CHARLESTON, W.Va. -- The recent monthly report from the U.S. Department of Labor did not bring encouraging news. While the official U.S. unemployment rate did not change markedly, job growth plummeted. Worse, the Labor Force Participation Rate dropped to 63.3 percent, its lowest level in 35 years. The rate was even worse at about 50 percent among those under age 25.
Both rates bear discussion. The popularly quoted unemployment rate is fiction at best. First, it only counts those who are actively seeking work. This means those who are lined up at official employment and workforce offices. For survey tallies, it also means that they have telephone or Internet. Clearly, particularly in rural areas where many have given up with that process, the rate is suspect. In fact, many economists suggest that the real unemployment rate should be triple the officially released rate.
The Labor Force Participation Rate hones into a more revealing situation. It indicates those who could be working but have given up looking. When half of the eligible workforce is not engaged -- or working under the table for spurts of cash without contributing to Social Security or receiving fringe benefits -- one could conclude that our economy is on the precipice of collapse as people shop less and cheaper.
The drop in labor force participation also has other consequences. As noted in the Wall Street Journal, "the longer people stay out of work, the harder it is for them to find jobs -- thus many of the recent dropouts will never return to the labor market." Those who buck that trend will face jobs that pay less. Those under age 25 will have fewer opportunities for career-building and training opportunities that in the past have propelled people to a decent living standard over their lifetime.
The prescriptive medicine of debt reduction promises to exasperate the situation as the impact of sequestration winds its way into employment freezes, cutbacks and furloughs. Personal saving is at a five-year low as people draw down their savings, which will reach a limit. The consequence will reduce employment, spendable income and consumption, which has an eventual ripple impact throughout the economy. While politically popular as a sign of fiscal accountability, the consequence will place the burden on those who have the least. Those at the top may also be affected but they will hardly be struggling to survive or deal with basic needs.
Stripping away political rhetoric, what is missing is what once was called horse sense. While debt issues are real, there is lacking a serious discussion of "what is happening to whom" and how to fairly share the cost of triggered decisions. For example, Sen. Bernie Sanders and Rep. Jan Schokowsky have introduced legislation that would require corporations to pay U.S. taxes on offshore profits as they are earned, an amount projected to be $590 billion. According to AFL-CIO President Rich Trumka, the legislation "would increase investment, employment and wages in the United States." This was echoed by Mary Kay Henry, president of the Service Employees International Union, who said the proposal would "raise revenue, restore fairness to our tax code, and create good jobs in the United States."
Sanders noted that 31 corporations represented in the Business Round Table, a group favoring the slashing of Social Security and Medicare benefits, have avoided $128 billion in federal income taxes by setting up more than 500 subsidiaries in tax haven countries while receiving $6.5 billion in IRS tax refunds. These companies include General Electric, Verizon, Cisco Systems, Honeywell, Merck, Corning, Boeing, Dow, Alcoa, Caterpillar, Microsoft and United Parcel Service. All claim a red-white-blue pedigree, and all are guilty of patriotic treason.
Another example, as already implemented in Britain, is a tax on the financial transactions of big brokers and banks. These entities, such as Bank of America, JP Morgan Chase, and Goldman Sachs, received a taxpayer bailout of more than $2.5 trillion. Currently, they can buy-sell securities tax-free and have no financial incentive to be cautious, knowing that they are too big for the government to let fail.
By forcing the price of austerity on the most vulnerable, the young and those who will never develop to full potential, long-lasting if not permanent economic scars will occur. These scars will be extremely costly to society in the future and will have to be paid by those who are left engaged. In that regard, we need to pause and reflect on words of former President Theodore Roosevelt: "This country will not be a good place for any of us to live in unless we made it a good place for all of us to live in."
David, a retired WVU-Tech professor, is a Gazette contributing columnist.