Gallup Finds U.S. Unemployment at 10.2% in Mid-March, Underemployment was also Unchanged from the end of February, at 19.9%

REPRINT FROM GALLOP

March 17, 2011
by Dennis Jacobe, Chief Economist
PRINCETON, NJ

— Unemployment, as measured by Gallup without seasonal adjustment, was at 10.2% in mid-March — essentially the same as the 10.3% at the end of February but higher than the 10.0% of mid-February and the 9.8% at the end of January. The U.S. unemployment rate is about the same today as the 10.3% rate Gallup found in mid-March a year ago.

The percentage of part-time workers who want full-time work was 9.7% in mid-March — essentially unchanged from the 9.6% in both February measurements and higher than the 9.1% at the end of January. The percentage of the U.S. workforce that is working part time but wanting full-time work is the same now as was the case a year ago.

Broader Underemployment Was Unchanged in Mid-March

Underemployment, a measure that combines the percentage of part-time workers wanting full-time work with the percentage who are unemployed, was 19.9% in mid-March. Not surprisingly given the lack of change in its components, this is identical to the end-of-February reading, and is virtually the same as the 20.0% of mid-March a year ago.

Jobs Situation About the Same as It Was a Year Ago

The government’s February report on the U.S. unemployment situation suggests that 192,000 jobs were created last month and the unemployment rate declined to 8.9%, down from 9.7% a year ago. Federal Reserve Bank of New York President William Dudley and others said they were encouraged by this report.

However, Gallup’s unemployment and underemployment measures have not shown the same gains in early 2011. Gallup finds an unemployment rate (10.2%) and an underemployment rate (19.9%) for mid-March that are essentially the same as those from mid-March 2010.

In part, the difference between Gallup’s and the government’s current job market assessments may be due to the government’s seasonal adjustments. Gallup’s U.S. unemployment rate is also more up-to-date — its mid-March data include jobless figures for much of March, whereas the government’s latest unemployment rate is based on the jobs situation in mid-February.

Most importantly, a key reason the government’s unemployment rate is dropping apparently has to do with the so-called participation rate: the percentage of Americans who are counted as being in the workforce. The government’s participation rate in February was at its lowest level since 1984. In essence, this tends to suggest that the government’s unemployment rate may be declining because many people are becoming discouraged and leaving the workforce — not because they are getting new jobs.

If this is the case, then neither Gallup’s unemployment report nor that provided by the government is good news for the economy. It is equally bad news if people are out of work and looking for a job or just too discouraged to say they continue to do so. Either way, a lack of sufficient job creation to increase employment among those who want to work remains a major obstacle to U.S. economic growth in the months ahead.

Why Can’t I Get Real Numbers on Unemployed?

During an interview on NBC’s Today show on April 5, 2011, Republican National Committee chairman Reince Priebus criticized President Barack Obama’s handling of the economy saying we’ve lost 26 million jobs since he’s been president. Of course he was quickly criticized. I have a hard time finding real job numbers well documented anywhere.

My father told me never to cheat at golf, because if I didn’t count every swing or miss, I would never know if my game was getting better. I quit golf a long time ago when my game stalled out but it would be nice to really know the score on unemployment.

So I pieced together numbers from various websites to make a “educated” guess. My guess is that the cost to the taxpayers of these unemployed and underemployed is about $500 billion dollars a year or about $3,800 for every employed worker. Imagine the good they could do if that 500 billion was put through a job voucher program.

