The most basic principle of economics is supply and demand. When consumers pay for a product, the market responds with a supply that is equal to the demand. Unfortunately (as the text books will tell you) things only work this way in a perfect world.
Economic growth is cyclical. But sometimes, corporate malfeasance, flawed logic and consumer irresponsibility combine to shock the market—and bring it to a screeching halt. We have seen this happen several times in the past century, the most notable being the Great Depression.
The intensity of the Great Depression was due, in part, to the lack of a social safety net. The New Deal not only helped create jobs and increase demand for labor, it also created the first strands of that safety net and built the foundation for economic growth far into the future.
One of the most critical pieces of our current safety net is unemployment insurance (UI). UI does far more than see people through difficult times; unemployment benefits have been proven to be one of the best kinds of economic stimulus—pumping money directly back into the economy.
With a national unemployment rate nearing 8% and more job cuts announced every day, there is no doubt that unemployment benefits are the last line of defense for many families. But UI benefits alone will not restore our economic security, nor protect it in the long-term.
To do that, we’ll need to promote educational success for young people, make higher education and training more accessible for adults, and ensure an economic safety net is in place for millions of families. Otherwise, we’ll only exacerbate the effects of the recession on working families.
Developing our country’s educational system and our physical infrastructure must be our top priorities. These actions will provide the short-term boost we need, and guarantee our economy remains strong well into the future.