Considering Unemployment

Having followed the work of Providence Journal reporter Neil Downing for years, now, I’m confident that it was not a deliberate omission, but I can’t help but wonder why a particular factor contributing to economic malaise didn’t make it into his recent article about unemployment:

In the current recession — which began in late 2007, and is now in its fourth calendar year — people are often out of work for 6 to 12 months — “if they’re lucky to find a job,” [URI Professor Edward] Mazze said; many are out of work for more than a year — or longer, he said.
The main reason, Mazze said, is that “no jobs are really being created.” Partly because of high rates of foreclosures and consumer debt amid this recession, “businesses are afraid to spend because consumers are not spending,” Mazze said.

Businesses and consumers both are facing uncertainty not only because of the depth of the recession but because we’ve got a “transformative” regime running the country. Massive public debt. Looming changes to healthcare requirements. Environmental regulations appearing inevitable, whether Congressionally enacted or administratively implemented. And the list goes on.
In such an environment, planning for as-yet prospective demand is even riskier than usual.

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michael
michael
11 years ago

Yet through it all, people still go tanning. Go figure.

Ken
Ken
11 years ago

Justin said; “Businesses and consumers both are facing uncertainty not only because of the depth of the recession but because we’ve got a “transformative” regime running the country. Massive public debt. Looming changes to healthcare requirements. Environmental regulations appearing inevitable, whether Congressionally enacted or administratively implemented. And the list goes on. In such an environment, planning for as-yet prospective demand is even riskier than usual.” That observation may be true in RI but there are other states and regional areas that are on the verge of coming out of this recession and experiencing expanding prosperity. During the month of June nationally, the jobless rate fell in 39 states and Washington, DC. Take a look at the top 10 states with the lowest unemployment numbers and you will see life is almost back to normal in those states. HI addressed the looming changes to healthcare requirements over 35 years ago with healthcare reform bringing HI the closest in the nation providing universal healthcare to the entire state population. As a result, HI has the lowest healthcare costs in the nation and one of the healthiest and longest living populations in the nation. My healthcare costs dropped $100 a month when I moved from RI to HI for the same coverage with same insurance companies. Is that not something you would want? HI is one of the top 10 (ranked 6 lowest) with 6.3% state-wide unemployment and a 5.8% in Honolulu. Down from a state-wide high of 7.7%. What hurt HI the most this recession was the bankruptcy of 2 airlines (Aloha and ATA Airlines) causing a loss of 600,000 flight seats and over 40,000 HI personnel layoffs and without those seats visitors had no way to get to HI. If there is any indication the recession is nearing an end then… Read more »

Ron
Ron
11 years ago

That’s kind of a silly argument, and not up to your usual standards. If there’s any effect this “transformative regime,” is having it’s not likely to even measure up to the other factors listed. The fact is that the money we gave the banks to kick start lending is more or less being hoarded. That means credit is scarce and debts are expensive. The man sitting in the oval office might matter to economics professors and arm-chair pundits, but it’s not likely to rank high on the list of concerns for your average small business.

Justin Katz
Justin Katz
11 years ago

Ron,
Three points:
1. It’s not just “the man in the Oval Office.” Congress is complicit, too. In other words, pretty much the entire policy-creating federal government is included in the “transformative regime.”
2. The methods of government “stimulus” are certainly among the actions contributing to the effect that I’m suggesting, as are economic policies generally.
3. Plainly put, the federal government has been in the process of making employees and business operation more expensive. Companies with clear demand (note my mention of “prospective demand”) will expand and hire, although access to credit comes into play, but I stand by my suggestion that hiring beyond obvious needs is “riskier than usual.”

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