As Labor Day weekend began, the U.S. economy received disappointing news from the Labor Department: no new jobs were created in August. While this indicates that no jobs were lost either, a zero-job growth figure is still troubling. Typically, around 125,000 new jobs each month are needed just to keep pace with population growth.
The unemployment rate remained at 9.1 percent, but this figure is misleading. While 14 million individuals are officially classified as unemployed, an additional 11.4 million people, who are not included in this count, are also in need of work.
The unofficial unemployment group includes part-time workers seeking full-time jobs and those who have not searched for employment in the last four weeks; these individuals are excluded from the Labor Department’s statistics. If we include them, the unemployment rate skyrockets to over 16 percent.
During the holiday, President Obama took a moment to address the people of Detroit, stating, “We’ve got a lot more work to do to recover fully from this recession.”
It is clear to all that increasing job availability is vital for economic recovery. But the question remains: How do we generate more jobs?
From policymakers to everyday citizens, opinions on this matter are varied and often unclear. In an effort to clarify, let’s explore some perspectives on job creation.
Demanding Pretend Jobs
One approach to job creation is simply to demand it. For instance, Saundra Williams, president of the Metro Detroit AFL-CIO, urged the public to advocate for job creation prior to Obama’s speech. “What we really want you to do is demand job creation,” Williams said to the audience.
Much like asking for a bountiful harvest, the demand for job creation is similarly uncomplicated. However, in any economy, the principle remains that you reap what you sow. Not all jobs are of equal value; there are both meaningful and trivial positions available. Some jobs may simply serve to fulfill a quota without producing real value.
While we can’t be certain, it’s likely that Williams is calling for the creation of these less productive, “make-work” jobs, which tend to arise from extensive public spending.
This Thursday, President Obama is set to reveal his latest jobs initiative. Although we will need to wait for specifics, it seems probable that his proposed solutions will also lean towards these unproductive jobs financed by government expenditure. He provided a hint at his vision during his recent speech, saying, “We’ve got roads and bridges across this country that need rebuilding. There is work to be done and there are workers to do it.”
More Public Spending Only Hastens the Demise
However, the President did not address how these infrastructure projects will be funded. Given the nation’s already high public debt, increasing spending could be likened to planting seeds in barren soil, resulting in unproductive labor.
If Williams or the President truly wanted to promote meaningful job creation, they would encourage entrepreneurship and allow private businesses to thrive. This could include lowering corporate taxes, simplifying hiring regulations, and removing excessive government restrictions that inflate labor costs.
Instead, their focus appears to be on expanding unions, promoting collective bargaining, and increasing government-funded employment—essentially advocating for “jobs for all” that do not contribute significantly to the economy.
As Ralph Waldo Emerson noted, “Every man is a consumer, and ought to be a producer.” Nations, like individuals, can either focus on consumption or production. It’s straightforward: those who consume more than they produce will find themselves in decline, while those who are more productive will enjoy wealth accumulation.
Creating unproductive jobs through government intervention may temporarily boost employment numbers, but it can simultaneously lead to a reduction in overall GDP and tax revenues. When governments persist on this unsustainable path, they eventually exhaust their resources to maintain a growing workforce. This scenario unfolded in the U.S. years ago, yet the trend continues unabated, resulting in soaring deficit spending.
Piling on additional public spending will not revive the economy but rather accelerate its decline.
Sincerely,
MN Gordon
for Economic Prism
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