Job Loss Looms as Part of Stimulus Act Expires

Tens of thousands of people will lose their jobs within weeks unless Congress extends one of the more effective job-creating programs in the $787 billion stimulus act: a $1 billion New Deal-style program that directly paid the salaries of unemployed people so they could get jobs in government, at nonprofit organizations and at many small businesses.

In rural Perry County, Tenn., the program helped pay for roughly 400 new jobs in the public and private sectors. But in a county of 7,600 people, those jobs had a big impact: they reduced Perry County’s unemployment rate to less than 14 percent this August, from the Depression-like levels of more than 25 percent that it hit last year after its biggest employer, an auto parts factory, moved to Mexico.

If the stimulus program ends on schedule next week, Perry County officials said, an estimated 300 people there will lose their jobs ”” the equivalent of another factory closing.

“It’s very scary, because there’s just no work,” said Brian Davis, a 36-year-old father of four, who got a stimulus-subsidized job with the City of Lobelville after he lost his job of 17 years at an auto parts plant that shed hundreds of jobs. Now he faces the prospect of unemployment again.

Read it all.


Posted in * Economics, Politics, Corporations/Corporate Life, Economy, Labor/Labor Unions/Labor Market, The Credit Freeze Crisis of Fall 2008/The Recession of 2007--, The Fiscal Stimulus Package of 2009

19 comments on “Job Loss Looms as Part of Stimulus Act Expires

  1. AnglicanFirst says:

    “…from the Depression-like levels of more than 25 percent that it hit last year after its biggest employer, an auto parts factory, moved to Mexico.”

    When you look at the taxpayer costs incurred to compensate for unemployment caused by the loss of jobs resulting from selling off our productive capacity to foreign countries,
    how much money is the consumer really saving as a result of the lower cost goods resulting from those sell offs?

  2. Sick & Tired of Nuance says:

    [blockquote]…Depression-like levels of more than 25 percent that it hit last year after its biggest employer, an auto parts factory, moved to Mexico.[/blockquote]

    NAFTA! We have got to repeal this treaty! There is no level playing field. Our manufacturing jobs are being lost to other countries that do not have an OSHA or an EPA and do not have Social Security or unemployment insurance. How can Americans compete with virtual slave labor? How can we compete when other nations pollute at will and don’t care about worker safety at all? Ross Perot was right and this joblessness is the giant sucking sound he warned about.

  3. Bart Hall (Kansas, USA) says:

    AF: those of us who [i]own[/i] businesses are affected by this all the time. I farm for a living, and the standard (but true) joke is that we have to be everything retail … and sell at wholesale.

    What’s really going on is that we’re in a deflationary depression. From extensive readings in economic history I first identified tremendous overhanging deflationary pressures in 1997. Repeated Fed monetary interventions were able to stall the unfolding of those pressures, but only for so long, and only in away that has made them worse.

    To date, deflationary pressures on [i]WAGES[/i] have largely played out in the export of jobs, or their disappearance altogether. It does not get much coverage, but [i]China[/i] has lost 15 to 20% of its manufacturing jobs in the last ten years (automation).

    Workers in America and elsewhere must begin to accept that the world they knew is gone, and will never return within their lifetimes. The people being paid $48 per hour, plus benefits to clean airplanes for Northwest Airlines … no longer have that job.

    Patchwork government subsidies only make things worse because they continue in the attempt to paper over the uncomfortable reality of a broadly deflationary wage environment only now gaining some real traction.

  4. Bart Hall (Kansas, USA) says:

    STN: You have obviously never tried to get anything done in Mexico.

    Average wages in Mexico are about $1.60 per hour, but wages are a tiny fraction of the costs of getting anything done down there.

    The tariffs removed by NAFTA were 10%. Do not ask me to believe that American labor could somehow compete against $1.76 wages, but not $1.60.

    I have worked with import/export in all three NAFTA countries, and am a citizen of two. The USA has been the greatest beneficiary of NAFTA because it removed heavy tariffs against our exports in two of our largest trading partners.

    And, as I posted to you once not so long ago, in inflation-adjusted terms, US manufacturing has [i]doubled[/i] since 1983. That is a 3% compound annual growth rate for nearly 30 years.

    As above, the problem really is more about American unwillingness to adapt to a deflationary environment, especially amongst unionised workers, and most particularly those in the public sector, who already garner 44% greater compensation than people in the private sector doing the same work.

  5. Cennydd13 says:

    Precisely, Bart!

  6. Tired of Hypocrisy says:

    We have been duped by multinational corporations who tell us they must move jobs to remain competitive. But, are they lowering prices or using these bogus savings to re-invest in the business? No, they are using it to prop up stock prices and quarterly statements. We have been betrayed by them, and by their puppets in Congress. Their solution to try to right this wrong? Borrow and tax to bail out collapsing financial institutions and throw us a bone with temporary unemployment benefits. Of course, the majority of Americans, though we have all been affected in some way by this betrayal, are getting along. But, even for those who remain employed the reprieve is temporary. Sooner or later we will all be sucked into this receivership economy because it is built on a foundation of sand–the acceptance of a growing permanent underclass that cannot earn a living wage in their own home town.

