August 2010

Congressional Stalemate Threatens Job Creation
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The jobs crisis continues. Nearly 15 million workers are unemployed, with more than half of those out of work for six months or more. But continuing opposition to new jobs legislation from congressional Republicans is paralyzing Capitol Hill, putting the economic future of millions of working families at risk.

A second stimulus bill meant to pump up the economy and extend jobless benefits for the long-term unemployed was blocked by GOP senators in June, cutting off benefits for more than 1 million jobless Americans.

The Senate fell three votes short of the 60 needed to break a GOP filibuster of the American Jobs, Closing Tax Loopholes and Preventing Outsourcing Act, preventing it from coming to the floor. Siding with the GOP were Nebraska Democrat Ben Nelson and Independent Joe Lieberman of Connecticut.

The bill would have extended unemployment and COBRA benefits while providing more than $16 billion in aid to the states to help state and local governments avoid layoffs and crippling tax hikes. It included dozens of tax breaks to encourage small businesses to hire new workers.

An effort by House Democrats in late June to pass a six-month extension of benefits separate from the stimulus was also defeated by the GOP, with help from more than a dozen "Blue Dog" Democrats.

"Without the funding, Iowa will be forced to lay off thousands of teachers, police officers and nurses, among others, putting public health and safety at risk," said Ken Sagar, president of the Iowa Federation of Labor, who organized a rally in front of the offices of Iowa Sen. Chuck Grassley (R), a bill opponent. "It’s time for Congress to stop playing politics with people’s lives and our economic recovery," said Sagar, who is a former Cedar Rapids Local 204 business manager.

With the GOP solidly against any future spending on job creation, it looks increasingly unlikely that Congress will make any progress on the job front before the end of the year—just as economists are predicting a possible double-dip recession.

A Rocky Recovery

Spurred by the bursting of the real-estate bubble and collapse of Wall Street, nearly 8 million jobs have been lost since 2007, with the sputtering economy creating only one job opening for every five job seekers, according to the U.S. Department of Labor.

More than two years since the current recession began, unemployment is still hovering near 10 percent, breaking double-digits in some states, including Nevada, California and Michigan. In the construction industry, the numbers are even worse, with unemployment exceeding 30 percent.

But as daunting as these statistics are, most economic experts are in agreement that without the American Recovery and Reinvestment Act of 2009—the stimulus bill passed weeks after President Obama took office—unemployment would have likely hit Great Depression levels.

"The fiscal stimulus played a decisive role in reducing the depth and pain of the recession and is now helping to get a recovery under way," M.I.T. economist Simon Johnson wrote in the New York Times last November.

President Obama’s $787 billion stimulus package was designed to jump-start the economy and help slow the tide of job loss by funding major construction and transportation projects, cutting taxes for small businesses and working families and offering training and research grants to create jobs in the new energy economy.

More than $130 billion was directed toward construction projects, putting hundreds of inside wiremen back to work, mostly on government projects. The legislation also included more than $500 million in alternative-energy training grants, of which more than $20 million went to the IBEW and joint apprenticeship training programs across the United States, helping to boost skills of members in solar, wind and building automation technologies.

And "Buy America" language in the act helped to make sure stimulus money went to creating manufacturing jobs at home.

Did the Stimulus Work?

Despite the continuing partisan bickering over the results of the Recovery Act, the numbers speak for themselves. The nonpartisan Congressional Budget Office says the stimulus saved or created more than 2 million jobs, halting the job loss momentum. It is also credited with expanding the economy by 3.5 percent, according to the Economic Policy Institute.

Even many of those in Congress who voted against the stimulus bill eagerly promoted jobs it created in their districts.

Data released by the federal government estimates that the act saved or created more than 70,000 construction jobs, not enough to match pre-recession employment levels, but still a boon for an industry that has seen credit markets freeze up and paralyze the private market, which was the engine of economic expansion before 2008’s crisis.

According to a survey by the Associated General Contractors of America—a group representing union and nonunion contractors—31 percent of contractors say they were awarded stimulus-funded projects in the last year. More than 60 percent reported that it allowed them to retain or hire new workers, which has helped get many IBEW members off the bench. (See sidebar.)

The Obama administration is predicting this summer to be the busiest for Recovery Act projects—including more than 10,000 highway, 80,000 home weatherization and 800 national park projects. But funds are running out; without a new burst of stimulus spending, work could dry up quickly.

As Ken Simonson, chief economist for the contractors’ association, told reporters during a conference call in May: "The good news is that the stimulus has stemmed the losses in construction employment for now. The bad news is that the stimulus is temporary. … Without long-term federal investment programs, construction employment is likely to suffer significant new declines once the stimulus runs its course."

A Jobs, Not a Deficit Crisis

The greatest obstacle to new stimulus legislation is an emerging coalition of the congressional GOP and self-declared "deficit hawks" in the Democratic party who are calling for a freeze on new domestic federal spending, arguing the national debt has grown too large.

"Americans see what’s happening in Europe, and they’re begging us to bring the debt under control, to cut it down before we face a similar fate," said GOP Senate Minority Leader Mitch McConnell.

But as many observers have pointed out, without real economic growth and job creation, the debt will continue to spiral out of control as our tax base shrinks and the strains on government services grow.

"The economic case for doing more is overwhelming," said Economic Policy Institute economist Heidi Shierholz. A recent EPI report demonstrates that job-creation policies can help pay for themselves by spurring growth and creating jobs. "How do you stimulate the economy again and put people back to work?" asked EPI Vice President Ross Eisenbrey during a June appearance on C-SPAN. "The only answer is that the government has to step in."

"Right now, we have a severely depressed economy—and that economy is inflicting long-term damage," wrote Nobel Prize-winning economist Paul Krugman in the New York Times. "Penny-pinching at a time like this isn’t just cruel; it endangers our nation’s future."

Extending unemployment benefits is key to keeping the recovery going. The Congressional Budget Office estimated that every dollar of assistance provides $1.90 in economic activity, creating more than 800,000 jobs.

"Unfortunately, some in Congress have shown more concern for the federal deficit than unemployed Americans," wrote International President Edwin D. Hill in a June 30 letter urging members of Congress to extend unemployment benefits. "Abandoning the unemployed will not help cure the deficit, it will only add to the breadth and depth of the recession."

And the American people agree. By overwhelming margins, they say that jobs and the economy are their No. 1 concern, according to a survey by Hart Research Associates.

"The Recovery Act has done a lot of good, but without bold action by Congress to continue to invest in creating jobs here at home, we face the prospect of mass long-term unemployment," Hill said. "There is nothing more important than getting Americans back to work, because the fastest way to fiscal health is jobs, jobs, jobs."

An analysis of Bureau of Labor Statistics numbers finds that the Recovery Act slowed and reversed job loss.

Source—Economic Policy Institute

Oak Ridge, Tenn., Local 270 foreman Chris Galyon, left, with journeymen wiremen Regina Guy and Derek Guy, were out of work before going back to their tools on a federal stimulus-funded project at Oak Ridge National Laboratories.