December 16, 2013
By Oren M. Levin-Waldman, Ph.D.
The unemployment rate in December fell to 7.0 percent, but that figure is misleading. The jobless rate is most likely higher because the official definition of unemployment does not take into account those who have either given up and stopped looking or those who haven’t filed an unemployment insurance claim in a prior four-week period because they exhausted their unemployment benefits. With the proposed budget deal negotiated between Senate Democratic and House Republican budget leaders, we can expect even lower official unemployment.
Both House and Senate Democrats were pushing for an extension of unemployment insurance to assist the long-term unemployed. Under the proposed deal, there will be no extension. This means that more people will have exhausted their benefits and will no longer be officially unemployed. They will, however, continue to be jobless, which is not reported in the monthly unemployment figures.
Politically, lower unemployment ought to lead to more support from all pockets of society. It would suggest that the economy is improving and maybe even growing. But if the result is that joblessness is the same as it was before, and now bound to be higher, we need to seriously ask ourselves whether we are truly better off. Of for that matter do the politicians really care?
Increasingly politics have boiled down to creating the impression that efforts are made to solve vexing societal problems like unemployment. The image has become more important than the policy itself. We no longer have to debate the merits of policy; only how it makes a political party look and to what extent that image can draw political support.
To date neither party has done much to help the middle class who has seen its wages stagnate over the last three decades. One party talks about expanding programs and raising taxes on the rich while the other talks about reducing taxes and eliminating regulations. In the last presidential election the Republican nominee touted Staples as an example of his business success as an argument that he could create jobs. Really? Minium wage job creation is now the measure of our success? Meanwhile, the best the other party could offer us was new taxes for so-called new investment. Failing to get infrastructure investment, the middle class was told that the economy would grow simply by spending more on social programs, including extending unemployment benefits.
We have now settled for new standards to measure success. The economy is now doing well because without this spending it would have been worse. Even as people are losing health insurance because their plans have been cancelled due to their not meeting the new standards under the Affordable Care Act, they are told that they are better off paying more for so-called better plans. But are they better off if the premiums are going up while their wages are still stagnating?
Many years ago, the late Senator from New York Daniel Patrick Moynihan wrote a piece where he talked about defining deviancy down. The gist was that things that were considered immoral or socially, and even politically, unacceptable say a generation or two ago, are now the new norms. Defining deviancy down would appear to characterize our new standards for measuring economic success.
We will never rebuild the middle class if we continue to accept that a 7 percent official unemployment rate is the new normal. We will never rebuild the middle class if our idea of new jobs are anything that pays a wage, albeit minimum wages. We will never rebuild the middle class if our nation’s politics continue to be centered on image and Harold Lasswell’s famous definition of who gets what, when, and how.
We will only rebuild the middle class when public officials begin to represent the interests of the middle class, and that can only happen when they subordinate their own personal interests to the public interest. Wages need to go up, unemployment and joblessness need to go down, and public spending needs to be invested in rebuilding the nation’s infrastructure. Workers need to be given voice, because it is only through voice that they, especially low-wage workers, can redress the asymmetrical power relationship between and employers. A wage policy, whether through greater organizing efforts or an indexed minimum wage will do. Institutions, in other words, matter.
But this is only the beginning. One policy that would benefit the middle class would also include a single payer universal insurance plan that would eliminate employer-based insurance. This would make us more competitive with other nations and end job-lock. Another policy that would benefit the middle class would be tax reform. A tax code with a few flat rates but absolutely no deductions would preserve progressivity while removing special interests from the tax code. Taxes should be about raising revenue; not social engineering. And yes, the middle class would benefit from serious campaign finance reform — perhaps publicly funded elections. This too would free politicians to represent the public interest, rather than special interests.