The Permanent Eradication of US Jobs, According to Robert Reich

Washington’s Blog posted an interesting tidbit from former Labor Secretary Robert Reich. Mr. Reich was the Secretary under the Clinton Administration. He says that essentially jobs will have to be cut permanently and won’t come back. Here is the quote:

    The basic assumption that jobs will eventually return when the economy recovers is probably wrong. Some jobs will come back, of course. But the reality that no one wants to talk about is a structural change in the economy that’s been going on for years but which the Great Recession has dramatically accelerated.

    Under the pressure of this awful recession, many companies have found ways to cut their payrolls for good. They’ve discovered that new software and computer technologies have made workers in Asia and Latin America just about as productive as Americans, and that the Internet allows far more work to be efficiently outsourced abroad.

    This means many Americans won’t be rehired unless they’re willing to settle for much lower wages and benefits. Today’s official unemployment numbers hide the extent to which Americans are already on this path. Among those with jobs, a large and growing number have had to accept lower pay as a condition for keeping them. Or they’ve lost higher-paying jobs and are now in a new ones that pays less.

    Yet reducing unemployment by cutting wages merely exchanges one problem for another. We’ll get jobs back but have more people working for pay they consider inadequate, more working families at or near poverty, and widening inequality. The nation will also have a harder time restarting the economy because so many more Americans lack the money they need to buy all the goods and services the economy can produce.

In Huffington Post, he’s quoted:

So let’s be clear: The goal isn’t just more jobs. It’s more jobs with good wages. Which means the fix isn’t just temporary measures to accelerate a jobs recovery, but permanent new investments in the productivity of Americans.

What sort of investments? Big ones that span many years: early childhood education for every young child, excellent K-12, fully-funded public higher education, more generous aid for kids from middle-class and poor families to attend college, good health care, more basic R&D that’s done here in the U.S., better and more efficient public transit like light rail, a power grid that’s up to the task, and so on.

Without these sorts of productivity-enhancing investments, a steadily increasing number of Americans will be priced out of competition in world economy. More and more Americans will face a Hobson’s choice of no job or a job with lousy wages. It’s already happening.

On his personal blog, he says: 

We don’t know exactly how much the President is proposing to spend, but sources tell me it’s in the range of $70 billion, redirected from the $200 billion in TARP savings. The President’s small, calibrated attempt to balance a stimulus with deficit reduction will in fact make the deficit worse over the long haul. It postpones the day when we’re back to near full employment, when almost all Americans who need a job get paychecks on which they pay taxes. This isn’t really balance at all. It prolongs the economic imbalance.