Sending American Jobs Away

Outsourcing has become a heated issue in relation to the unemployment crisis. Basically American corporations are sending jobs overseas (especially manufacturing jobs) to countries that offer cheap labor, such as China, India, Panama, and many more.  This is has caused major problems for blue collar American workers, who have struggled to find work. Many of these workers received higher specialized education because they were told doing so would assure their job security, but apparently corporate America lied. While this practice continues to ship American jobs away, little is being done to stop it. However, President Obama has declared that he plans to introduce new legislation that will limit outsourcing and offer tax breaks to corporations that stay away from the practice.  This plan did upset some foreign nations, especially India, whose economy relies a great deal on American outsourcing.  When it comes to unemployment in the U.S. though, I have to side with President Obama because protecting American jobs should be our highest priority right now.  Having foreign outsourcing fuel your economy, is not steady or reliable thing to have. Sweatshops are often the result of outsourcing, and some even argue that they help boost a nation’s economy and decrease poverty. But having sweatshops or a poor economy are both horrible, so outsourcing is really not making these foreign nations better off.  Our main goal right now should be bringing jobs back to America and then we can worry about how to help struggling foreign nations boost their economy.  Outsourcing is a dangerous practice, and it is sad to see the government stand by and do nothing as it watched corporations send American jobs away. Something must be done quickly to limit outsourcing if we are serious about fixing unemployment in America.

Unemployment Theory

One of the key problems associated with unemployment is the disagreement between the Republicans and the Democrats. Neither can seem to come to an agreement on the issue. While this is a very complex issue and it is very unlikely that the two sides will ever agree on anything, I have come up with a plan to unite the two fronts and ultimately deal with the problem of unemployment. From my research I have concluded that extending the Bush Tax Cuts would be an enormous help to repairing the collapsed job market. Giving tax breaks to businesses (both big and small) would allow more capital to be allocated towards expansion and hiring more workers. Providing tax relief to all Americans would also be of tremendous help as it would allow citizens to save more, but also to spend more, thus pumping money back into the economy.  Increasing the monetary flow in the economy is a necessary start to fight unemployment.  However, reducing taxes alone is not enough.  Even though the Republicans are concerned about the national deficit and too much government spending, extending the unemployment benefits to idle American workers was money well spent.  These benefits not only help unemployed workers support themselves and their families, it also allows them to look for a job. Instead of worrying about how to support their families and quickly taking a job which they are over-qualified for, these idle workers can focus on getting a "real job." Another plan I came across during my research was the development of more public service jobs, much like FDR did during the Great Depression. Although, it does not significantly reduce unemployment, it provides jobs, "modernizes" our infrastructures, and helps prepare for the future. One blog I have been visiting quite often is on Algae and how it can be used as an alternative energy source for oil. While reading some of the posts, it occurred to me, that if the government put more effort into the development and research of algae as an energy source, then it would not only help us create a cleaner, more efficient energy source, but also provide jobs for Americans.  While there are so many ideas to fight unemployment, I think one of the most important is stopping outsourcing.   Our government has stood by and watched numerous American companies send jobs over seas. While the companies are provided with cheap labor, American workers are provided with no work.  Al least the government has made recent strides to limiting outsourcing, I think it needs to take a firmer stance and get rid of it altogether.
I know many of my proposed solutions are loved by one party and hated by the other, but that is just how it has to be. Both parties must realize that you cant always get what you want, and that sometimes you have to pick and chose what you want the most.  Compromise is my advice to the Republicans and the Democrats.  All of the proposed ideas are designed to fight unemployment, so why not give them a try even if you don't think some will work.  I have researched most of the plans each side has to other, and as far as I can tell, a combination of both is the best solution to lower unemployment in America.

Unemployment Benefits...What?

Tax breaks are not the only strategy the government has come up with to fight unemployment.  Unemployment benefits are a technique used to assist those out of work, but like the tax cuts, there are many concerns surrounding it.  Unemployment benefits are provided by the Federal-State Unemployment Insurance Program and given to” eligible workers who are unemployed through no fault of their own (as determined under State law), and meet other eligibility requirements of State law.” The main goal of these benefits is to temporarily help those unemployed while they are looking for work. Weekly claims must be filed to receive benefits, which the State Unemployment Agency will examine.  The issue surrounding these benefits was not whether they would help or not but how much they would cost. Republicans wanted a budget cut to go along with the proposed extensions, and so they continued to stall the signing of the bill. The video is a news report done right before many unemployed Americans were about to lose their benefits. The unemployment benefits extension was eventually signed in January of 2010. The video demonstrates how some Americans were desperately in need of assistance, but why many were hesitant to pass these extensions.

