Saturday, October 30, 2010

Unemployed_Home in Foreclosure_Thank Democrats spreading the wealth. It is ok to be Mad...You can fix it. Vote Republican

How are people supposed to take care of their families on month-to-month contract jobs - and why doesn't anyone seem to care?

Companies have hired more temps for four straight months. Yet they remain reluctant to make permanent hires because of doubts about the recovery's durability.

Even companies that are boosting production seem inclined to get by with their existing workers, plus temporary staff if necessary.

"I think temporary hiring is less useful a signal than it used to be," says John Silvia, chief economist at Wells Fargo. "Companies aren't testing the waters by turning to temporary firms. They just want part-time workers."

The reasons vary. But economists and business people say the main obstacle is that employers lack confidence that the economic rebound has staying power. Many fear their sales and the overall economy will remain weak or even falter as consumers spend cautiously.

Companies also worry about higher costs related to taxes or health care measures being weighed by Congress and statehouses. That's what Chris DeCapua, owner of employment firm Dawson Careers in Columbus, Ohio, is hearing from clients.

We have a real unemployment rate of 18%, when we include people who are working part-time and can’t find a full-time job, and people who have simply given up looking. And in some of our cities, unemployment is as high as 50%! Home and commercial property foreclosure rates are dangerously high, and they show no signs of going down. Some experts say this is our biggest concern. And small businesses, our biggest potential source for jobs, are struggling to survive. Our economy is ice cold, and it has the potential to get worse. People are suffering, and if things don’t change, there will be a significant long term toll on our citizens’ well being.

A decrease in taxes has the opposite effect on income, demand, and GDP. It will boost all three, which is why people cry out for a tax cut when the economy is sluggish. When the government decreases taxes, disposable income increases. That translates to higher demand (spending) and increased production (GDP). So, the fiscal policy prescription for a sluggish economy and high unemployment is lower taxes.

Read more: Fiscal Policy and Economic Growth: Government's Unique Situation —

Unemployment levels are primarily a function of how much money is being spent in our economy. If more goods and services are being purchased, more goods and services need to be produced, and more people are hired to produce and sell those goods and services. Taxes reduce people’s spending power. If you increase taxes by $3,000 on a family that makes $50,000 a year, it makes a big difference. It makes it harder for them to make their mortgage payment, or buy health insurance, or pay their child’s tuition. It reduces their spending.

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