Private Troubles vs. Public Issues

There’s little doubt that between now and the mid-term elections, all we are going to hear about is record high unemployment and jobs, jobs, jobs. And during times like these, I can’t help but think about the late C. Wright Mills. Mills was a Texan and one of America’s most influential sociologists. His 1959 classic, The Sociological Imagination, should be required reading for both policy makers and those who aspire to be.

One of Mills’ fundamental concepts was both the distinction and connection between one’s “private troubles” and societal “public issues.” Simply put Mills would argue that if you come home one day to learn that your teenage daughter is pregnant, that’s your private troubles. On the other hand if 25 percent of the teenage girls at the local high school turn up pregnant, it’s a public issue! In other words, at some point we cross a threshold and come to understand that we are dealing with more than personal failings; and therefore the solutions need to be structural and societal. And I couldn’t help but think of Mills during the summer-long debate regarding the extension of unemployment benefits to workers who are categorized as the long-term unemployed.

Those who opposed the extension of benefits regularly cited two reasons. The first was simply that if Congress wishes to extend these benefits they should identify a mechanism to pay for it. That sure makes sense to me. But other voices opposed to the extension of benefits seemed to suggest that allowing unemployment benefits to expire was precisely the medicine needed to get the long-term unemployed off the couch and on to a payroll.

How anyone can be immune to the fact that the national unemployment rate is still above 9%; that there are currently 5 applicants for every job opening; or watch on the nightly news the thousands of unemployed Americans lining up at job fairs all across the country is beyond me. Using Mills’ framework, I guess they still view being unemployed as one’s private troubles instead of a public issue.

But allow me to give you one more reason for extending unemployment benefits that may not have been emphasized to date. That being, in some ways it is a more direct jobs stimulus than any of those that have been proposed to date. Allow me to explain.

As every business person knows, there are two commonly used figures that summarize the health of a business: the “top” line and the “bottom” line. The top line reflects the demand for the goods and services a business produces and sells. A growing top line means that demand for your products is increasing. The bottom line however, takes into account the sales reflected in the top line, but also factors in the costs of production and delivery. So the bottom line more accurately reflects the business’s net income.
Both figures are extremely important, but top line growth is much more important when you are trying to stimulate job creation. Think about it this way, government tax credits or the relaxation of certain regulations may in fact help improve the bottom line and make the business more profitable. But increased business income does not really motivate business owners to hire more workers. Rather, the primary event that really motivates business owners to create more jobs is a significant and sustained increase in sales (the top line). If factory orders or showroom sales increase to the point where the business cannot meet this growing demand in a timely fashion, they hire more workers. It’s often that simple.

Returning to the issue of the unemployed, the reality is that providing the extension of benefits not only keeps households afloat during tough times; but because unemployed workers are typically cash-strapped, funds paid in unemployment benefits will quickly be re-invested back into the local economy to pay for rent, utilities, groceries, gasoline, clothing, etc… In other words, it helps directly increase the top line of local businesses; supports local demand and improves the chances of local job growth. On the other hand, the majority of jobs programs comprised of tax breaks and incentives for business owners may in fact reduced business expenses and improve their bottom line, but if it doesn’t increase business sales, it won’t serve to stimulate any new jobs.

So how long do we continue to extend benefits to the long-term unemployed? After all, where does it end? Well if Mills were alive today he would likely suggest that if you are unemployed when the unemployment rate is below 6 percent, that’s your private troubles. But as long as the unemployment rate hovers close to 10 percent it’s a matter of public policy.