This Economy: Little hope of a quick solution to job losses

The one-year anniversary last week of the $787 billion stimulus bill had Democrats and Republicans arguing over how much relief the controversial package brought to the economy.

The White House rolled out quotes from independent economists giving the stimulus program credit for preventing much higher unemployment, and President Obama acknowledged that the recovery does not feel like much of one because so many are still out of work and struggling.

The Republican National Committee struck with a Web video titled "Broken Promise" that contained clips of Obama a year ago promising millions of jobs. House Minority Leader John A. Boehner of Ohio issued a scathing report called "Where Are the Jobs? A Look Back at One Year of So-called 'Stimulus.' "

That dismal state of affairs in Washington, where the political focus jumps around from health care to jobs to education to financial reform, has some Americans stewing, and, sometimes, coming up with their own ideas.

Businessman Hank Leipert is beside himself with frustration over political battles that do nothing for employers or workers.

"I watch the news at night, and I have to roll duct tape around my head because it's going to explode," said Leipert, who runs an aluminum and zinc die-casting firm in Bechtelsville, Pa.

Harvey Kazatsky, an out-of-work paralegal in Holland, Bucks County, has what he thinks is a no-brainer of an idea for getting people like him back to work. Kazatsky's plan hinges on his belief that many small businesses are shorthanded and would happily hire workers if there were not so much uncertainty over taxes and health care.

Kazatsky proposes that the state could pick up half of a worker's pay for a year. For example, if he found a job paying $15 an hour, the state would pay - in cash, not in a tax credit - $300 a week, 25 percent less than the $400 a week he is getting now on unemployment.

Asked for his take on Kazatsky's idea, William C. Dunkelberg, Temple University economics professor and chief economist for the National Federation of Independent Business, seized on the red tape. "It immediately means all kinds of paperwork and delays," he said.

Besides, Dunkelberg said, "you can't hire people who put less in your pocket than you put in theirs." For too many small businesses, said Dunkelberg, who has been tracking the sector since the early 1970s, demand is not great enough to hire even subsidized labor.

That's the what-comes-first-problem that bedevils the economy after every recession. Companies will not hire if demand is weak, and demand will be weak as long as unemployment remains high.

Even once the relatively benign recession of 2001 ended, significant job growth did not occur for 21 months. What will happen this time, after what economists say is the severest downturn of the post-World War II era?

If this recession ended in June, as economists at Wells Fargo Securities L.L.C. estimated, and it takes as long this time for the job market to bounce back, tough times could continue until spring 2011.

Slow hiring coming out of recessions is often driven by gains in efficiency. Alcoa Inc., for example, has said that about 75 percent of the 24,700 job cuts it made during the recession will be permanent. Locally, PHH Corp., a mortgage lender and fleet-leasing company in Mount Laurel, said last week that it would go over its operations with a fine-tooth comb to look for savings. That is not a good sign for jobs, much less job growth, even if the housing market bounces back.

For an unemployed worker like Kazatsky who thinks there is a better way, it is an exasperating situation. "I feel like a man in a dark room just yelling at the walls," he said.