Total Americans (millions)…………………………307

over 18……………………………………………………..226

Less
over 65……………………………..36
In college…………………………….5
In military……………………………2
Stay at home………………………..6
Severe Work Disability…………6
On welfare …………………………..5
Homeless not working…………..2
Institutionalized……………………1
in jail……………………………………3
Available to work……………………………………….160

Less Working……………………..133

Unemployed……………………………………………….27

Plus Underemployed……………..9

Unemployed
and underemployed…………………………………….36

Percent Unemployed ………………………………..17%
Percent underemployed and unemployed……23%

Of course if we add in social security, welfare, disability, welfare, and the institutionalized that figure per working person goes up to $10,600 per working person. Interestingly however, if we add the cost of government employees and divide the number by working private employees the number jumps up to over $24,000 per working private employee per year. Considering that the average wage in America is about $43,000, well that is alot of cost to cover. Just figuring……

Forbes: The Richest People in the World 2011

The following repost of Forbes richest people gives insight into the changing dynamics of globalization and America’s fading dominance.

Repost from Forbes
Mar 9th 2011 at 5:15PM

Luisa Kroll and Kerry A. Dolan, Forbes.com

This is Forbes’ 25th year of tracking global wealth and it was one to remember. The 2011 Billionaires List breaks two records: total number of listees (1,210) and combined wealth ($4.5 trillion). This horde surpasses the gross domestic product of Germany, one of only six nations to have fewer billionaires this year. BRICs led the way: Brazil, Russia, India and China produced 108 of the 214 new names. These four nations are home to one-in-four members, up from one-in-ten five years ago. Before this year, only the U.S. had ever produced more than 100 billionaires. China now has 115 and Russia 101.

Atop the heap is Mexico’s Carlos Slim Helu, who added $20.5 billion to his fortune, more than any other billionaire. The telecom mogul, who gets 62% of his fortune from America Movil, is now worth $74 billion and has pulled far ahead of his two closest rivals. Bill Gates, No. 2, and Warren Buffett, No. 3, both added a more modest $3 billion to their piles and are now worth $56 billion and $50 billion, respectively. Gates, who now gets 70% of his fortune from investments outside of Microsoft, has actually been investing in the Mexican stock market and has holdings in Mexican Coke bottler Femsa and Grupo Televisa.

While nearly all emerging markets showed solid gains, wealth creation is moving at an especially breakneck speed in Asia-Pacific. The region now has a record 332 billionaires, up from 234 a year ago and 130 at the depth of the financial crisis in 2009. Sizzling stock markets are behind the surge. Three-fourths of Asia’s 105 newcomers get the bulk of their fortunes from stakes in publicly traded companies, 25 of which have been public only since the start of 2010.

America’s wealthiest still dominate the global ranks, but the U.S. is losing its grip. One-in-three billionaires is an American, down from nearly one-out-of-two a decade ago. It has 10 more than last year but 56 fewer than its 2008 peak. The U.S. is adding new billionaires at a much slower pace; just 6% of its 413 billionaires are new this year compared with 47% of China’s and 30% of Russia’s.

Still there are plenty of inspiring newcomers who figured out clever ways to get rich. The most obvious example is the success of Facebook, whose soaring valuation over the past couple of years — based on the most recent institutional round the company is worth $50 billion — has spawned six billionaires. Leading the group is Facebook’s CEO Mark Zuckerberg, whose fortune jumped 238% to $13.5 billion in the past year. Also joining him in the world ranks are his co-founders Eduardo Saverin and Dustin Moskovitz, its first president Sean Parker (played by Justin Timberlake in The Social Network) and the Russian Internet investor Yuri Milner. Moskovitz, 26, is eight days younger than his former college roommate Zuckerberg, making him the world’s youngest billionaire.

The frenzy among big investors for all things social pushed up private market values of online gaming outfit Zynga and online group-buying site Groupon, creating two more new billionaires, Mark Pincus (who taught people to farm on Facebook) and Eric Lefkofsky (who was Groupon’s lead investor).

Other notable American newcomers include Do Won and Jin Sook Chang, the co-founders of Forever21, and Chris Cline, who owns three billion tons of coal reserves, mostly in Illinois.

Why do we spend so much time counting other people’s money? Because these moguls have the power to shape our world. Telecom billionaire turned prime minister Najib Mikati is keeping Lebanon’s government together. Ernesto Bertarelli, who lost the America’s Cup to Larry Ellison last year, is now focusing on saving the oceans from mass extinction. Gates and Buffett have already traveled to three continents working to change giving practices among the ultra-rich.

No. 1: Carlos Slim Helú & family
$74 billion | Telecom | Mexico

No. 2: Bill Gates
$56 billion | Microsoft | U.S.

No. 3: Warren Buffett
$50 billion | Berkshire Hathaway| U.S.

No. 4: Bernard Arnault
$41 billion | LVMH | France

No. 5: Larry Ellison
$39.5 billion | Oracle | U.S.

No. 6: Lakshmi Mittal
$31.1 billion | Steel | India

No. 7: Amancio Ortega
$31 billion | Zara | Spain

No. 8: Eike Batista
$30 billion | Mining, Oil | Brazil

No. 9: Mukesh Ambani
$27 billion | Petrochemicals | India

No. 10: Christy Walton & family
$26.5 billion | Wal-Mart | U.S.

The Wisconsin Battalion Fired the Loudest Shots in the Battle of the Bulging Government

Our country will soon be jolted by successive economic shockwaves that will ratchet down consumer confidence as our states and local governments are constitutionally forced to remedy historic revenue short falls.  With public opposition rapidly mounting against tax increases, most governments will be faced with the monumental task of slashing budgets.  The state of Wisconsin fired one of the first nationally heard shots across the bow of this newest American crisis.

In the state of Wisconsin, senators are attempting to bring to the floor a bill to give maximum flexibility for crafting a workable budget.  One line item of the bill caused half the senate to walk out, and sparked a teacher rally that filled the senate floor.  Public primary education teachers in Wisconsin make approximately $100,000 compensation, including salary and benefits. They can retire after 25 years service and receive a one time payment of $950,000, plus approximately $100,000 each year for life after that.

The Wisconsin state senate has 19 Republican senators who have vowed to reduce this budget line item.   However senate rules require 20 out of 33 senators to be physically present for a quorum to vote. All Democrat state senators staged a walk out and left the state for Illinois to avoid wounding the state teachers union. However, they must physically step onto the Senate floor to collect their checks. If even one Democrat defects, a vote will occur. Makes interesting politics.

In Sarasota, Florida where I live, the county’s tax revenue will not cover public employee retirement benefits this year. How did Sarasota, Wisconsin, and the rest of the country reach this seemingly overnight crisis?  During the economic bubble decades from 1980 until recently, government spending grossly outpaced our population and grew to spend revenues that had been inflated by economic bubbles and consumer borrowing. 

When the Great Recession hit, state revenues from most sources shrank, including federal transfer, sales, and income taxes.  All these sources had been artificially buoyed by successive bubbles, and now popped simultaneously along with our latest and greatest housing bubble.  With shrinking housing prices, plunging ad valorem revenues just added to the fray.  When tax revenues shrank to fit our sustainable private industry job base, decades of excessive government spending left an overwhelming shortfall that exposed both our governments’ lack of understanding of bubble risks, and their willingness over thirty years to spend increasing tax windfalls rather than reduce tax rates.

As an example, our local and state governments escalated public employee ranks and pay scales to match escalating revenues; increases that well outpaced our population increase.  During the last three decades, the U.S. population increased 37 percent, but our local government employment increased 56 percent, and state government employment increased 68 percent. 

State and local budget line items increased well beyond our population growth as well.  As an example, while an increasingly older and poorer population could partially explain a 100 percent increase in health/welfare spending in real dollars, the vast majority was spent to increas staffing, compensation, and programs.  Also, educational spending increased 50 percent in real terms when the school age population only increased 11 percent. In the last five years of the great housing bubble, total state spending increased 30 percent in an attempt to keep pace with accelerating home prices. 

