The recent slight uptick in job creation has prompted some to declare that the great recession is over. But a look beneath the surface of the numbers tells a more ominous story. It's true -- the Labor Department's employment report for the month of May showed a gain of 431,000 jobs and an overall unemployment rate of 9.7 percent - down slightly from April's rate of 9.9 percent. But before breaking out the champagne we should consider that 411,000 of the newly employed are temporary Census workers and that 15 million Americans are still looking for work. Consider also, that African American and Latino joblessness continues to far outpace the national average, and now stands at 15.5 percent and 12.4 percent respectively. With summer fast approaching, the unemployment rate for Black teens has climbed to 38 percent. Clearly, like the oil spewing from that well in the Gulf of Mexico, the jobs crisis continues.
Perhaps the most disturbing statistic in the latest jobs report is that 46 percent of all unemployed workers have been out of a job for six months or more - a clear sign that the labor market is far from being in recovery. The burgeoning ranks of the long-term unemployed, coupled with the weak growth in private sector jobs reinforces the need for legislation that funds direct job creation and training for the chronically unemployed. This will reap huge dividends for struggling families and communities as well as our nation.
A new report from the National Urban League Policy Institute describes how investing in job creation is also the best strategy for reducing the deficit. We estimate that if the economy could replace the 8 million jobs lost since the recession began in December of 2007, the resulting increase in tax revenues would reduce the deficit by $235 million. Another $75 billion dollars in deficit reduction would be achieved due to reduced spending on unemployment benefits. In total, a robust jobs surge can reduce the budget deficit by $310 million.
The continuing increase in teen unemployment is also cause for alarm. We urge the Senate to join the House in swiftly passing H.R. 4213, the American Jobs and Closing Tax Loopholes Act. That bill includes $1 billion for a summer youth program and $2.5 billion in emergency assistance for needy families. We know that summer jobs are the launch pad for success. They provide a foundation for a solid work ethic and invaluable experience that gives young people a clear advantage that lasts throughout their working life. The Senate must act without delay. We cannot continue to sacrifice our future for short-term political gain.
As a part of our centennial year IAMEMPOWERED campaign, the National Urban League has challenged the nation to meet the goal of ensuring that every American has access to jobs with a living wage and good benefits by the year 2025. To keep the country focused on that goal, we recently launched our State of Urban Jobs site at iamempowered.com. Log on today to stay abreast of the latest developments.
NUL's 6-POINT PLAN FOR JOB CREATION
1. Fund Direct Job Creation by offering financial support to cities, counties, states, universities, community colleges and non-profit community based organizations to hire the personnel necessary to provide critical services in communities across the nation. Eligibility for support will be based on local unemployment rates with a focus on the long-term unemployed. At least twice in American history, the government has responded to high rates of unemployment with investments in direct job creation -the 1935 Works Progress Administration when nearly one-fourth of the labor force was out of work, and the Emergency Jobs and Unemployment Assistance Act of 1974 which established Title VI of CETA as a temporary countercyclical employment program at a time when unemployment was quickly approaching 9 percent. We propose an investment of $150 billion to create 3 million jobs, a number that represents only half of the current unemployed with a high school diploma or less.
2. Expand and Expedite the Small Business Administration's Community Express Loan Program through a reduction of the interest rate to 1 percent targeted for those businesses located in areas where the local unemployment rate exceeds the state average. A ten-fold expansion of the program (from $1 billion to $10 billion) should make credit available to an additional 50,000 small businesses nationwide.
3. Create Green Empowerment Zones in areas where at least 50 percent of the population has an unemployment rate that is higher than the state average. Manufacturers of solar panels and wind turbines that open plants in high unemployment areas will for a period of three years, be eligible for a zero federal income tax rate and a zero capital gains tax under the condition that they hire and retain for a minimum of three years at least half of their workforce from the local area.
4. Expand the Hiring of Housing Counselors Nationwide by investing $500 million to fund housing counseling agencies nationwide to help delinquent borrowers work with their loan servicers to secure more affordable mortgages. Over the past 18 months more than $400 million in federal funds have been invested by the Administration to help mitigate the mortgage crisis through housing counseling and according to a recent report by the Urban Institute, borrowers facing foreclosure are 60% more likely to hold onto their homes if they receive counseling and receive loan modifications with average monthly payments $454 lower than those who did not see counselors.
5. Expand the Youth Summer Jobs Program for 2010 by investing $5-7 billion to employ 5 million teens. While the unemployment rate for African-American youth is over 40 percent, the employment population ratio makes clearer the desperate situation faced by many urban youth. Since the late 1990s, this number has declined from a high of 33 percent down to 15 percent and labor force participation for this group is now at a record low of 26 percent. A critical factor in eliminating racial and socio-economic disparities in unemployment is providing a solid foundation upon which African-American youth can build positive future labor market expectations and experiences.
6. Create 100 Urban Jobs Academies to Implement an Expansion of the Urban Youth Empowerment Program (UYEP) to employ and train the chronically unemployed. UYEP, a four year demonstration project created in partnership with the U.S. Department of Labor in 2004, is a youth career preparation initiative designed for at-risk, out-of-school, and adjudicated youth and young adults between the ages of 18 and 24. With 27 Urban League affiliate sites and a total of $29.3 million, the program served 3,900 youth, 65 percent of whom either had job placements (paying an average wage of $9.32/hour) or completed their high school diploma or GED. Two hundred participants were placed in postsecondary schools or college upon completion of their secondary education. Scaling this program up to 100 sites would more than triple the program at a cost of $108.5 million.
Marc Morial is the president and CEO of the National Urban League.