unemployment

Unemployment Jumps Under Obama, Pelosi, and Reid

by Hans Bader on October 25, 2010 · 1 comment

in Deregulate to Stimulate, Economy, Employment, Stimulus to Nowhere

Unemployment averaged about 5.2 percent under both Clinton and Bush, but rose to an average of 9.43 percent under Obama (the current rate is at least 9.6 percent, and may rise to over 10 percent next year).  See this graph.  The unemployment rate began rising in 2007, after House Speaker Nancy Pelosi (D-Calif.) and Senate Majority Leader Harry Reid (D-Nev.) took charge of Congress (their control of Congress led to massive increases in federal spending).  It rose further after passage of the $800 billion stimulus package under Obama.  48 out of 50 states have lost jobs since passage of the stimulus package.  The Obama administration mistakenly said the stimulus would keep unemployment under 8 percent.

As noted earlier, the stimulus package contained wasteful “green jobs” funding, 79 percent of which went to foreign firms, effectively sending American jobs overseas.  A recent biofuel program actually wiped out jobs rather than creating them as intended, while costing taxpayers a lot of money.  New EPA rules are expected to wipe out at least 800,000 jobs, and the EPA is considering new ozone rules that could wipe out 7.3 million jobs. The stimulus package contained provisions that wiped out thousands of jobs in America’s export sector.  New laws backed by Obama, and Obama Administration regulations governing employers, have discouraged employers from hiring new employees.

Meager Part-Time Work Masks Unemployment

by Hans Bader on October 19, 2010

in Economy, Employment, Regulation

Unemployment is often masked by part-time work, since people who would prefer to work full-time are not treated as unemployed by government statistics if they work even part-time. But part-time pay is becoming increasingly meager, reports today’s Washington Post. It takes a look at how part-time workers’ pay has shrunken by double-digit percentages in the Washington, D.C. area, even though that region is one of the most prosperous areas in America.

The official unemployment rate in the U.S. is at 9.6 percent and is expected to rise slightly to over 10 percent in the coming year. But that’s just the official rate; some measures of unemployment that include more jobless people, such as discouraged workers who have given up looking for a job, give unemployment rates of up to 17.5 percent.

Washington, D.C. and its inner suburbs, such as Arlington, have benefited from growing federal payrolls, which will likely expand further due to the massive amount of new regulations and red tape from Obamacare and the Dodd-Frank financial “reform” law. Obamacare creates “183 new agencies, commissions, panels, and other bodies.” The Dodd-Frank law is nearly 2,400 pages long, and it “creates nearly 500 regulatory rulemakings, 60 studies, and 93 reports” that will require lots of new bureaucrats. Yet it left intact the money-losing government-controlled mortgage giants Fannie Mae and Freddie Mac, which are receiving a bailout likely to exceed $400 billion, while multiplying the regulations and exactions imposed on productive, self-supporting private banks.

By contrast, the outer suburbs of Washington, such as Prince William County and parts of Fairfax County, have suffered massive collapses in real estate values just like many other places in America. Private industry in the Washington metropolitan area, such as the biotech industry in Montgomery County, and high-tech industry in Fairfax and Loudoun Counties, will suffer from the flood of red tape under the Obama administration, just like the rest of America. This red tape is a factor in the continued loss of jobs, such as the 95,000 that disappeared from the economy last month.

Jobs: Created, Not Made

by Kathryn Ciano on October 12, 2010

in Bailout Watch, Economy, Employment

Welcome to October, the start of a new government fiscal year. 2010 was the year of “jobs created or saved.” Bank and business bailouts may have begun long before this year, but 2010 saw what effects flow from nationalizing big business.

Now that the budget says 2011, what has the government done for the individual this year? Despite hundreds of billions of stimulus dollars flooding the economy, unemployment remains in double digits.

In February Treasury Secretary Tim Geithner called the government’s economic efforts “inadequate,” noting that the administration needed to “fundamentally reshap[e] the government’s program to repair the financial system.”  Geithner, a human Laffer curve of robust tax irresponsibility, is the most egregious bailout proponent remaining in Obama’s cabinet.
Business is not like government.

Geithner’s mentality lends itself well to growing government. Geithner’s mentality would not last a year in business.