Because of 30 years of escalating state and local government spending during the boom years, we now face yet more waves of economic crises, the first of which will be successive slashing of state and local budgets that will cause economic backlash and social unrest as a poorer public is forced to adjust to fewer government services.  Governments will have little choice but to reduce public employee ranks by 20 percent to right size government to our population size.  To balance budgets, remaining public employees will be forced to take 20 percent compensation cuts to match resulting sustainable GDP.  When the suds clear from this latest bubble burst, 4 million public servants will lose their jobs and an additional multiplier of parasitic jobs will be lost as well, exposing America’s latest of its coming destructive waves.

Baby Boomers Force Dramatic Shift in American Social Contract

I was born in the census year of 1960 at the tail end of the baby boomers. A half century later, I frankly submit that our nation was naïve about the consequences of this historic generation’s path through American history. In 1960, as our boomers entered the workforce, they became the focus of capitalists worldwide, and their economic and social decisions shaped what appears in 2011 to be our nation’s retreat from world leadership.

In 1960, America’s bustling population was 179 million. Economic times were good. Even though the number of workers per retiree to support the New Deal social contracts of Medicare and Social Security had dwindled from 42 in 1935 to only 16 in 1960, the purchasing power of the average family had more than doubled in that time. While government spending had increased from 20 percent to 28 percent to support our strategy of world military dominance, solid economic growth still seemed inevitable for generations to come.

America’s social awareness was growing as well. Led by the likes of Kennedy, King, and Johnson, America began to advance government to rectify historical social ills, and to cause capitalists to pay for their social impacts of growth. A decade later, influenced by the seeming senselessness of Viet Nam, in an attempt to ferment President Johnson’s Great Society, boomers began an expansion of government that would grow from 30 percent of GDP in 1970 to over 43 percent today. In that effort, Americans diverted capital into government social programs, slowing economic growth to a level that could not sustain boomers’ retirement years.

In 2011 looking back, it seems that our representative democracy left us unprepared to support the boomers’ last stage of life. Even though the 2010 census swelled to 309 million Americans, our worker to retiree ratio dimmed to 3.2 and is falling still. And while rising wages from 1940 to 1960 lessened the impact of changing demographics, wages during the last forty years stagnated, leaving middle class boomers inadequately funded for retirement, and leaving young people with inadequate income to support them. While these changing demographics knowingly loomed for years, America failed to plan. As a result, a socially divisive wedge has been driven between the boomers and our youth.

This view of our boomer dilemma leaves me with unanswered yet glaring questions such as:  Why did our government levy social impact costs caused by our capitalists but not fulfill their fiduciary responsibility to levy financial impact costs on capitalists’ MNC investments?  Why did our government create only limited regulated retirement investment opportunities to funnel our boomers’ frenzied savings into stock investment bubbles?  Why did we then deregulate debt financing to further funnel now desperate boomers’ savings into mortgage derivatives?  Why did we allow capitalists to siphon these boomer funds into overseas investments without creating sustainable good paying employment in America for the young people who would be called upon to support our boomer retirees?

 Why were American capitalists allowed to lobby for free trade, and transfer boomer wealth overseas without paying forward the retirement impacts of those investments?  Why were our primary educational systems, designed to feed an earlier industrial economy, allowed to fail a third of our future taxpayers as our capitalists instead focused on funding adequate primary educational systems in emerging countries.  Why were our secondary educational systems allowed to inflate the real cost of college education by 150 percent during the last 30 years, beyond the reach of many Americans, when our government’s stated strategy to combat emerging economies was to use innovation of college graduates to create new high paying jobs?  What is the responsibility of our wealthiest Americans to the rest of our society in creating a feasible path through what will most likely be less than golden years for our boomers?

 Answers to these questions need to be transparently debated as we now prepare for the legacy of our extraordinary generation.  The paradigm of entitlement that gave boomers false hopes and that now embolden our youth to vote for change will soon end.  We now are at pivotal moment in American history in which our diminishing demographics will change America’s societal paradigm forever.  In its place will be the painful national discussion that must take place to pave a way forward.

