Saturday, October 16, 2010

High unemployment is issue that could doom Democrats next month

We are only a few weeks away from next month's election, and both Democrats and Republicans are already sweating what should be an exciting sprint to the finish line.

There is a lot at stake. For President Barack Obama, he has had the luxury of having both the U.S. House and Senate controlled by Democratic majorities for the first two years of his presidency.

Because of this, he has been able to pass healthcare reform and other legislation that he promised to voters when he ran for president in 2008. Republicans, on the other hand, have had to sit on their hands and brood while watching this happen.

However, a few factors have made Democrats vulnerable in the election. Most significantly, the economy remains sluggish, and unemployment is still high.

Though many experts have stated the recession ended last year, it has been difficult to convince the skeptical public of that. Unemployment remains unacceptably high. The national unemployment rate for September was 9.6 percent, and the rate remains above 10 percent in several states.

Many economists have pointed out that unemployment usually is a lagging indicator when it comes to determining our economic health.

This makes sense. Typically, businesses want to be absolutely certain that the economy is strengthening before taking on the considerable cost of hiring more people. Because of this, unemployment rates can remain high even after a recession has ended.

The real frustration that a lot of the public is feeling is that the unemployment rate has remained at an extraordinarily high level for a prolonged time.

We all got used to unemployment levels down around five percent before the economy tanked. Like many things before the bubble burst, we are not going to see unemployment levels that low for a long time.

With this frustration building, Democrats find themselves facing an election with a whole lot of angry voters.

All voters can see at this point is the figure of 9.6 percent. They have no patience for explanations of how there have been improvements when it comes to hiring in the private sector.

For example, 64,000 jobs in the private sector were added in September. Though that amount should be described as ‘tepid,’ it is the ninth consecutive month in which the private sector added jobs.

However, for unemployment these days, there is a step back for every step forward. Though the private sector added jobs, the public sector lost 159,000 jobs in September. Most of these losses were cuts by local and state governments trying to balance their budgets and temporary U.S. census workers getting laid off.

On top of this, the unemployment rate does not take into consideration those who are 'under-employed.' Under-employed people are those who have had to take jobs of less than 40 hours.

In many cases, this is done because a person is running out of unemployment benefits and has to grab low-paying, part-time jobs just to keep some money coming in. Estimates vary, but some experts put the under-employment rate at 16 to 17 percent.

Additionally, there are people who have run out of unemployment benefits and have simply given up looking for a job. They slip through the cracks of the unemployment rate as well.

The bottom line is incumbents have a lot of explaining to do, and it will be interesting to see just how mad voters are next month.

Frankly, at this point, I do not have a lot of confidence in either the Democrats or Republicans. Their main focus seems to be maintaining power instead of working together.

How about a third party?

I am starting to warm to the idea.

No comments: