The American economy could slip into a deeper recession unless immediate action is taken to stem the tide of rising unemployment and falling family incomes, witnesses told the Committee in a
hearing today.
Economists predicted that, based on past recession trends unemployment
could soon reach eight percent or higher, and middle-class families’
incomes could drop by more than $2,000 this year.
“It is
urgent that we prepare now to take the next steps to rescue the economy
by creating jobs, providing immediate relief to the states and small
businesses, and by making real investments in energy, technology and
education,”
Chairman George Miller said. “We must have a plan that speaks directly to the needs of American families and workers today.”
The
number of out-of-work Americans has increased by 2.2 million in the
last year. They join more than 2 million workers who have been
unemployed longer than 27 months. In October, many workers began
exhausting their unemployment insurance benefits. By the end of this
month, an estimated 775,000 workers will be left without a safety net,
and a total of 1.1 million workers will be in the same straits by the
end of the year.
In a
letter
to Chairman Miller released at the hearing, economist Alan Blinder of
Princeton University predicted that “unemployment will top out in the
8-8.5 percent range” if the coming recession is as severe as the
recessions of 1981-82 and 1973-75. “My worry,” wrote Blinder, “is that
we may be heading in that direction.”
“We are clearly in the
early stages of a potentially very serious recession that will likely
be as deep as anything we have experienced in a generation,” said
Ron Blackwell,
chief economist of the AFL-CIO. “Just how deep and protracted this
recession will be depends on a timely, aggressive and well-focused
economic recovery package.”
To help families make ends meet while they look for a new job, the
Democratic Congress voted to extend unemployment benefits
in early October. Unfortunately, that effort was blocked by Senate
Republicans. The Bush administration threatened to veto the extension
claiming it would encourage out of work Americans not to find a new job.
“There is nothing enjoyable about being up at night worrying about how you are going to make ends meet,” said
Dana Stevens,
an unemployed worker from Thorofare, NJ. “For anyone to suggest that
receiving unemployment is like getting a free vacation is insulting and
degrading to the millions like myself who are desperately trying to get
back to work.”
Millions of workers not only lose their jobs
during a recession, but household incomes for those with a job also
decline on an average of four percent.
Jared Bernstein,
director of the Living Standards Program at the Economic Policy
Institute, said that if past trends repeat themselves this time around,
middle-class families’ who earn around $60,000 will see their income
fall about $2,500 this year.
“Due to factors regarding job loss,
fewer hours, and the slower wage growth driven by the weaker job
market, incomes usually fall in recessions,” said Bernstein.
In
September, the House of Representatives also approved an economic
rescue and job creation package to help head off a deeper recession. It
would have created good-paying jobs by investing in new energy
technology and infrastructure. The bill would have also provided
access to job training and helped working families with grocery and
health care bills. Senate Republicans and the Bush administration also
opposed this effort.
Many economists say that making
infrastructure investments are some of the most effective uses of
federal dollars that create jobs in both the short-term and the
long-term.
Robert Pollin,
a professor of economics at the University of Massachusetts-Amherst,
said a $150 billion job creation program will create 2.9 million jobs
in the short-term alone.
“In the midst of the severe financial
crisis and deepening recession, it is imperative that the federal
government take action as soon as possible to counteract the downturn,”
said Pollin.
Pollin’s latest research also reveals that
infrastructure investment produces a second wave of private sector job
creation within two years, pushing the 2.9 million new jobs up to 3.3
million new jobs in a two-year time frame.
To encourage
long-term job creation, investments are needed to build the nation’s
technological backbone that will help foster growth in the emerging
high-tech industry and green economy.
“Advanced networks will
allow increased opportunities for the creation of even more highly
skilled technology jobs to invent new products and improve existing
ones in the vital areas of energy, health care, education, public
safety and services,” said
Christopher Hansen, president and CEO of AeA. “These are the jobs of the future.”