Job Voucher Plan is Better for America Than Tariffs or Subsidies

Ultimately, protectionism is not a viable answer for America because of our views on property rights, and because of the costs of tariffs and subsidies. Americans believe in protection of property rights, including a corporation’s intellectual property. It has the right to sell its trade secrets to a foreign entity and to make products overseas to distribute to America.

The U.S. government can dissuade the company’s decision to move offshore through tariffs. This may incentivize the company to maintain enough manufacturing capacity in the U.S. to meet domestic demand, but if scale efficiencies are gained off shore, or if, through lower production costs, more global market can be gained than will be lost in the U.S., a tariff will only provide a form of taxation as a penalty to the multinational corporation (MNC) for transferring jobs.

When the U.S. government imposes a tariff, the U.S. consumer pays more for goods. However, the tariff’s goal of saving U.S. jobs may not be successful. When low cost goods are allowed to enter the U.S. without a tariff, the U.S. consumer pays less for goods, but jobs are lost.

If the MNC has a sizable market share, the MNC can set prices a small percent less than what U.S. companies must charge, and the MNC can still capture a sizable profit. As a result, the marginal benefit to the consumer of lower cost goods is more than offset by the cost of unemployment compensation to those that have lost U.S. jobs. Tariffs, therefore, are ineffective at retaining jobs, and do not stop the transfer of wealth from the consumer to the MNC and international shareholder.

As an alternative, the government can subsidize certain industries. In so doing, they allow that industry’s products to be priced more competitively. This alternative may make sense if the cost of the subsidy is less than the cost of paying for unemployed persons, or if the government finds that the non-competitive industry is nonetheless vital to our national security. However, the subsidy disincentivizes the U.S. company from becoming competitive. In addition, our bilateral trading partners will also retaliate by raising tariffs or providing subsidies of their own, cancelling out benefits and raising prices worldwide.

The U.S. is facing a prisoner’s dilemma. If U.S. MNCs do not use the funds of international investors to build factories in foreign countries, then other countries’ MNCs will fill the void. If other countries build, they will still sell to us at lower prices, we will still lose jobs, and we will still pay unemployment. At least when U.S. MNCs build foreign factories, they generally employ supplemental employees in the U.S., and pay some taxes to the U.S. as well.

Since we will lose jobs anyway, we might as well attempt to share in the MNCs’ profits as a form of payment for the transfer of jobs. I say attempt because while the U.S. government will attempt to share value through taxing profits of U.S. MNCs made in foreign countries, MNCs are adept at staying ahead of U.S. actions through manipulation of foreign subsidiary profits.

Acquiescing to U.S. MNCs building overseas appears inevitable, but America can create a better solution than we have thus far attempted. Just attempting to collect taxes is not an optimum solution. For one, if America must compensate the unemployed as a result of MNC job transfers, we should at least extract value from unemployment payments by employing the unemployed.

We need not use ineffective tariffs or subsidies. With my job voucher plan, unlike tariffs, consumers still get the benefits of lower prices. In addition, our country gains benefits of lower domestic prices as lower employment costs are passed through small businesses to consumers. With my job voucher plan, unlike subsidies which have both domestic and export costs, company incentives are capped at the cost of unemployment, a sunk cost that our government is already committed to paying.

Is Bankruptcy in America’s Future?

Pat Robertson, as controversial a televangelist as he has been, ran for president of the United States in 1988 with a platform of a constitutional amendment for a balanced budget. America’s debt in 1988 totaled a “mere” 2.6 trillion dollars. One of his controversial presidential platforms was a call for the Year of Jubilee, a biblically historical reference that every 50 years, all debt was cancelled, all land went back to its original owner and all slaves were set free.  Mr. Robertson stated that the Year of Jubilee would be a less harsh way to deal with depressions of capitalism for the United States.

His solution for the path he predicted would ultimately lead America to the precipice that we now face was a Year of Jubilee for America. The idea was such an anathema to our firm societal view of debt repayment that it branded him a marginal candidate and cost him the control of his media empire.

