by James Boyd

Created on: February 13, 2010

Of all the whole or partial solutions that have been for America’s current economic woes, none begins to address the root of the problem. We have used federal funds to bail out banks, auto companies, and one very large insurance company. We had stimulus funds approved. None of those things are going to solve the problem. Rather, they just allow us to have a temporary respite from the very real trouble we face.

The problem is jobs. There are not enough of them and the ones that are available do not pay very well. When somewhere in the neighborhood of 17% of the workforce is unemployed or underemployed, we have a problem that no bailout of a big bank is going to touch. President Obama recently acknowledged that this may be the biggest obstacle to economic recovery. There was a proposal floated of a $5000 tax credit to an employer for hiring somebody. That is just silly. Companies will just churn workers, and the costs of an annual turnover rate in excess of 100% will be more than offset by tax credits. They will hire lots of people, fire lots of people, and the net effect for the economy will be zilch.

Before considering the specifics of a solution to our current economic woes, it is critical to understand the effect of creating enough jobs so that everyone who is willing and able to work has steady employment at a living wage. People who have jobs pay taxes. That increases revenue for the government and thus eases the deficit problem. In addition, those people are no longer draining funds from government coffers because they do not need food stamps, Medicaid, housing subsidies, or unemployment insurance. Business payments for unemployment insurance would be dramatically smaller. In addition, people with steady jobs that pay a living wage do what with their money? Do they stuff it under the mattress? They do not. They spend it. Which results in increased sales of nearly everything, and that benefits businesses directly by way of increased revenue, which enables them to pay more employees. Increased sales also increase government revenue through sales taxes.

People with steady incomes also make their mortgage payments, so full employment would be a big benefit for banks, too.

Full employment also benefits politicians. People with secure incomes tend to like the status quo and are likely to keep whichever politico happens to be in office, rather than agitating for change. A situation in which nearly everybody who is willing and able to work has steady employment

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