  7. palagious says:

    Short-term government jobs is just plain dumb, as the teachers unions are finding out. They only delayed the reality for a year.

  8. libraryjim says:

    My Dodge Caravan (remember, Chrysler was one of the companies receiving the bailouts) had a sticker on that said “assembled in Mexico”. What good is it to bail out American companies if they are not going to return the investment by staying in the US? That should have been a requirement of the bailout and stimulus funding.

  9. DonGander says:

    Sorry, all, but you have managed to put me in a bit of a depression, myself. It’s not really about NAFTA (for or against) or government, it is about productivity. Our job is to give a cup of water in Jesus name. The article seems to infer that a government paycheck is as good as work. It ain’t so. Yes, there is no level playing field with other slave countries. True, but to use that as an excuse to not work is a non-christian attitude. At what point in history (since Jesus died on the cross) has life been fair? We shouldn’t expect “fair” and we sure shouldn’t expect government to make things fair. They are most generally the source of much of the unfairness.

    I did not live through the 1930s but I did live through the 1970s and I learned then that there are always more people needing things done than there are people willing to do them. We Christians need to focus on the need rather than on the difficulty. Jesus said that the need would always be there. I believe Him.


  10. John A. says:

    #6 I used to work at a company that moved plants from the US to Mexico, Eastern Europe and China. The math was simple. It costs less to hire people outside of the US. Of course they do it to “prop up stock prices”. That’s their job. What would you have them do instead??

    When a company makes “extra” money they either invest it to expand the business, invest it in new machinery or technology so they do not have to hire as many people or they give it back to the share holders. Employees who are responsible for planning participate in profit sharing but everyone is paid relative to the market. That’s how the system works. Are you proposing socialism or a planned economy?

    Don’t think tariffs or special tax incentives are the solutions either. In one case the company received a tax incentive for shipping product through US ports. As a result product that could just as easily been produced in the US was produced in Scotland and shipped back to the US!

  11. John A. says:

    #6 I forgot to mention … Companies definitely pass along the savings to their customers. The only exception would be if they are protected by tariffs or some other government intervention.

  12. Tired of Hypocrisy says:

    John A., I’m very familiar with financial statements and with capitalism, and what we allow multinational corporations to do is simply wrong. Too many of us, including me, have been drinking the cool aid of so called “free market” capitalism. It’s a long discussion and won’t be resolved here, but take a close look at our assumptions about how business is conducted here and abroad, look at the stock market, ask yourself if what you’re saying is really true, or if it’s what we’ve been told should be true.

  13. John Wilkins says:

    Bart shrugs at the possibility that we may become more like a third-world country. Personally, I’m quite happy that we had the greatest boom in the history of the world from 1945-1972. It included fairly high taxes for the wealthy, but there was plenty of trade. The government spent money on universities; on the GI bill; roads; a strong military that provided jobs and security.

    And while American workers became more productive, their salaries remained stagnant. They invested in 401 Ks that the market ravaged. And now, people will lose jobs, ravaging their families and creating more misery. Who cares? It’s not the job of business to care. And Christians, generally can’t do enough. How many have the power to offer jobs with health insurance and a pay that can offer security? Or perhaps, we do not believe that loyalty is cost-effective. By and large, those virtues of tenacity, loyalty, solidarity are bought and sold. No reason for any employee to trust their employer, who reminds the worker that they are, finally, replaceable.

  14. Tired of Hypocrisy says:

    Amen, John Wilkins. Here is an area where we share common ground. You ask: “How many have the power to offer jobs with health insurance and a pay that can offer security?” I answer: If it’s a priority, all can. ALL CAN… if it’s a priority. At least if we’re talking about the giant corps, but many smaller ones, too. Would it be an all-inclusive package? No, but it might be enough to ward off bankruptcy when there’s a health crisis in the family. When giant corporations whine about the rising cost of healthcare, they are whining about their inability to manage their own relationship with the insurers and/or providers. They have incredible leverage to push for change, but don’t use it for some reason. Why? When they whine, they admit they don’t understand the priorities of the average employee. What could be more important than healthcare? I’m not endorsing the Obama solution, I’m just saying, what priority could possibly be higher? But, to get back to the question of jobs, worker loyalty and performance are worth nothing, and everyone who reads this knows it. Factors out of worker control, including the whims of feudal-lord-like company executives and politicians will always trump their efforts. Do not put your trust in these earthly powers. That is what we have learned from this recession. (And yes, I do still have a job.)

  15. Sarah says:

    RE: “Bart shrugs at the possibility that we may become more like a third-world country.”

    Nah — he just has the appropriate resignation of a Constitutional conservative in a country led by collectivists. These things happen with folks who relish the power of the State to steal from the individual to serve their particular treasured audiences of favor-seekers.

    But our time is coming — not to worry. Then Bart won’t need to be resigned.

