Robert Reich Formal U.S Secretary of Labor Term Paper

Pages: 5 (1517 words)  ·  Style: MLA  ·  Bibliography Sources: 3  ·  File: .docx  ·  Topic: Economics

Robert Reich formal u.s secretary of labor during the clinton's administratation. conduct some reserch on the current administration's labor policies.Has anything been done to pursue the goals Reich articulated in 1995? Do you think the situation facing the "anxious Class" has improved or worsened since then? Why do think as you do?

America's Anxious Class

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Robert Reich was secretary of labor during Clinton's administration. He focused on the relation of the government's economic party to the nation's economic health. Therefore, his opinion was that the nation should develop industrial policies designed for the nation as a whole rather than interest groups. One of his books (originally published in the winter of 1995) is called "America's Anxious Class." It mentions that "while wealthy citizens benefit from advanced education, live in the elite suburbs, and ride the waves of economic change easily, [...] the middle class now needs two or three jobs per family to keep from slipping, and prospects for the underclass are becoming increasingly bleak" (Reich, 1995). Reich's solution addresses not only individual initiative or government involvement, but the implication of the leaders of U.S. businesses. In addition to that, Reich asserts that "the American middle class is disintegrating and turning into three new groups: an underclass largely trapped in central cities and isolated from the growing economy; an overclass profitably positioned to ride the waves of change; and an anxious class, most of whom hold jobs but are justifiably uneasy about their own standing and fearful for their children's future" (Reich, 1995).

In order to integrate the unemployed people in the economic society, they should prove to be more productive. Thus, they should improve their intellectual knowledge because the world has changed from depending mostly on the tangible assets. Nowadays, companies lay more emphasis on the intangible assets, on their workers skills.

Term Paper on Robert Reich Formal U.S Secretary of Labor Assignment

However, the businesses have a major impact in the attempt to revive the old American middle class. One way is to spend a part of the revenues on the employees' skills improvement.

President Bush declared that he sustained the development of the economy upon signing the "Jobs and Growth Tax Relief Reconciliation Act of 2003": "And now, with this bold legislation, we're sending a clear message to the doubters, the doubters that Washington can respond. We can respond. We can respond in a positive way. We're building on the strengths of our economy so that everybody who wants to work can find a job in this great country." "After initially justifying his 2001 tax cuts on the grounds of fairness, President Bush shifted rationales to say that billions of dollars in new tax cuts were necessary -- along with the increased phase in of his 2001 tax cuts -- to help create jobs. For millions of American workers, the outcome of this "tax-cuts-as-job-creation" approach has been less than optimal as the nation has experienced the weakest employment growth in decades" (The $871,000 Job Subsidy). This initiative helped the job creation process. The Bureau of Labor Statistics estimated that job growth averaged an annual 0.4 per month since March 2001. However, the target of the president was to create 5.5 million new jobs between June 2003 and the end of 2004. Among these, 4.1 million would have been produced by the natural economical processes and 1.4 million by the tax cuts. Yet, by the end of 2004, only a number of 2.6 million jobs were added since June 2003.

In addition to that, "in early 2005, the White House predicted a comparatively low job growth rate of 175,000 new jobs per month. By the end of 2005, the economy was still 112,000 jobs shy of meeting this goal. The administration predicted 176,000 new jobs per month during 2006 -- again a relatively slow job growth assumption. Yet, to even get over this very low hurdle, job growth in November and December would have to average 322,000 jobs. Since March 2001, there have only been three months -- far apart -- with job creation of more than 300,000 new jobs" (The $871,000 Job Subsidy).

It seems that the policy was not quite successful because, after computation, it can be proved that the state managed to spend $871,000 on every new job created since 2001. This sum does not justify the new emergence of jobs. Specialists assert that this costly procedure does not pay-off with the number of jobs created. The value of the GDP, released on the 27th of October 2006 depicted an economy growing at an annualized rate of 1.6%. This rate proved to be the slowest growth rate since the first quarter of 2003. "The widening trade deficit, which grew to the highest level since the BEA began keeping records in 1947, and a severe decline in the housing market, with spending on new homes and home improvements dropping by an additional 17.4%, both added to this slow rate of economic growth. The bright spot in last week's GDP numbers was the solid expansion of business investment. This sector increased by 8.6% in the third quarter, which included strong growth in structures and equipment investments and commercial construction investments. However, business investments are not growing at a rate comparable to this point in past business cycles. The Bush administration sold their corporate and personal income tax reductions as forerunners to increased overall investment. Business typically recovers strongly from a recession, but investment in this sector has only increased 7.7% during this business cycle, which is 12.4 percentage points lower than in the average of past business cycles.

The sharp end to the housing boom will likely keep exerting downward pressure. There has not yet been a replacement motor to drive the economy. All other sectors have either failed to grow fast enough to compensate for the decline or have created an additional strain on the economy" (Continuing the Slump).

In order to depict the bad situation with which middle-class families are confronted with, we can mention several problems. Firstly, the financial security has declined. "More specifically, only 36% of families had enough financial wealth to cover a medical emergency [a decline of 7.8 percentage points from 2001 and a much lower share than in 1995], and only 48.2% of families had enough financial wealth to last through an unemployment spell, even after taking unemployment insurance benefits into account. Similarly, families with at least three months of their income in liquid financial wealth declined by 6.2 percentage points, to 32.5% in 2004 from 38.8% in 2001, after rising by 5.9 percentage points between 1989 and 2001. This is a clear reflection of the inability of a growing number of American families to save more, even as the value of some of their financial assets presumably grew once the stock market recovered in 2002" (Middle Class in Turmoil).

Secondly, the job growth was very slow after the Second World War and the wages became flat. "In inflation-adjusted terms, family incomes did not rise in any single year between 2000 and 2004. Almost all groups saw either declines or flat incomes during this period, with two small exceptions: High income families and Hispanic families saw minimal income increases from 2003 to 2004. But the overall declines from 2000 and 2004 were larger for minority families and lower income earners than for their higher-earning counterparts. For instance, from 2000, the last full year of the last business cycle until 2005, the inflation-adjusted incomes of black families declined by 8.2%, and those of Hispanic families dropped by 4.3%. White families saw their inflation-adjusted earnings drop by 2.5% over the same period. Low income families' earnings declined by 7.5% compared to a decrease of 3.3% for middle income families. In fact, the decline after 2000 for low income families was large enough to erase almost all income gains made by low-income families from… [END OF PREVIEW] . . . READ MORE

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