Government is comprised of millions of people with billions of priorities. Business reflects a single priority: Maximizing the bottom line.

Groups involved with government cooperate only inasmuch as they can agree. Groups involved with business quickly learn to cooperate at all times, because the moment it costs a business more to keep an employee than to fire him, he will be fired.

Similarly, for a business to hire a new employee, that company’s bottom line must benefit from the hire. If it costs $20,000 to hire a new employee, the business will only hire if it anticipates earning $20,001. If the bottom line cannot support the cost of a new worker, she simply will not be hired.

Funds alone cannot generate jobs. As with any financial interaction, money is only as good as the probability of your being able to use it. When dollar hopefuls are very uncertain about their ability to use money in the future, they save it. Businesses are not like government; they are risk averse.

If the government wants more people to be employed, it should get as far away from the hiring process as possible. Only when a business can assess its finances and capabilities can it make a real determination as to how much a potential new employee is worth.

When government keeps fiddling with the works — flooding business competitors with funds, levying ominous health care costs on certain business sizes, and nationalizing some sectors but not others, businesses have no choice but to freeze.

Market uncertainty makes it impossible for businesses to make decisions. The convoluted health care revolution is convoluted enough on its own to freeze the private sector pipes; add pending financial regulations, taxes, and laws that are indecipherable even to the regulators who write them. Even Nancy Pelosi admits we need to pass the bill, subjecting it to interpretation, before we can “find out what’s in it.”

Just like so much sausage, even once we pass the bill we don’t know where it comes from. To “stimulate” the economy with one dollar, the government must first take it from the people.

Printing new money for economic stimulus is even worse — this deflates the value of each dollar, so prices rise the middle class disintegrates. Printing money was a favorite of the depression-era German government, and led to Germans pushing wheelbarrows full of marks and boiling wallpaper for dinner in the early 1930’s. This hardly fosters job growth or stable politics, though Germany is okay now, I suppose.

Since the Obama administration recognized a recession in early 2009, the government has taken nearly $3 trillion dollars out of the economy and has promised nearly $11 trillion more in government programs. In that time the American economy has shrunk by over nine million jobs.

Government by definition operates at a loss, funded by takings and the future. Businesses do not have that luxury. Government attempted to save the private sector by tapping individuals’ wallets. When that was not enough, government nationalized businesses to tap their savings too.

Until businesses can make reasonable predictions about the future, they will not invest in new hires. The best thing the government can do to help the economy is to get out of the way.

CEI Podcast – October 7, 2010: Trade, Jobs, and Korea

by Ryan Young on October 7, 2010

in Economy, Podcast, Trade

Have a listen here.

CEI Adjunct Fellow Fran Smith talks about the EU-Korea free-trade agreement that takes effect next year, and why the U.S.-Korea FTA stalled, to the economy’s detriment. Fran also talks about NAFTA’s impact on jobs, and why imports are a good thing.

Unemployment Jumps to 9.6%, 54,000 More Jobs Lost

by Hans Bader on September 3, 2010 · 1 comment

in Bailout Watch, Deregulate to Stimulate, Economy, Employment, Energy, Environment, Global Warming, International, Natural Resources, Politics as Usual, Stimulus to Nowhere, Trade, Zeitgeist

Unemployment went back up to 9.6%, as the nation shed 54,000 jobs in August.  Yet Obama calls this “Recovery Summer.”  This is the same Obama who complained about the economic recovery in 2004 being jobless because unemployment was at 6 percent.  If you include discouraged workers, unemployment may be as high as 17 percent.

Earlier, governors warned that ObamaCare will increase unemployment.  Indiana’s governor said it will wipe out thousands of jobs in his state by raising taxes on medical device manufacturers.  It will also kill jobs by imposing huge record-keeping burdens on small businesses, requiring them to file IRS forms over even small purchases.

Employers are afraid to hire new employees because of looming new burdens, such as the global-warming regulations being drafted by the EPA, which could wipe out at least 800,000 jobs in the short run, and far more in the long run.  They also worry about costly new Congressional mandates, such as global-warming legislation backed by liberal Senators, which would provide corporate welfare for some businesses, but impose heavy burdens on many others.  Capping greenhouse gas emissions isn’t cheap — Obama himself told the San Francisco Chronicle that under his cap-and-trade plan to fight global warming, Americans’ electricity bills would “skyrocket,” and coal power plants that now provide much of the nation’s energy would go “bankrupt.” Although Obama and other backers of this “cap-and-trade” concept claim it will cut greenhouse gas emissions, it may perversely increase them by driving industry overseas to places with fewer environmental regulations, resulting in dirtier air, and damage to forests and water supplies.