  16. Sick & Tired of Nuance says:

    Prior to NAFTA and GATT, I don’t recall there being a mass exodus of manufacturing jobs from America. I distinctly remember when alarm bells were sounding because IT help desks were being outsourced to overseas. I also remember fairly recent discussions of how white collar jobs were starting to be outsourced to overseas workers…even things like having our x-rays interpreted by a physician in another country.

    I am not a trained economist, nor am I a business owner. However, I have seen first hand how electronic parts I use in my work were outsourced to other countries. I have first hand knowledge that quality went down, sometimes to the point where the components were worthless. (We were then told to “use them until they are exhausted from the supply system” – yet the motherboards were completely useless because the way the vendor made them, they would not fit into the “packages” we were working on.)

    The point is, something profound changed in the US and seems to have coincided with NAFTA and GATT. Since the passage of these two trade bills, our trade deficit seems to have gotten worse and job security went the way of the Dodo. Also, our pensions became self funded and controlled and that seemed to sever all ties of loyalty between workers and their companies. The very idea of a “company man” was dead and gone. Your employment could be terminated because some worker in Bangladesh would do your job for $1 and hour and there were no benefits or OSHA protections required. Education was no barrier either, despite all the hype at the time about how we were just shedding old fashioned manual labor type jobs. No, we are and have been shedding both blue and white collar jobs. Most of the new jobs created have been in the service sector and they are low paying. The stagnation and decline in real wages is a fact of life and has been going on for over a decade. (That is why I am in favor of either anchoring our currency to some precious metal or automating minimum wage increases to the CPI.) Productivity went up immensely, yet jobs still went away and pay still stagnated. That isn’t the worker’s fault! That is a systemic issue tied with international trade.

    You ALWAYS end up with the system that you engineered. If the results are not what you want, it is because there is a design flaw, not because there is a “malfunction”. Currently, we are experiencing stagnant wages and staggering unemployment across all class boundaries. This is by design, regardless of the intent. If we step back to see what changes were made to the system prior to the symptoms of massive outsourcing and stagnant wages, I believe we will see that those changes are NAFTA and GATT. These negative effects of outsourcing and stagnant wages seemed to have taken effect right after the passage of these treaties. I think we should repeal those treaties, reduce corporate taxes, and see where the capital flows. I believe that investment money would flood our nation and significant manufacturing (not just “assembly”) would return to our nation…leading to lower unemployment, higher wages, higher tax receipts, fewer foreclosures, fewer bank defaults, more investment, etc.

    It is as if the “ruling elites” wanted to reduce economic incentives for international conflict, so they engineered a way to reduce America’s preeminence while raising the standard of living for third world countries (and perhaps socialist Europe). This appears to have been done at the expense of the average worker in the US. The US rebuilt Japan and Europe after WWII. We gave Japan the newer oxygen coker plants to produce steel, and sewed the seeds of the demise of US steel. We funded (through the Marshall Plan and by paying for the defense of Europe during the Cold War) the European socialist standard of living. This was all done by the US engines of industry and the American worker. What changed? NAFTA and GATT.

  17. John Wilkins says:

    #15 – I am always perplexed by your loose definition of the word “collectivist” which is, to put it mildly, imprecise if rhetorically useful. Especially as we have a president that is slightly to the right of Richard Nixon. My own taxes have gone down; and I don’t see the state do much except pay private entrepreneurs to redo the roads. The teachers who haven’t been fired don’t have lunch at state businesses, but buy their lunches at grocery stores. I admire the hyperbole, however. I doubt it will end the recession.

  18. Sarah says:

    RE: ” I am always perplexed by your loose definition of the word “collectivist” . . . ”

    No you’re not.

    RE: “I admire the hyperbole, however. . . . ”

    Nah — it just irks you.

    Just think how much more November elections will irk you.

  19. John Wilkins says:

    Heh – well, I guess the chasm of mutual incomprehensibility has again been demonstrated, Sarah.

    I may be disappointed, but probably not for the reasons you suspect. Some of us don’t quite have a Manichean world-view about politics and ideology. I’m personally fascinated by the Tea Party, for example, and will be intrigued to see if they take governing seriously. Irked?


    If the Republicans govern well, good for them. I’m skeptical. Over the last 30 years they’ve controlled the white house for 20 and the congress for 12. If the American populace wants to give them another chance – well – that’s the nature of our democracy. I just don’t think their policies will work. If they do, great! Ireland hasn’t done that well under an austerity budget; Brazil and Germany have been more successful and they have different economies. India weathered the banking crisis, in part because they’ve got strong regulations. We gave Obama two years to fix things. Perhaps the Republicans will fix things faster. Perhaps they will now have to work with Obama rather than oppose him. It’s easy to be the opposition. Once elected, they will be the incumbents.

    I have, by now, overcome my frustration that the party of Senator Borah, Millicent Fenwick, Lowell Weicker, Nelson Rockefeller and Jacob Javitz has become ideologically provincial. And it remains perplexing to me that a president politically to the right of Nixon is considered a “collectivist” by many. A fascinating, if disturbing, commentary on our times, and our general lack of historical knowledge.