Unemployment Analysis

    

        With the 2010 Midterm Elections approaching soon, it is no surprise to see unemployment high on the list of key issues.  Since my last posting I have spent hours researching this topic, trying to fully understand the complexity of such a problem.  While reading I realized I had failed to grasp why unemployment rates have skyrocketed.  Although I had encountered possible solutions and reasons as to why it was increasing, I had yet to learn what caused this catastrophe in the first place.  After further examination I was shocked at what I learned. According to globalresearch.ca it is mainly the government to blame for the current unemployment crisis. For the past 50 years the government has supported the outsourcing of American jobs and investment off shores. Also the government has encouraged mergers especially for the failing banks who would simply buy out their competitors. Both of these actions have resulted in fewer jobs in America, as many jobs are now located in foreign countries, and jobs that are in America are now so few because of mergers that eliminate certain positions. Probably the greatest contribution to unemployment is the government’s attempt to fight inflation.  However, I have a question for the government: what inflation? Bill Fleckenstein, a writer for MSN.com, says that inflation is not as big as concern as the government claims it is. In today’s market the average price of goods has been lower than in previous years. Therefore, wouldn’t it make sense to print more money to help this ailing economy? Timothy R. Homan, a writer for Bloomberg Businessweek, explains that it was not only the government’s fault unemployment rose.  When the recession hit, companies became very reserved with their money and were too worried to spend money and expand their business. As a result fewer jobs have been created and companies simply are not hiring at the moment.

            Unemployment will certainly be the driving force behind the 2010 elections. With the unemployment rate almost reaching 10% and Conservatives constantly scrutinizing the way the government has handled the situation, many project Democratic incumbents to be out of a job come November. However, President Obama says that to have unemployment around 9.6% gives an enormous advantage to whoever is not in power. While he makes a valid point about the bias surrounding his party, the majority of Americans have been disappointed with his increased spending as they would rather see a reduction in the national deficit. Obama’s $814 stimulus package has been attacked by the public and Conservatives who have failed to see how it has helped. Obama encourages voters to be patient and understand that this economic problem is not his fault, but rather previous governmental continued used of failed economic policies.

           While unemployment is an issue that is sure to determine which candidates gets elected come this November, I was surprised at how the importance of the issue differed between the two parties.  According to Deborah White, US Liberal Politics Guide, unemployment failed to make the Democrats top five issues of 2010.  Some issues such as the War in Afghanistan and immigration I can understand, but climate legislation and health care? The economy is a huge issue that impacts all Americans, and not making that a priority just seems irresponsible.  However, the Democrats have tried to pass legislation to boost the economy, but Republicans have made it difficult for them to do so. This is also irresponsible of the Republicans who claim unemployment is one of their top priorities, but when it comes time to pass some form of legislation related to the issue, they have a problem with it.  Playing these political games in Washington is not helping America’s unemployment rates get any better.

           

Knowing where each party stands on unemployment and how they plan to fix it is important to understanding the debate. Below I will explore each party’s views and plans on the subject of unemployment. However, before I do so, I would like to address some problems of bias I had with my research. Finding cold hard facts on this subject was very challenging as this debate is plagued with biases.  Conservative sites, such as Fox News, would always say how the Democrats have done nothing to help unemployment and have only made things worse. This article constantly attacked Obama’s stimulus package saying it has had “no impact” on unemployment.  But even when I visited a more Liberal website I was still thrown into the extremes and biases of the argument.  One New York Times article completely attacked the Republicans for blocking all economic legislation in congress and failed to provide a clear reason as to why they would block the legislation.  Bias proved to be a problem, but below I have tried my best to provide unbiased outlines of each party’s agenda when it comes to unemployment. 

