1. The Jobs Crisis and Stimulus Policy Lawrence Mishel President, EPI www.epinet.org

2. Recession: Costing Jobs and Wages, Generating Inequality Employment losses are steep. Unemployment will continue to grow. Particular groups have been hit hard. Recession has resulted in wage and income losses. Recession has renewed growth of inequality.

3. A jobless recovery Jobs down 2 million since recession began. Greater job loss than in earlier recessions.

4. Employment change 26 months into a recession.

5. Unemployment up from 3.9% to 6.0% Labor force growing minimally

6. Source: Mishel, Lawrence, Jared Bernstein, and Heather Boushey. 2003. The State of Working America 2002-03. Cornell University Press. Monthly unemployment rate 1989-2002

7. Unemployment will stay high throughout 2003.

8. Source: Mishel, Lawrence, Jared Bernstein, and Heather Boushey. 2003. The State of Working America 2002-03. Cornell University Press. EPI Unemployment Forecast

9. Wage Growth: Slowest rate since mid-1990s

10. Source: Mishel, Lawrence, Jared Bernstein, and Heather Boushey. 2003. The State of Working America 2002-03. Cornell University Press. Average hourly earnings growth, 1995-2002

11. Household incomes fell for the bottom 95% from 2000 to 2001. Typical household lost 2.2%, or $934 annually. Unemployment increase in 2002 causing further decline in household incomes. Household Incomes

12. Source: Mishel, Lawrence, Jared Bernstein, and Heather Boushey. 2003. The State of Working America 2002-03. Cornell University Press. Average household income growth, 1995-2000 and 2000-01, by income fifth. 1.6% 2.1% 2.0% 2.2% 2.6% 3.6% -2.9% -2.3% -1.8% -1.0% -0.6% 0.4% -4.5% -3.5% -2.5% -1.5% -0.5% 0.5% 1.5% 2.5% 3.5% 4.5% 1st Fifth2nd Fifth3rd Fifth4th Fifth80-95%Top 5% 1995-002000-01

13. CRITERIA FOR EFFECTIVE STIMULUS

14. 1. Generate Growth and Jobs Create more customers (i.e., demand)--consumers & government. With unused capacity, investment incentives are ineffective. Spending is more stimulative than tax cuts. Tax cuts are a more immediate stimulus.

15. 2. Be Fiscally Responsible Temporary tax cuts Temporary spending Leave long-term fiscal balance untouched Permanent measures unnecessary

16. 3. Timing Economy needs some immediate stimulus. Impact of stimulus must be felt over the next 15 to 18 months.

17. Source: Mishel, Lawrence, Jared Bernstein, and Heather Boushey. 2003. The State of Working America 2002-03. Cornell University Press. 4. Stimulus must be fair Should lessen, not exacerbate inequalities.

18. Source: Mishel, Lawrence, Jared Bernstein, and Heather Boushey. 2003. The State of Working America 2002-03. Cornell University Press. 5. Stimulus should target currently existing unmet needs

19. EPI Plan Outcomes –Generates 1.5 million jobs –Lowers unemployment by 1% –Generates 2% additional growth

20. Temporary Spending ($110 billion) Grants to states to preserve health, education, law enforcement, and other services ($50 billion) School renovation and repair ($25 billion) Unemployment insurance: extend benefits and expand eligibility to part-time and low- earning workers ($25 billion) Other measures ($10 billion)

21. Temporary Tax Cut: A Wage Bonus ($65 billion) Rebate of 3.5% of first $15,000 in wages Comes from general revenue Benefits 149 million workers $525 for first $15,000 in wages, or $1,050 for family with two such workers