbling and that the unemployment and underemployment problems are still serious. Helping the jobless would mean admitting there's a problem. So the administration decided to look the other way as Congress killed the federal Temporary Extended Unemployment Compensation program, which currently provides an extra 13 weeks of benefits to workers who have been unemployed for more than 27 weeks. As a result, 90,000 unemployed workers per week will run out of state benefits with no additional assistance forthcoming.

The president should abandon the rhetoric about recovery, rather than abandoning the unemployed. Having prematurely declared the end of combat in Iraq, the White House should be cautious about declaring economic victory.

The truth is that the Bush tax cut has failed so far as a job-creation device. The economy is actually producing fewer than half as many jobs as the White House predicted it would create even without the tax cut. The recession officially ended in November 2001, two months after the September 11 terrorist attacks. But two years later, there are more jobless workers, more people who want full-time jobs but can only find part-time work and more people out of work for six months or longer. This kind of prolonged stagnation has not happened in 70 years — since the Great Depression.

A year ago, Congress did the same thing it did this year. It adjourned before Christmas and let the emergency unemployment benefits program die. But a media and public uproar made them change their minds, and the program was renewed when Congress returned in January. It helped that President Bush called on Congress to act.

It's time for the president to step away from his rhetoric about recovery and step up to the plate for the millions of struggling families. He needs to admit that the recovery still hasn't caught hold where it matters the most — the creation of jobs. And he needs to push Congress to do the right thing and renew the program of extended unemployment compensation benefits.

Ross Eisenbrey is vice president and policy director of the Economic Policy Institute in Washington, D.C.

[ POSTED TO VIEWPOINTS ON JANUARY 9, 2004 ]