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Reich writes: "Businesses won't create new jobs without enough customers. But most Americans no longer have enough purchasing power to fuel that job growth."

Economist, professor, author and political commentator Robert Reich. (photo: Richard Morgenstein)
Economist, professor, author and political commentator Robert Reich. (photo: Richard Morgenstein)

The Lousy Jobs Report and the Scourge of Inequality

By Robert Reich, Robert Reich's Blog

11 January 14


he U.S. economy created a measly 74,000 new jobs in December, and a smaller percentage of working-age Americans is now employed than at any time in the last three decades (before women surged into the workforce).

What does this have to do with the fact that median household incomes continue to drop (adjusted for inflation) and that 95 percent of all the economic gains since the recovery started have gone to the top 1 percent?

Plenty. Businesses won't create new jobs without enough customers. But most Americans no longer have enough purchasing power to fuel that job growth.

That's why it's so important to (1) raise the minimum wage at least to its inflation-adjusted value 40 years ago - which would be well over $10 an hour, (2) extend unemployment benefits to the jobless, (3) launch a major jobs program to rebuild the nation's crumbling infrastructure, (4) expand Medicaid to the near-poor, (5) enable low-wage workers to unionize, (6) rehire all the teachers, social workers, police, and other public service employees who were laid off in the recession, (7) exempt the first $20,000 of income from Social Security payroll taxes and make up the difference by removing the cap on income subject to the tax.

And because the rich spend a far smaller proportion of their earnings than the middle class and poor, pay for much of this by (8) closing tax loopholes that benefit the rich such as the "carried interest" tax benefit for hedge-fund and private-equity managers, (9) raise the highest marginal tax rate, and (10) impose a small tax on all financial transactions.

One of the major political parties adamantly refuses to do any of this, and the other doesn't have the strength or backbone to make them.

Make a ruckus.

Chancellor's Professor of Public Policy at the University of California at Berkeley and Senior Fellow at the Blum Center for Developing Economies, was Secretary of Labor in the Clinton administration. Time Magazine named him one of the ten most effective cabinet secretaries of the twentieth century. He has written thirteen books, including the best sellers "Aftershock" and "The Work of Nations." His latest, "Beyond Outrage," is now out in paperback. He is also a founding editor of the American Prospect magazine and chairman of Common Cause. His new film, "Inequality for All," is available on DVD in January and on Netflix February 28th. your social media marketing partner


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+27 # raclis 2014-01-11 09:46
All of this makes so much sense, it is unlikely to happen, but we can hope!
-19 # wantrealdemocracy 2014-01-11 11:38
This can only happen if you stop voting for the Democrats. I need not mention that you must not vote for the Dims corporate evil twin. The Republicans are honest that they are for the rich and socially weird. Voting for the Democrats who talk nice (nice lies) but vote for the further enrichment of the top 1%. These people are the ones we must stop voting for to allow candidates who will support the ideas that Reich puts forward. It would be wonderful if Reich would tell the truth about the Democrats and their dreadful voting record. We need a clean sweep in Congress. Vote out ALL imcumbants.
+12 # tabonsell 2014-01-11 15:23
Strange but I never saw anything like this happening when Republicans controlled the White House, both houses of Congress and the judiciary. Why should I expect it to happen in the future? The GOP is behind all our problems.

If you would do any research at all you will ind that Democratic administrations produce better results in all things economic than do Republicans. Just do a little research.
+6 # SenorN 2014-01-12 06:17
Since Eisenhower, Republican presidents have consistently run far higher deficits than Democrats.

Embarrassingly for Republicans, that disparity is greatly increased if you consider the legacy costs left to Democratic presidents by their Republican predecessors. (Think of the surplus Clinton left GW and the $1 trillion dollar budget deficits the latter left Obama...) For more detail on this, check out http://home.adelphi.ed
0 # SenorN 2014-01-12 06:21
With apologies, because I don't see a way to correct the above incomplete URL, here is the complete one:
+2 # Quickmatch 2014-01-12 13:11
I don't understand your point. Don't vote for either Democrats or Republicans? Vote everyone out and replace them with...who? A bunch of Neo-Nazis, Communists and people who run arounf wearing tinfoil hats?
+25 # edwin_ 2014-01-11 10:10
I agree with RR on the minimum wage. But on the underlining problem ,the Unemployment Rate, the dems are as bad as the repubs. The political elites of both parties have given too much to the corporations while the corporations eliminate American jobs. This started with Fast-Track & NAFTA . Yes, Ross Perot was correct when he spoke of the 'giant sucking sound'. companies get tax breaks for out-sourcing and hiring H1B visas to replace American workers.
The elites know that Americans work best on an empty stomach so they donate many $ to have the politicians enact policies that eliminate jobs in the US. We need to get $ out of politics.

