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Last Hired, First Fired

The popular expression in the Black community that its members are the "last ones hired and the first ones fired" has proven to be true in 2001. In April, we immediately took note of the dramatic spike in the rate of unemployment for Blacks juxtaposed to that of their White counterparts and alerted our viewers. At the time, unemployment had dramatically jumped from 7.5% to 8.6% for Blacks while remaining at 3.7 for Whites. And last month it was announced that the unemployment rate for Whites held steady at 4.3% while moving up to 9.1% for Blacks. It is now October and our warning, regarding the Black economy is even more intense in light of the aftermath of the September 11th terrorist attack and the economic recession, productive uncertainty, diminished consumer confidence and monetary deflation that mark the new terrain.

It should be clear by now, that the braggadocio displayed by members of the Clinton administration over the lowest Black unemployment rate in 30 years was a superb campaign talking point but not an accurate indicator of the changed fortunes of Black America over the last eight years. The "Clinton boom", was hardly an economic renaissance for Black America. Rather, the "lowest African-American unemployment rate in 30 years" was the result of a once in a generation mixture, for Blacks, of available full-time work, part-time jobs and temporary job placement, resulting in an increased number of Blacks holding more than one job, at a single time.

Now, those supplemental positions appear to be drying up and the entry-level, low-skilled and manual labor supplied disproportionately by Blacks is gradually becoming a burden that small businesses and corporations alike can no longer carry.

The economic stimulus package being formulated by Congress and President Bush shows little promise for Black America with its emphasis and billions of dollars heading toward corporate bailouts in the transportation sector as well as a an enormous influx of cash into the military industrial complex and the pet projects of numerous members of Congress. The extra billions will save jobs for some Blacks such as airline attendants, airport service employees, and construction workers but won't have any major effect on the broader Black economy.

The manipulation of the fiscal lever is where the rubber will meet the road in any stimulus package and already the two political parties, breaking from their public display of national unity, have returned to their economic talking points, making stark and contrasting arguments as to why the approach of their colleagues across the aisle is doomed to failure and will push America even further into the economic abyss. Both sides, however, view the world without the Black economy on their radar screens, and as a result, develop revitalization formulas that will have no success in slowing the rapid economic slowdown in Black America.

President Bush's political instincts on how to save the economy are legitimate and his impulse to save those next to the worse off is a step in the right direction. The President's proposal to extend and expand unemployment benefits immediately after the Labor Department announced that new claims for state unemployment insurance last week were 528,000, up 71,000 from the previous week, was appropriate. However, the rest of the Bush economic team, in their advocacy of different aspects of a stimulus package are simply wrong-headed. Treasury Secretary O'Neill is at it again trying to fiddle with the middle of the tax code for the benefit of those who pay the 28% marginal income tax rate. Again, the idea sounds good on paper but will do more for the khaki and wallet business than it will in "stimulating" the economy as individuals tear the seams of their pockets and purses as they hold on to the extra cash that they will no longer have to fork over to Uncle Sam. Unfortunately, the increasingly- marginalized Treasury Secretary's selective income tax cuts don't ensure increased production and entrepreneur activity nor will they spur capital formation - the badly needed prerequisite for economic expansion in the Black community. To boost consumer spending and production, while fostering capital formation, the President and Congress would have to cut the payroll tax by more than a couple of percentage points, raise the personal exemption on the income tax to $5,000 (to simply keep pace with the monetary inflation of the last 30 years), lower the capital gains tax to 15% and reduce to twelve months (down from its current bond-like 5 year time frame), the holding period for businesses that operate in distressed rural and urban areas which qualify for capital gains tax elimination.

The debate over the economic stimulus package finds the Black political establishment's two most vocal opinion leaders on fiscal policy bogged down in partisan economic rhetoric, with Rep. J.C. Watts (R-Ok) defending the no-growth $1.6 trillion Bush tax cut as he sells Rep. Charles Rangel (D-NY) on the merits of a broad cut in capital gains, unaccompanied by a reduction in the holding period for businesses that languish in the inner city. Meanwhile, Rep. Rangel advocates an increase in the minimum wage that will send the Black teenage employment rate well past its current level of 30.5%, as he strikes paydirt in exposing the weak spot in Republican Party tax cut rhetoric, which inexplicably dismisses the option of payroll tax cuts unless they are tied to Social Security privatization. But any legitimate arguments that Rep. Rangel presents to the Bush administration on how to tweak the economy run the risk of being shot down quickly, in this era of one-party politics in America. In a closed-door meeting last week, Treasury Secretary O'Neill disrespectfully framed a Rangel criticism of the Bush tax cut, as an effort by Rangel, with the worst possible timing, to raise taxes.

With Rep. Rangel being advised by the Center On Budget Policy and Priorities and Rep. Watts responsive to the Heritage Foundation and the CATO Institute, the eventual inclusion of provisions potent enough to break the Black economic malaise is doubtful. There remains the outside possibility that Black Caucus members Congressman Bennie Thompson (D-Ms), who has some interesting ideas on government investments in human capital; Rep. William Jefferson (D-La.) and Rep. Danny Davis (D-Ill), who both joined with Rep. Watts in advancing the community renewal; and Rep. Jesse L. Jackson (D-Ill) could influence the congressional negotiations regarding the economy in a manner that reflects their combined belief that American economic prosperity is directly linked with the creation of new markets in America's innercities.

In the meantime, Black America heads toward economic depression, as the superficial gains of the Clinton boom evaporate and the economic damage of the September 11th terrorist attack works its way into the balance sheets of small businesses, corporations and cities, increasing the ranks of the Black unemployed, until a time uncertain.

Remember the first ones fired are also the last ones hired...

Note: Today's Deeper Look is an example of our Black Electorate Communications Analytical Commentaries, which will be available as part of our U.S. Black Political Economy product. If you are interested in becoming a client of our service, please be sure to review our product information and join our mailing list

Cedric Muhammad

Monday, October 8, 2001

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The views and opinions expressed herein by the author do not necessarily represent the opinions or position of or Black Electorate Communications.

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