The Employed: The Forgotten People

When you listen to Mr. Obama and the rest of the Democrats, they're always focused on that extra 2-1/2 percent of our population that lost their jobs last year as the unemployment rate increased from 5 percent to 7.6 percent. Almost entirely, their recently passed stimulus package is aimed at the unemployed by attempting to use government funds to get construction workers back to work and by using that same funding to provide a social safety net for those who lost their jobs. But, 70 percent of this country's jobs are in small business and, predominately, in the service industries. Not in the construction and manufacturing jobs that will gain under their stimulus bill.

Circuity City didn't go under and lay off 36,000 people because 2-1/2 of the population lost their jobs in the last year. With a few adjustments, I am quite sure that they could have handled a proportional loss of 2-1/2 percent of their sales. If one of their stores has 50 people, a 2-1/2 percent reduction in sales could have been easily handled by letting 1 or 2 people go rather than just closing the whole store. But, they went out of business because the 93 percent of us, those who still have their jobs, weren't buying all those consumer electronics at the previous pace. Their sales were down more than 20 percent. The marketplace could no longer support them along with the more popular retailers such as Best Buy, Wal-Mart, Sears, the Internet, etc.

If those 93 percent of us were still buying stuff as they did before, companies like Circuit City could have survived. But their business was based on a certain level of buying activity in order to support all the stores and warehouses that they owned and leased; all those employees; and all the rich inventory they needed to maintain in order to be competitive. And, they couldn't adjust all those factors downward fast enough to support the dramatic reduction in buying activity.

In the grand scheme of things, the 2-1/2 percent of those who lost their jobs is less important to our recovery than the 93 percent who are still working. Even if our government could rehire the 2 million that lost their jobs in 2008, the impact to the economy, at best, would be about 2.5 percent. I say "at best" because people who have been out of work for a while will spend more of their paychecks on paying off the debt that they accumulated while being unemployed than becoming an active buyer of things in the general marketplace. Often, those who were unemployed will not go beyond buying the essentials for 2 or 3 years and until all their debt is paid off.

This, again, demonstrates the difference in philosophy between Democrats and Republicans. The Democrats are always concentrating on those who lost their jobs or those who are at the lowest ends of the pay scale. But, it is the lower middle class and above that drive our economy. Don't forget, Circuity City didn't go out of business because the poor and unemployed of this country weren't buying iPods, Flat Screens, and cell phones. It was the reduced spending by middle to upper classes that killed them.

This is why I and most Republicans keep hammering on the fact that it is "more important" to give tax cuts to the 93 percent of this country, those that are still working, than to worry about the 2-1/2 percent who lost their jobs. This is not to say we shouldn't care for those who lost their jobs and provide for them. But, they should not be our primary focus.

In reality, the stock clerk or the cashier who used to work at Circuity City will not be getting a job under this stimulus plan because they don't have the job skills to be in construction and manufacturing industries. Anyway, there's a lot of construction workers out there who are out of work and who would be better able to compete for those so-called shovel ready jobs.

There's a simple premise to get this country alive again. If we can get that 93 percent of the population to start buying again; then, those 2 million who lost their jobs will get them back. The auto industry isn't hurting because they lost 2-1/2 percent of their sales. They're hurting because they've lost 50 percent of their sales. But, what we're doing in this stimulus bill is just making sure that the well-connected in the construction industry will maintain their businesses and keep their employees while the clerks, cashiers, sales persons, auto dealers, etc. of this world continue to go unemployed as consumer spending continues to fall. That's why so many economists are still projecting 10+ percent unemployment by the end of this year.