The Democrats:

            According to about.com, one of the Democrats main goals in dealing with unemployment is job creation. For example, the President signed the American Recovery and Reinvestment Plan in order to help encourage job creation, but will also make “long-term investments in health care, education, energy, and infrastructure.”  Democrats also plan to create jobs by investing in alternative forms of energy and modernize American infrastructures. This is estimated to create about 3.5 million jobs for Americans.  CNN Senior Congressional Correspondent Dana Bash, says that Democrats also plan to fight unemployment by limiting the outsourcing of U.S. jobs overseas. Unfortunately, Republicans have blocked any attempt by Democrats to pass a bill limiting outsourcing and punishing companies that do so.  However, many Republicans are upset at most Democratic plan for fighting unemployment as they typically require large sums of money. National Debt is a big issue for most Americans, as citizens are tired of seeing the country fall more in debt. Therefore, the Democrats are having trouble getting some of their programs and solutions rolling. As far as assisting those currently unemployed, President Obama signed the unemployment benefits extensions back in January 2010, which provided much relieft to Americans out of work. It took a long time to pass though as Republicans wanted a budget cut to accompany it so the national deficit would not increase. Spending seems to be the Democrats main solution to fixing the unemployment, and while it may be effective, it does add to the deficit which could be a major problem down the road.

The Republicans:

 The Republican plan for helping unemployment seems very complex, but also very specific. Extending the Bush Tax Cuts, as well as, providing tax relief for working families and small businesses are two of their greatest priorities at the moment.  Reducing taxes allows families to save up their money or spend more at a time, while it also sends a message to businesses saying that tax relief is of the highest concern right now, which in turn encourages businesses to expand and hire.  However, let me clarify that the Bush Tax Cuts debate is a matter of Republicans vs. Democrats. There are some Republicans and Democrats that want them extended and there are some from both parties who don’t.  Extending the tax cuts will increase the deficit by 3.7 trillion over the course of 10 years, but it will provide major relief to working Americans and private sector firms. Republicans are also talking about establishing a job growth incentive tax credit in which businesses will receive tax deductions for creating job positions. This has plan has been used in the state of Colorado for a few years now and it has seen much improvement in its state employment rates.  Another task Republicans have discussed is limiting the power of labor unions. While unions do help protect the rights of American workers, sometimes their demands can be to extreme for corporations who end up outsourcing jobs to foreign markets. There are many critics to this plan however, as some point out limiting union powers would allow businesses to exploit workers more. 

Concepts for Reflection

This issue has definitely spurred on the Republican and Democrat rivalry. A common theme I found while researching was that on cites that favored a certain party; the blame was always thrown at the other.  According to World News Vine, the Republicans have introduced no innovative policies on fighting unemployment. But wait; didn’t I just list some of their plans above? Also the Democrats claim that if the Republicans get control of congress, then they will go back to the failed policies that drove us into this mess.  On the other side Republicans are blaming democrats for this mess. Many have blamed the Clinton Administration for this economic downturn, especially the housing crisis. During his terms loans were given out to people who would never be able to pay them off, and that he just reaped the benefits of the Regan/ Bush eras.  On terms of current economic policies Republicans criticize Democratic plans as most require vast amounts of spending which will only add to the deficit.  However, all this bickering between the two parties makes me wonder if the government even cares about helping the unemployed.  Democrats seems to be too focused on health care and minor environmental problems (this does not include the Gulf Oil Spill), which the American people have clearly showed no interest in. Republicans on the other hand claim they want to help, but whenever the Democrats try to introduce a new bill to assist the unemployed, the Republicans shoot it down.  There are pros and cons to each side’s actions and plans, but at the moment it is tough to see if Washington truly has the best interests of the American people in mind.  Unemployment is a huge issue that will require thought out strategies and party cooperation.

                                                                                                       



Lighten Up Unemployment!

In this post I decided to change things up a bit. I recently found a video that takes a lighter more humorous approach to this dramatic issue. The man in the video is named Josh Lipton is a Staff Writer at Minyanville, where he covers Business & Markets. Josh joins Minyanville from Forbes.com, where he was a Staff Writer reporting on stock market activity and trends.  Although he takes more of a Stephen Colbert/ Jon Stewart role in addressing this issue, he does make some interesting points (even if I don't necessarily agree with them).  I am aware of the fact that he is very intelligent and knowledge when it comes to the economy, so he seemed like a very credible source.  In the video he will talk about how the market is failing and how he thinks it can be fixed. He recommends making the census every year because that was how the government was able to show an increase in employment in recent months. It simply hired more census workers. He jokes about adopting the census' practice of firing and then rehiring workers just to say that new jobs have been created. He claims: "it’s a numbers game." Obviously this could never work because the jobs these numbers are saying have been created are in fact a lie. Unemployment is still the same, as they just fired and then rehired the same worker. However, I do agree that the census creates jobs, so maybe instead of having it every 10 years, make it 5. More jobs would be created more often, but the only downside is that it will increase the deficit even more as money must be spent to pay wages. However, helping unemployment should be our nation's greatest priority now. I hope this crisis will be solved soon.

