As we are beginning quarter 4, 2009, it is becoming clear that what we already knew was going to happen is, ahem, going to happen. That is, we are most certainly going to see the end of the recession between April and September of this year. Further, the unemployment rate is going to continue to rise and rise for quite some time.
As I mentioned, this is not surprising or new information. What IS surprising, however, is that there is a group of people who find themselves in an uncomfortable position; the Democrats.
Job losses are expected to continue at least into the middle of next year, likely driving the unemployment rate above 10 percent from 9.8 percent last month. It could take three or four more years for it to fall to normal levels.
The longest and deepest downturn since the Great Depression has claimed 7.2 million jobs since it began in December 2007. Analysts figure 750,000 more jobs could disappear over the next six months.
And why is this? It’s a perfect storm of sorts for the Democrats. They are dealing with both long term and short term trends. On the one hand, we are now paying the piper for the incentives given to banks, lenders and individuals to buy/sell houses to people who couldn’t afford them. That’s the long term. The short term? The whole stimulus package including, to be fair, the Republican led TARP disaster. And the medium term? The rise of the minimum wage, which, by the way, is coinciding with a very bad labor market. Right when we should be trying to incent people to hire other people, we instead are raising the cost of labor; even beyond what that labor is worth.
And what are the Democrats going to do to try to help us through this period of adjustment? Why, a second stimulus perhaps? Some are even considering raising that minimum wage even higher. And the doubly whammy? Cap and Trade along with Universal Health Care.
If you wanna implement policies that promise to rise the people up but in reality strip those same people of economic health and vibrancy? Hire a Democrat; just remember that when their policies fail, it’ll get harder and harder to hire them in the next election.