Eleven years ago, after 24 million petition signatures were gathered worldwide for debt relief, the World Bank and IMF participated in Jubilee 2000 and forgave debt of approximately $90 billion to 22 of the world’s poorest nations, freeing them from a form of indentured servitude. This foretelling of restructuring of world debt gave credence to Pat’s solution and vindicated his thoughts, but could not begin to support the idea that America might join the ranks of defaulting nations.

23 years after Mr. Robertson’s suggestion, America has a much different social psyche. While a few percent of our elite have prospered during the past 23 years, many of Americans have struggled. When Wall Street decimated much of the only vestige of the American Dream in which many Middle Americans could participate, home ownership, it changed the bargain between classes.

A great many Americans are now choosing to walk through the social stigma of bankruptcy and foreclosure and to self direct their own personal Year of Jubilee. If this social movement takes hold, a new “Pat Robertson” claiming America’s biblical right for a Year of Jubilee 2016 could gain the White House, defeating the financial defenses of our political structure, and catapulting America into a nation that considers default as a valid option.  It is critical for our nation, that our political leadership presents a fiscally responsible budget, supports an economy that will provide jobs to all Americans, and restores confidence in the democratic and capitalistic contract that has been the basis of wealth distribution for our society.

Wal-Mart, My Store, Your Job Loss

1984 was the first year I entered a Wal-Mart store. I was assigned to Poteau, Oklahoma, the county’s center with a population less than 10,000. This was a perfect community for Wal-Mart’s initial strategy.  I was amazed by the store’s size compared to the size of Poteau.  Its big box aside the main drag in town was a bit overpowering, but I felt they did their part to minimize it with their elderly greeter. Although Wal-Mart was 22 years old in 1984, it still owned a mere 0.3 percent of the U.S retail market at the time.

I soon found myself by-passing local stores and running to Wal-Mart to buy diapers and other sundries because it was the biggest store in this small town, had most of what I might need, I really had no branded retail outlet to consider as an alternative, and Wal-Mart had the lowest prices in town.  As the years went on, and Wal-Mart began to penetrate more populace communities, I found that Wal-Mart was becoming more of my weekly life.  I began to differentiate purchase decisions between commodities, which I gladly bought at Wal-Mart, and those reserved for my own indulgences, which I reserved for brand stores. Wal-Mart became my accepted outlet for everything from batteries to bar soap.

I reserved other retail outlets for my material comforts.  My flavors, I bought from Fresh Markets.  I bought the the highest quality electronic gadgets of the time from outlets like Best Buy. For a cruise, I chose to upgrade to Royal Caribbean.  Witnessing this behavior, Wal-Mart introduced a few mass marketable selective brands as well.  With a solid understanding of their market position and a drive toward lowest cost, Wal-Mart acquired eight percent of the entire U.S. retail market.

We have come full circle.  Just as the shipping merchants were the kings of commerce pre-industrial age, Wal-Mart dominates the seas today. Wal-Mart’s shipping fleet is a testament to modern technology. Its sleek ships sail fully laden with cargo from China to American ports in 5 days, a full 4 days sooner than the average cargo ships used by others today.  Importantly, Wal-Mart  applied state of the art technology to drive down a major component of their business model.  They had to counteract America’s trading deficits because these floating works of art sail back  to China empty.

To achieve its retail dominance, Wal-Mart has honed its China strategy.  Now, 80 percent of goods sold in Wal-Mart originate in China. The vast majority of China’s retail market is tied to giant outlets like Wal-Mart, Wal-Mart alone accounting for 12 percent of China’s exports.  Our buying behaviors, China’s selling behaviors, and unfortunately net American job losses are intricately entwined through the market engineering of the world’s greatest multinational corporation, America’s largest retailer, and history’s largest company, Wal-Mart.

To Win Our Job War, American Governance Must Again Be Restructured

One theory suggests the unrestrained rise of multinational corporations will lead to worldwide monopolies that transfer all wealth above worldwide sustenance levels of employees to capitalists.  What are the deterrents to this endpoint?  The most significant deterrents are both regionalism, defined by age-old civilizations, cultures and religions, and nationalism, defined by historical norms and governance.  

Representative democracy is America’s chosen governance of and by its people. Capitalism is America’s chosen economic system.  Democracy is both our supporter of the best of capitalism and our deterrent to capitalism run amuck.  When a country’s governance is too greatly influenced by its economic system, whether capitalism or other, it ceases to be able to protect its people from the economic system’s abuses.

America has risen to power both by the freedoms and protections of its democratic governance and the strength of its capitalism.  One leg of our success is now threatened on two fronts. First, our democracy has become unduly influenced by our capitalists.  And secondly, our democracy is becoming less effective at protecting our nation’s people from the globalization of capitalism.     

America’s social and material health has been affected by our governance and economic decisions yet our people are unaware of how unhealthy we are.  One reason for this is that we have not publicly measured, disseminated and debated our governance health metrics.   Metrics that grade the universal health of our government should include our citizens’ health, wealth and ability to exercise freedoms expressed in the U.S. Constitution.  

As a governance system, American representative democracy, with all its faults, would measure dynamically positive against universal metrics, with the possible exception of our past few decades. We moved from the institution of slavery to universal suffrage. Our live spans doubled, and our rule of law matured to perfect our exercise of freedoms. The material wealth of our country expanded. More recently however, the ability of our representative government to protect social and material wealth of all its citizens has been questioned, and we are struggling to improve our governance health metrics.

America’s economic system, begun as laissez-faire capitalism, evolved into a mixed economy in which the government regulated and tariffed for the general welfare. Material wealth improved initially for all citizens but grew for capitalists at a higher pace, the price of capitalism. However, by the late 1920s our capitalist system had evolved into multiple monopolies and oligarchies, exacerbating wealth disparity.

From 1776 until 1929, capital had slowly accumulated, aggregated, and concentrated under the watch of our representatives without measurement of government health metrics and without each successive change of government being held accountable for universally improving our health metrics. As a result of our governance system’s failure to steward our economic resources for the benefits of all its citizens, our democracy and capitalism was overhauled in the 1930s.

America’s restructured system of governance seemed to improve its health through the 1960s. However, in the 1970s, our economic system decoupled from our system of governance, once again with tacit approval from our representatives. With the rise of the multinational corporation, our democracy’s ability to regulate production, support GDP growth, balance social growth, and redistribute material wealth for the benefits of our citizenry was wounded.

Additionally, our government’s decoupling of its authority and what some might call reckless desire to spend from its fiduciary responsibility to balance spending with taxation, and its choice of borrowing and dollar devaluing to cover tax shortfalls, created rampant fiscal irresponsibility that ballooned our debt.

Our current government health metrics are antiquated and opaque. As a result, our citizens are severely unaware of the depth of our problems. Can we openly measure, disseminate and debate our governance health metrics including these newest, greatest threats to our democracy?  Government must now transparently reinvent itself to stop its deficit spending and to protect its citizenry from the ills of multnational corporations.  If it cannot, the people must insist through elective and constitutional convention means if necessary that government heal itself.

Are Americans Entitled to Extended Unemployment?

Tea Partiers are ignited about the idea of abolishing long ago formed agencies that have been cemented in stone buildings along Constitution Avenue. They believe that good government concepts never really die and eventually become entitlements that stymie original intent.  However, once formed, these ideas take hold in the American consciousness and we begin to believe we are entitled to them as unalienable rights.

