the jobs crisis and stimulus policy lawrence mishel president epi www epinet org n.
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The Jobs Crisis and Stimulus Policy Lawrence Mishel President, EPI www.epinet.org. Recession: Costing Jobs and Wages, Generating Inequality. Employment losses are steep. Unemployment will continue to grow. Particular groups have been hit hard.

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recession costing jobs and wages generating inequality
Recession: Costing Jobs and Wages, Generating Inequality
  • Employment losses are steep.
  • Unemployment will continue to grow.
  • Particular groups have been hit hard.
  • Recession has resulted in wage and income losses.
  • Recession has renewed growth of inequality.
a jobless recovery
A jobless recovery
  • Jobs down 2 million since recession began.
  • Greater job loss than in earlier recessions.
slide5
Unemployment up from 3.9% to 6.0%
  • Labor force growing minimally
household incomes
Household Incomes
  • Household incomes fell for the bottom 95% from 2000 to 2001.
  • Typical household lost 2.2%, or $934 annually.
  • Unemployment increase in 2002 causing further decline in household incomes.
average household income growth 1995 2000 and 2000 01 by income fifth

3.6%

2.6%

2.2%

2.1%

2.0%

1.6%

0.4%

-0.6%

-1.0%

-1.8%

-2.3%

-2.9%

Average household income growth, 1995-2000 and 2000-01, by income fifth.

4.5%

3.5%

1995-00

2000-01

2.5%

1.5%

0.5%

-0.5%

-1.5%

-2.5%

-3.5%

-4.5%

1st Fifth

2nd Fifth

3rd Fifth

4th Fifth

80-95%

Top 5%

1 generate growth and jobs
1. Generate Growth and Jobs
  • Create more customers (i.e., demand)--consumers & government.
  • With unused capacity, investment incentives are ineffective.
  • Spending is more stimulative than tax cuts.
  • Tax cuts are a more immediate stimulus.
2 be fiscally responsible
2. Be Fiscally Responsible
  • Temporary tax cuts
  • Temporary spending
  • Leave long-term fiscal balance untouched
  • Permanent measures unnecessary
3 timing
3. Timing
  • Economy needs some immediate stimulus.
  • Impact of stimulus must be felt over the next 15 to 18 months.
4 stimulus must be fair
4. Stimulus must be fair
  • Should lessen, not exacerbate inequalities.
epi plan
EPI Plan
  • Outcomes
    • Generates 1.5 million jobs
    • Lowers unemployment by 1%
    • Generates 2% additional growth
temporary spending 110 billion
Temporary Spending ($110 billion)
  • Grants to states to preserve health, education, law enforcement, and other services ($50 billion)
  • School renovation and repair ($25 billion)
  • Unemployment insurance: extend benefits and expand eligibility to part-time and low-earning workers ($25 billion)
  • Other measures ($10 billion)
temporary tax cut a wage bonus 65 billion
Temporary Tax Cut: A Wage Bonus ($65 billion)
  • Rebate of 3.5% of first $15,000 in wages
  • Comes from general revenue
  • Benefits 149 million workers
  • $525 for first $15,000 in wages, or $1,050 for family with two such workers