First Step: Tax Cuts

As I began my research on plans offered by both the Republicans and the Democrats to fix unemployment rates, I noticed that both plans rarely appear on the same web page. Although the sites I found mainly focus on one party over the other, they do mention the plan of their counter part.  That being said, one of the main ideas for lowering unemployment rates was to extend the Bush Tax Cuts, and perhaps lower them even more.  According to Justin Quinn, if congress pushes to extend the Bush Tax Cuts the result would be "huge private sector corporate spending." This is just the thing a failing economy needs. While both parties have surprisingly come to an agreement that the Bush Tax Cuts need to be extended, the problem now lies with who gets the breaks.

Democrats like Republicans both agree that small businesses need to receive tax cuts. Janet Peterson, a writer for Finance News, claims the Democrats plan to tax the rich in order to make up for lost revenue brought on by the credit crisis.  This is where the parties split on their ideas. Republicans want to also extend the tax cuts for big businesses along with small businesses. They do not want to place heavier taxes on the rich because they think that this will encourage more spending that will help the struggling economy. 

I think that both sides make valid arguments to their side. However, I don't understand why the Democrats don't want to extend the tax cuts to bigger businesses as well. Seeing as they are a huge and vital part of the economy, not assisting them in this economic downturn seems foolish. It makes sense that Democrats don't want to lose revenue which would further extend the national debt, but once businesses can get back on their feet, then we can worry about debt. In my economics class I learned that large firms (in a competitive market, meaning no monopolies) are very important for economic success. If big businesses all begin to fail, because they are not being offered any help and are actually being punished for being successful then the entire economy could potentially collapse. Having many large corporations fail at the same time would put so much stress on the economy that it would completely fail, creating a worse situation than before.  Extending the Bush Tax Cuts would be a huge first step in fighting unemployment, but they must be offered to all businesses, both small and big if they are to be successful. The whole point is to create jobs and promote spending, which cannot be done if no one has money to spend or is too scared to do so.

Who Knew Finding a Job Would be so Tough?

Before I begin an in depth analysis of possible solutions for lowering unemployment rates, I thought it would be helpful to first explain how this problem started.  The unemployment crisis began to emerge in 2007, near the end of the Bush Administration. While President Bush attempted to address the issue, he was ultimately unable to accomplish much with such a short amount of time left on his term. Therefore, President Obama has also shared the task in trying to resolve this issue, and he too has not had much success. According to James Sherk (Senior Policy Analyst in Labor Economics), unemployment has increased for two main reasons:

1. Firms have increased layoffs and

2. Firms are creating fewer new jobs

However, the second reason of the two is the most dangerous. When a worker loses his job he typically tries to find new work right away. Unfortunately if firms are not creating new job positions then the worker will stay unemployed longer as it is extremely difficult to find an open position. For this reason today's job market has become very competitive and with so many desperate for work, it is no surprise to see many taking jobs they are clearly over qualified for. This is an issue I hope to further discuss later especially since I will be trying to find a job in the next few years and students have had a tough time finding work in this economy. The current recession has definitely played a major role in keeping unemployment rates high. In fact "more than eight million people across the nation have lost their jobs since our recession began in late 2007," according to Moe Bedard.  Other factors contributing to unemployment have been poor management by firms and lack of government support.

Now that you have some basic knowledge of how the unemployment crisis came to be, I will begin analyzing possible strategies directed at fighting unemployment. Since the United States has two main political parties, I will thoroughly examine each party's solutions, as well as list the pros and cons associated with each plan. By creating an informative and unbiased blog about possible solutions for reducing unemployment in America, I hope that you will be able to form your own opinion about the best course of action to take, even if it differs from my own.