Take unemployment insurance for example. Like defense, education, and the rule of law, unemployment compensation has its roots in increasing the efficiency of capitalism.  With a temporary stipend, unemployed workers are free to move from businesses that are sliding past their plateau of usefulness to those that are innovating.  Without the fear of losing their homes and other assets, employees move to healthy businesses even during economic downturns.  Because this idea supported the beliefs of both parties of congress, unemployment insurance passed by an overwhelming majority in 1935 as part of the Social Security Act.

In most downturns, the unemployed are able to find jobs within the insured period of 26 weeks. However, an underlying sickness gutted our sustainable job base during the last thirty years as we borrowed our way through successive economic bubbles.  Only after the credit default swap bubble collapsed our economy did we understand that our jobs were gone.  Not only had our manufacturing blue collar jobs been shipped overseas, but our technically skilled jobs were exported as well. Our average period of unemployment has now swelled to 37 weeks.

It was only natural that Congress quickly adjusted the unemployment period as a stop gap measure when faced with the Great Recession.  They rightly protected our longer term unemployed to keep them from losing all they have gained in contributing to our country.  Now that the ranks of the 99ers, those that have fallen past the safety net of extended unemployment, are swelling, America is debating if unemployment benefits should extend further, and whether the unemployed are entitled to a longer benefit period.  

The debate on entitlements needs a paradigm shift.  Instead of discussing whether unemployed should receive more than two years unemployment compensation, we should be creating a process that allows our citizens to quickly re-enter the workforce and once again contribute to America’s success.  

My voucher plan is a paradigm shift.  Instead of paying unemployed to sit on the sidelines of our economy, America instead invests in our future by getting our people back to work.  Small businesses can hire voucher employees at their unemployment rate. In return, Voucher employees can work twenty five hours per week and receive the same pay they would have received through unemployment. The Federal Government can then reimburse employers the employees’ wages without increasing the unemployment budget.

Tea Party members will be concerned that this voucher plan will become yet another entitlement. They can rest assured that the voucher plan will be a relic of the Great Recession, created to automatically expire as the economy improves. Voucher dollars will decrease as the percent of unemployment decreases, requiring employers to cover more of voucher employees’ wages.  As a result, voucher employees in barely sustainable businesses will transfer to healthier ones.

Some claim that the unemployed feel entitled to remain unemployed, collecting extended payments.  While we can all find a few examples of misuse of American altruism, I have found that most people want meaningful employment.  The entitlement argument stems from the disincentive our unemployment system creates for rejoining the workforce.  It’s not unreasonable to compare available jobs with current unemployment payments. When a worker leaves a job that paid $14 per hour, is getting $8 per hour for unemployment, and is faced with a job that pays $9 per hour, their incentive to work is only $1 per hour; substantially less than their former job and only a dollar more than unemployment. Unemployment should not create a re-employment inertia differential.  My job voucher plan creates the largest re-employment incentive because unemployment extension payments end.

Americans might be concerned that my voucher plan would be used to balloon what they believe is already too large a government providing too many entitlements.  They cite previous government programs that raised social benefit costs without creating profit generating, taxable products or services. My job voucher plan, however, grows jobs only in private sector small businesses, and can be supported by existing government agencies without expanding their budgets. 

Others claim that my voucher plan is just an entitlement to small business, creating an inefficient makeshift set of jobs for the unemployed.  While I agree that my plan can rapidly employ all Americans, and as such may create some early, inefficient placement of workers, it nonetheless will also create a micro-venture capitalist function for millions of small businesses.  Some of these ventures will successfully create taxable revenue, and some will be incredibly successful, paying back America’s investment through future taxes on corporate profits and employee compensation.

Finally, concerns have been raised that any program such as this may create an entitlement mindset that all Americans must work.  Government work programs have been abused by some to collect compensation while performing work at subpar levels.  This problem is self correcting in my voucher plan.  Employees would still be governed by private sector principles.  If the job is not a good fit, employees will not find safe harbor in this program. For the program to be successful, government intervention will have to be restricted to current EEO and ADA requirements.  But, in the end, one entitlement should fly true.  America will find it is entitled to renew its future.