The Congressional Budget Office has repeatedly admitted that Obama’s $862 billion stimulus package will shrink the economy “in the long run.”  The stimulus contained welfare and repealed welfare reform.  Unemployment is higher now than if Congress had voted it down.  Countries that refused to adopt big stimulus packages have fared better than those that imitated President Obama.  The biggest-spending countries have suffered worst in the recession. The stimulus package wiped out jobs in America’s export sector, while giving “green jobs” funding to foreign firms.

Expensive Jobs

by Ryan Young on August 27, 2010

in Deregulate to Stimulate, Economy, Stimulus to Nowhere

Through June, the government spent about $620 billion of stimulus money. The Obama administration claims that the spending has saved or created 2.3 to 2.8 million jobs.

For the sake of argument, let’s assume those job creation numbers are true. In fact, let’s pick the rosiest number — 2.8 million jobs.

At a price of $620 billion, that comes out to $221,428.57 per job. Startlingly inefficient.

Now consider that that $620 billion had to come from somewhere else. Some of that money came from taxes. That leaves less money left over for consumers and businesses to spend. Some of the stimulus money was borrowed. That leaves less capital for private companies borrow.

The private sector tends to spend less than the government to create a job. Since stimulus spending is spending more money to create fewer jobs than the private sector, it is actually causing net harm to the job market.

In place of the spending stimulus, I humbly offer a deregulatory stimulus. CEI VP Wayne Crews and I offer some specific proposals here.

Unintended Consequences of Unemployment Benefits

by Ryan Young on July 8, 2010 · 3 comments

in Economy, Employment

This letter of mine ran in today’s New York Times in response to Paul Krugman’s July 4 column.

To the Editor:

Paul Krugman is at a loss to explain why some people oppose extending unemployment benefits. One reason people hold such an opinion is that when government subsidizes something, there tends to be more of it.

The more government subsidizes unemployment, the more people will indulge in it for longer periods of time.

Ryan Young
Washington, July 6, 2010

The writer is a journalism fellow at the Competitive Enterprise Institute.

“Nearly Two-Thirds of Americans Say the Stimulus Isn’t Working”

by Hans Bader on April 29, 2010

in Economy, Employment, Politics as Usual, Sanctimony, Stimulus to Nowhere

“Nearly two-thirds of Americans do not believe the $787 billion stimulus package the president passed last year has helped create jobs, according to a new Pew Research Center poll.”

As the Washington Examiner notes, “a recent survey of business economists showed they didn’t think the stimulus was creating jobs, either.”  President Obama falsely claimed that virtually all economists supported his stimulus package, but this was patently untrue at the time he made this claim, when at least 200 economists publicly opposed it, and it  is even more untrue now.

Obama falsely claimed that the $787 billion stimulus package was needed to prevent “irreversible decline,” but the Congressional Budget Office admitted that it would actually shrink the economy “in the long run”.  The stimulus package has since destroyed thousands of jobs in America’s export sector, and subsidized countless examples of government waste and corruption.

Unemployment has skyrocketed past European levels, as big-spending countries have fared worse than thrifty ones.  As the Examiner notes, “If his stimulus program was approved, Obama promised, unemployment would not go above 8 percent . . . The reality is that it passed 10.3 percent.”

Nobel Prize-winning economist Gary Becker says that Obama’s policies are delaying economic recovery.

“How is stimulus money allocated? Unemployment isn’t a factor, but politics is,” found George Mason University researcher Veronique de Rugy in a recent study.

Districts where people are struggling and unemployment is high are not receiving any more money than those in which unemployment is low, even though a stated purpose of the $800 billion stimulus package was to help the unemployed.  But politics mattered in doling out federal funds.  And “Democratic districts also received two-and-a-half times more stimulus dollars than Republican districts.”

