Monday :: Jan 7, 2008

Open Thread - with some Economic Meanderings


by Mary

Even moderate economists see recession on the way and now the argument is whether it will be mild or severe. What's severe? A recession that lasts a year or more and has an 8% unemployment rate. Since the unemployment rate no longer counts those not covered by unemployment or who gave up looking for a full-time job, I'll bet we'll never see an 8% unemployment rate again. Such a lucky Bush - once more the coming (or recently arrived) recession will feel really severe by those affected by it, but you'll never be able to tell that by the government statistics. One wonders what it would take for the chattering classes to figure out that a major reason people are unhappy these days is because the economy sucks for way too many Americans. As Alan Binder notes, a big reason for this is because there isn't much of a safety net left when one loses a job.

As present, most Americans who lose their jobs suffer a catastrophic loss of income. The minority of job losers who are fortunate enough to be covered by unemployment insurance see perhaps half of their lost wages replaced. But most job loss is not covered by unemployment insurance. That should change. In addition, wage insurance would replace a portion of the wages lost by workers who do find new jobs at lower rates of pay. While wage insurance has been criticized for encouraging employers to pay low wages, it would also encourage the unemployed to find and take jobs more quickly.

Americans who lose their jobs are also likely to lose their health insurance coverage. And some also lose their accumulated pension benefits. None of this should be allowed to happen in a civilized society. We cannot stop the world from spinning on its axis, but we can fix these problems.

Of course, under a Bush administration, the only likely fix would be to reduce taxes on the ultra-rich so they won't have to worry about their futures. After all, they are Bush's base.

Your turn now.

Mary :: 12:00 AM :: Comments (2) :: Digg It!