RR is correct . Soon the economy will run ot of customers
+28 # samothrellim 2014-01-11 10:21
Let's all get behind Elizabeth Warren and Robert Reich for the changes we thought we were getting with Obama and Occupy has yet to accomplish!. How refreshing it would be!
+17 # DikBala 2014-01-11 10:43
All the recommendations seem sound except for number (7). If the first $20,000 of income were exempted from FICA, I would never have qualified for Medicare or Social Security, since I worked for a non-profit and took most of my living expenses in kind. Since what one gets back is a function of what one puts in, low wage earners would end up in poverty in old age. Unless a basement level of social security is established, irrespective of lifetime earnings, this point could end up being disastrous.
+10 # Merschrod 2014-01-11 12:11
Good point - the list needs tweaking - details were nt in the list though - tose are nice policy points though.
+22 # reiverpacific 2014-01-11 11:00
I just for the Hell of me CAN'T understand why this damn government can't get the infrastructure renewal and upgrading -it desperately needs to be dragged into the 21st century, like the criminal Healthcare non-system and social safety net; ALL would create jobs across the board from professionals to blue-collar and might even instill pride in being working class again, give a sense of worth to the millions of unemployed and boost the economy.
There is a sense of almost 'deadness' that I'm perceiving now, as opposed to the "Can-do" and almost anything possible prevalent when I first hit these shores in the 1970's.
But of course that might mean cutting the seemingly sacred military-spy-in dustrial-border -prison complex in this death culture.
+19 # dostoevsky 2014-01-11 11:00
Two additional ideas: 1) Stop the destruction of the purchasing power of the US$. 2) Stop the destruction of U.S. manufacturing jobs. Why is TPP (NAFTA on steroids)being "fast-tracked" in secret?
+11 # modernjacobin 2014-01-11 12:21
There's an article here in the L.A. Times:!

Supposedly, Obama thinks it will create jobs for Americans in Europe and Asia. (Yes, that's right, we'll just have to move there!) It also says "he wants in order to limit congressional debate and force quick votes on his big new pacts."

Whatever happened to a transparent government?
-56 # Robt Eagle 2014-01-11 11:13
Lower taxes and get rid of onerous regulations on small business and then jobs and equality will naturally occur. Also get rid of Reich and Krugman who are both wrong consistently and constantly.
+14 # Merschrod 2014-01-11 12:17
Rather simplistic Rob, think through the offshoring and absolute free trade - then explain to us just how the US economy can produce "stuff" for less than the People's Republic.

BTW there is no such thing as "naturally." The economy is a contrived set of rules and regs. Is it natural to restrict the right to assembly? (Such as the formation of unions?)
+10 # Farafalla 2014-01-11 14:16
I read RSN to read Reich and Krugman, not you and Ayn Rand.
+7 # Lou17 2014-01-11 12:24
Professor Reich, I think the reason Democrats do not fight for the people is not lack of strength or backbone but because corporate money largely funds them. In campaign contributions, business interests outspend unions by more than 15-to-1, and business PACS outspend labor PACS by more than 3-to-1, according to the Center for Responsive Politics. In lobbying, labor spent $34.8 million in 2013, compared to $359.1 million spent by the health industry, $358.9 million spent by finance/insuran ce/real estate,, out of a total of $2.238 billion spent by almost 12,000 lobbyists. The solution? Awaken the people enough so they demand getting corporate and big-donor money out of politics, probably by amending the Constitution.
+16 # modernjacobin 2014-01-11 12:29
Today, on January 11, 2014, it may not be amiss to recall FDR's proposed second bill of rights--one that he proposed exactly 70 years ago:

1. The right to a useful and remunerative job…
2. The right to earn enough to provide adequate food and clothing and recreation;
3. The right of every businessman, large and small, to trade in an atmosphere of freedom from unfair competition and domination by monopolies at home or abroad;
4. The right of every family to a decent home;
5. The right to adequate medical care and the opportunity to achieve and enjoy good health;
6. The right to adequate protection from the economic fears of old age, sickness, accident, and unemployment;
7. The right to a good education.

Now, tell me, how much of this do we have today? Has it not declined rather than improved?

See also Harvey Kaye's wonderful article:
0 # louisPhillipe 2014-01-11 13:57
These proposals are great but the middle class has not been brought down enough to create a third party. Until then nothing will change.
+10 # modernjacobin 2014-01-11 15:03
The question is how long do we wait until the middle class shrinks entirely so that we confront the same predicament faced by France in 1789? Decline may not be evident in every city and state, but there are enough signs that the middle classes have become much more vulnerable since 2008 just as Reich and so many others have noted time and time again. A few years ago, the NYT reported record numbers of middle class folks who once contributed to the food banks now receiving food there. A number of tent cities arising throughout the west just like the camps of migrant workers in the 1930s. And most recently, there was an article in the WSJ about people getting priced out of San Francisco: a city where midmarket studios now cost $2,500 to rent. I say it's better to take preventative action than to wait for the disaster to happen.

Sometimes 3rd parties can work--and very well at that: that's actually how slavery got abolished in the 1860s. (Surprise, Republicans were sort of the Green Party of the day since they split off from the Free Soil party.) Personally, at the moment, I would prefer to see folks like Warren, Grayson, and Sanders lead just because of all the great energy, commitment and action they've already taken over the last few years.
-1 # Rick Levy 2014-01-11 20:10
In your dreams, Robert. Of course your recommendations make sense, but you and others have been promoting them almost from day one of the Great Recession. If they haven't been implemented by now, they likely never will, and the status of working Americans will continue to decline.
0 # reiverpacific 2014-01-12 16:37
Every January if I remember a'right, there's a drop in employment, as the temporary hires for the "Silly-season" of mad-rush shopping for "Stuff" are laid off.
I wonder why that's a surprise to anybody but it reads like it year after year.
And construction is notoriously slow in winter, especially with the freezing weather back east and the Midwest.
Just a wee observation; doesn't make the picture any brighter I guess but "Make a ruckus" is a bit weak from Dr Reich as a solution, especially as the majority of the 1.5 party system millionaire's club are practically deaf to the grassroots, except when they want their vote to stay in these cushy jobs we pay them for to do bugger-all.
+5 # Quickmatch 2014-01-12 18:36
Why not lose the income cap on SS? The bottom quintile ($20,000) gains $35 billion, the top quintile (>$100,000) pays $270 billion more, half from incomes over $180,000. The formula adds $230 billion a year to SS revenues and liberates the SS fund for decades while costing the $180,000 income family $8000.

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