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We Must Create Jobs

POSTED: November 22, 2011, 12:00 am

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Last week, I had the opportunity to testify before the Congressional Progressive Caucus. I am grateful to Congressman Keith Ellison for the invite. Here are excerpts of my n estimony:

While I am sure that you are familiar with the data, I would like to take a moment to discuss the magnitude of the unemployment challenge. Officially, the unemployment rate in October was 9 percent, which meant that, officially, 13.9 percent of all Americans were unemployed. 5.8 million of these folks, or 42 percent of the unemployed have been without work for more than 27 weeks, or half a year. The average unemployed person has been out of work for 39 weeks.

But these data are a pleasant fiction that ignores the reality of our nation's unemployment. From Table A-15 of the monthly BLS Employment Situation report (USDL-11-1576) we learn that when those marginally attached to the labor force and those working part time who want full time work are included as unemployed, the rate for all Americans soars to 16.2 percent. That means that one in six Americans are unemployed.

The situation is far more severe in the African American community, where the unemployment rate is 15.1 percent. This represents an improvement over the 16 percent rate that was measured last month, yet this is a rate that is still too high. If we look at this through the lens of the A-15 data, in other words, using the same projection that is used with overall rates, the 15.1 percent black unemployment rate actually looks more like 27.2 percent. African American men over twenty, with an official unemployment rate of 16.2 percent, actually experience unemployment at the 30 percent rate. In some of our nation's largest cities, half of all African American men do not have work. Overall, the employment population ratio for adult African American men is 57.4 percent, a full ten percent below the same rate for white men.

It is important to review the magnitude of this problem because different tactics may be used to respond to a 9 percent unemployment rate than a 16 percent unemployment rate, than a 27 percent unemployment rate. A 9 percent rate might simply be considered a challenge, but a 27 percent rate, or the 30 percent rate for African American men must be considered a crisis.

What are the solutions, then, for the challenges we face. Not only must the federal government be involved in job creation, but the private sector must be offered incentives to be part of this solution. We have a rich tradition of federal involvement in job creation, ranging from the Depression era Works Progress Administration (WPA) to the JTPA (Jobs Training Partnership Act) of the 1980s. There are unmet needs in public infrastructure, in health care, and in social services. Creating 5 million jobs at $50,000, with benefits and administrative costs would run us $500 million, and would reduce the unemployment rate by about 5 percent, and would increase tax revenue significantly. Those employed by federal programs could work in schools and in libraries, in repairing infrastructure, and in implementing neglected public services. It is would be my recommendation that employment funds flow to cities, not states, as urban issues are far more acute that state-wide issues, and because cities are likely to be blacker, browner, older, younger, and both richer and poorer than the rest of American. The economic bifurcation we see in cities is likely to be one of the reasons we see such strong Occupy movements in urban areas.

Many will ask where the money will come from to create jobs, especially as Congress grapples with debt ceiling related issues. There is overwhelming evidence that a country does not work its way through a recession, official or unofficial, by cutting employment or cutting programs. While there is no denying the self-imposed constraints that have come from the August agreement to cut the long-term debt, I might posit that the debt might be eliminated more quickly if American were put back to work. I would suggest that if cuts are necessary, then a tax increase to put America back to work would be in order. However, it might also be necessary to consider a special appropriation directed to job creation. Our nation's future depends on it.

Job creation is only the first step for securing America's future. We also have to look at the issue of workforce readiness and job preparation. We are lagging woefully behind in the STEM areas, and in other international indicators of economic prosperity. We are 11th in the world in the number of people over 25 who have AA or BA degrees, falling behind Finland, South Korea, Ireland and Canada, among other nations. In order to continue to innovate, and to produce educated global citizens, we must spend more money, not lest, on both K-12 and higher education. While I realize that there must be a spirit of shared sacrifice in this economic climate, I would also suggest that cutting higher education is equivalent to a farmer eating her seed corn, choosing to sacrifice tomorrow for the exigencies of today.

My special concern is for historically Black colleges and universities (HBCUs), the work we do in post-secondary education and job creation, and the extent to which we may experience cuts in Title III funds in Supercommittee deliberations. Although the 38 HBCU colleges represent just 1.6 percent of the 4-year degree granting colleges, we produce more than 5.6 percent of our nation's college graduates. We do more than our share of heavy lifting, preparing inner city, first generation, and financially challenged students. We need more support, not less.

Our nation is losing ground and losing our leadership status internationally because we are neither generating jobs nor investing in the education that will prepare the workforce of the future. I realize that these are trying times, and yet innovation often emerges from trying times. We can create jobs at a modest cost, and improve communities along the way. We can support higher education, especially for the underserved. We can connect the public and private sectors with tax incentives to encourage business to employ those who have been out of work. Finally, we can encourage entrepreneurship by strengthening new businesses with government grants and tax incentives.

Dr. Julianne Malveaux is a noted economist and president of Bennett College for Women.

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