There are three trillion dollars in tax increases in Obama’s proposed budget, yet it would still borrow 42 cents on the dollar, resulting in colossal deficits.

Obama’s policies would raise the national debt by $9.7 trillion, noted the Congressional Budget Office.

Earlier, one of Obama’s own advisers worried that the “barrage of tax increases” in his budgets could harm the economy and prevent a “sustained” economic recovery.

In 2008, Obama promised a “net spending cut,” but as soon as he was elected, he proposed massive spending increases.

Senate Passes $18,000,000,000 Spending Bill: Will it Create Jobs?

by Ryan Young on March 17, 2010

in Economy, Stimulus to Nowhere

The Senate just passed an $18 billion spending bill. Since the House already passed it, the legislation is now headed to President Obama’s desk to await his signature and become law.

The hope is that the spending will create jobs. If you’re reading this blog, then you probably know enough about economics to know that isn’t what will actually happen. Remember: anything that Washington giveth, it must first taketh away from somewhere else. It’s a zero-sum game. All those new jobs that politicians will be touting for the cameras will have come at the expense of other jobs elsewhere. On net, they’re not creating a thing.

Take, for example, the bill’s payroll tax break for small businesses. Yes, those small businesses benefit. Maybe the money they save will even be used to hire more workers. That’s easy enough to see. But that money had to come from somewhere. That is harder to see. Too hard for the Senate to see, at the very least.

The reason is this: the government is foregoing some payroll tax revenue. But since it isn’t cutting spending to match, it has to borrow more. And there’s only so much investment capital to go around. Because Washington is borrowing more, less is left over for private investment opportunities. At the very least, companies will have to offer investors higher interest rates to lure them away from government bonds.

That makes getting loans more expensive. And when something gets more expensive, there tends to be less of it. Because of today’s bill, about $18 billion less capital will be available for the private sector to create jobs.

The legislation the Senate passed today is no jobs bill, at least on net. It is a spending bill. It doesn’t create jobs, it only redirects them.

$3,000,000,000,000 in Tax Increases in President Obama’s Budget

by Hans Bader on March 13, 2010 · 1 comment

in Deregulate to Stimulate, Economy, Employment, Health and Illness, Healthcare, Insurance, Politics as Usual, Precaution & Risk, Regulation, Sanctimony, Stimulus to Nowhere, Trade, Zeitgeist

The president’s proposed budget raises taxes by three trillion dollars over the next ten years, notes Washington fiscal analyst Brian Riedl in the Wall Street Journal.  Yet, in spite of that, “The president’s budget would borrow 42 cents for each dollar spent in 2010,” and “double the national debt over the next decade.”

The Obama administration recently ran up the largest budget deficit in history — so big that the monthly deficit was much bigger than George Bush’s entire annual deficit in 2007.

The president wants a new $267 billion stimulus package, on top of the $800 billion one that passed earlier.  Obama claimed the stimulus package was needed to avert “irreversible decline.” But the Congressional Budget Office concluded that the stimulus package will actually cut the size of the economy in the long run.

Unemployment has skyrocketed past European levels, as big-spending countries have fared worse than thrifty ones.  As the Examiner notes, “If his stimulus program was approved, Obama promised, unemployment would not go above 8 percent this year. The reality is that it passed 10.3 percent.”

The stimulus package destroyed thousands of real world jobs in America’s export sector.  Meanwhile, the administration claimed credit for creating thousands of imaginary jobs in non-existent congressional districts.  The stimulus is full of wasteful spending.

“President Obama’s policies would add more than $9.7 trillion to the national debt,” the Congressional Budget Office said.   That’s roughly fifteen times the cost of the Iraq and Afghanistan Wars combined.

The president’s health care proposals will add still more to the national debt, through budget gimmicks.  Even Democrats have expressed alarm about their unaffordable cost.   Their true cost, experts say, is at least $2.3 trillion, dramatically increasing the budget deficit.   ObamaCare would reduce medical innovation, raise taxes, drive up insurance premiums, break campaign promises, and increase state deficits.  It  would cut the quality of  care, while imposing restrictions that failed when tried at the state level.  It ignores advice from experts about how to cut costs.

In the 2008 campaign, Obama promised a “net spending cut,” but as soon as he was elected, he proposed massive spending increases.

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