The Real Solution to Unemployment

Lately, Washington has been aflutter on the topic of what to do about unemployment. In this kind of environment, Congress has two choices. They can either pretend to act by putting together a series of band-aids, or they can adopt the real solution that is staring us all in the face: a community jobs program. It’s time to put Main Street before Wall Street and reinvest in our communities.

History tells us that a community jobs program can create hundreds of thousands of jobs quickly, jobs that will create a more competitive economy and build skills that will benefit workers and communities alike for years. The need to act fast and with an eye on the structural needs of our economy is obvious to almost everyone but the most ardent do-nothing conservatives. The current unemployment rate and overwhelming likelihood of its persistence for many months, even years, is a human disaster.

Our communities and neighborhoods are being ravaged by collapsing incomes; the effects of which can be seen in the continuing loss of homes, rising hunger, and longer lines at homeless shelters and food banks. This October marked 22 straight months of job loss – the longest uninterrupted stretch since 1939. More than a third of the 15.1 million people counted as unemployed have been looking for work for 27 or more weeks, the highest percentage on record since 1948.

Our communities simply don’t have the infrastructure in place to allow our people to contribute to rebuilding this economy. Unless we address these fundamental needs, the many inherent contradictions left over in the economy (reduced demand along with high debt), guarantee that the next meltdown will be far worse than last.

Finally, the top heavy recovery will be a calamity for the fiscal health of our nation. Revenues at the federal and state levels will not rebound until the recovery is real and incomes begin to rise. Collapsing incomes mean fewer tax revenues, and without a rebound in our fiscal health, our ability to address every problem we face, domestically and internationally, will be severely compromised. Consider that state after state has slashed services. Some face the prospect of suspending basic functions such as the investigation of child abuse and fighting fires, or even temporarily shutting down completely.

The solution to this dilemma will require the White House to reorient its domestic policy focus. Between 1980 and 2004, real wages in manufacturing fell one percent, while real income of the richest one percent rose 135 percent. Though the myth of trickle down was exploded by the reality of massive increases in income inequality during the last decades, the Wall Street crowd continues to dictate White House policy.

A community infrastructure program would provide resources to local governments to create jobs in the public or non-profit sector and in small businesses that provide public services.

  • Projects would create immediate opportunities for employment of community residents, the unemployed and the underemployed, and provide jobs with good wages, benefits and support services. Jobs would be designed to develop participants’ skills and open pathways to future employment.
  • Jobs would address the deterioration in services and infrastructure that have resulted from long term neglect in neighborhoods across the country, and change the trajectory of the economy -- visibly and tangibly, locally and nationally. For example, jobs would be created to: improve the environment; promote public health services; upgrade physical infrastructure, including new construction and rehabilitation; provide education and child care; and engage out of school youth.

Over the long term, these investments will create job opportunities that foster participants’ readiness to work and impart job-related skills that will make Americans more employable once the economy has turned around, sustaining long term local economic development; and strengthen the social and economic infrastructure of low-income communities, filling gaps in public services, providing the resources and manpower to rebuild community institutions, and expanding the capacity of community-based non-profits, contributing to a more productive, stable national economy.

A program making a significant impact on the unemployment rate and providing a structural support and infusion for our economic competitiveness would cost approximately $35 to $40 billion and create one million new jobs. We could fund this rebuilding project by taxing the very transactions that help put the entire economy at risk in the first place. A sales tax on stock, futures, options, swaps and credit default swaps of more than $100,000 of 0.02 percent could raise as much as $150 billion a year.

In every crisis there is an opportunity. Now is the time to reinvest in our nation’s distressed communities and to create jobs for those who need them in order to reduce economic insecurity, stimulate the economy, and help unemployed workers build new skills for the future.