No president since Franklin Roosevelt has won reelection with unemployment over 7.2%. Will 2012 be a referendum on jobs? Not exactly. (More)
Creating Jobs, Part III – Talking to Fred (Non-Cynical Saturday
This week Morning Feature looks at the phrase “creating jobs.” Thursday we examined the Republican view, as expressed by the House GOP caucus. Yesterday looked at the Democratic view. Today we explore how to talk about jobs with Fred, our archetypal median voter.
A referendum on jobs?
Last week, the New York Times‘ Binyamin Appelbaum wrote that employment data may be the key for Democrats’ electoral chances in 2012. The Wall Street Journal agreed, and a Gallup Poll this week found more voters are concerned about jobs than deficits. Yesterday, Senate Democrats said President Obama must do more on jobs, and began discussions on a major infrastructure package funded by cuts in oil industry subsidies and corporate tax loopholes.
But New York Times statistics maven Nate Silver’s found only a weak correlation between elections and unemployment. In a followup article, Silver found even weaker correlation for GDP growth and inflation, economic factors commonly raised in mainstream political narratives. Silver also analyzes economist Douglas Hibbs‘ “Bread and Peace” model, which is somewhat stronger, and concludes:
I’d be worried if, as our study of the unemployment rate seemed to imply, the economy had no effect on election results at all; that clearly seems wrong given the effect it has upon people’s lives and the media’s (appropriate) attention to it.
But I’d be just as worried if one or two economic variables explained 90 percent of the results. Wars matter, above and beyond what can be measured with a single variable based on military causalities. Watergate mattered. September 11 mattered. Monica Lewinsky mattered. The fact that parties have nominated candidates as strong as Dwight Eisenhower and as weak as George McGovern — that matters. It matters that the electorate goes through phases of being relatively more and relatively less partisan.[…]
It’s much too soon to reduce the election down to a four-word catch phrase, or to a two-variable formula. It’s the economy, stupid. And everything else too.
And that suggests our first tip when talking with Fred, our archetypal median voter:
Yes, unemployment is important. But the GOP also have a jobs plan – more specifically, a Plan For Job Creators – and we saw Thursday that plan will not help Fred support his family. The problem is not, as Republicans argue, that government hasn’t done enough to help archetypal wealthy Charles. As we saw last week, Charles has been the only real beneficiary of conservative economic policies. Incomes for the top 1% have skyrocketed over the past 30 years, while Fred’s median income has lost ground to inflation.
Silver’s numbers show that real disposable income growth is a better political predictor than unemployment, GDP, or inflation. And it’s not just about elections. His political analysis matches the economic analyses of Peter Diamond and Robert Reich we discussed yesterday, showing that our current stubborn unemployment is due to weak demand. Simply, Fred can’t afford to buy much, so sales are too weak to spur hiring.
It’s not enough to create jobs, especially if most of those jobs are minimum wage and/or part-time hires. A recent Price-Waterhouse-Coopers study found that the cities with the highest economic potential are not “pro-business” utopias with low taxes, low wages, and few regulations. Businesses do best, the study found, in cities that support families, where Fred earns a living wage, has access to affordable health care, strong public schools, and sound infrastructure. As the study’s authors concluded:
The successful modern city relies on intelligence and social well-being as much as economic clout – a conclusion that seems not so much to challenge any theory as to confirm common sense.
Here’s my Fred Whispering story:
Y’know what boosts an economy? Dinners out. When Fred goes out for dinner, the restaurant needs a cook and a server and a busboy, at least. That’s at least three people with jobs. They spend their paychecks and other businesses have to hire people, who spend their paychecks. And so it goes. If Fred can’t afford dinner out, that cook and server and busboy will be out of work, and the cycle goes the other way.
And here’s the thing. If Charles spends $250 at Chez Chic, that’s still just one dinner out. One set of people with jobs. If five Freds spend $50 each on family dinners out, that’s five times as many people with jobs and paychecks to spend … so other businesses hire more people.
You want to boost our economy? Make sure Fred can afford dinners out.
Republicans believe Charles needs a tax cut and Fred needs a pay cut. Democrats know that’s exactly wrong, and we have 30 years of GOP failure to prove it.
Fred needs a job that will support his family. Democrats want to create those jobs, and that’s how we’ll heal our economy and rebuild our nation.