Posted on 07/16/2011 9:03:57 PM PDT by Kaslin
Why aren’t employers hiring more workers? Why are so many people seeking work unable to find anything other than part-time positions or temporary employment? And that’s when they can find a job at all.
In short, what’s causing the continuing stagnation of the U.S. economy?
Former Sen. Phil Gramm observed in the Wall Street Journal the other day that we’ve had recessions before. But at this point in the cycle we should be roaring back. Had we followed the pattern of the previous 10 recessions, almost 12 million more people would be employed right now, producing additional goods and services worth more than $8,000 for every household in America.
So what gives?
Job Creators Alliance (JCA) is an alliance of business leaders who are focused on this very issue. These are employers who are in the trenches, facing the economy’s woes day in and day out. Two of them told Fox Morning News last week that the reasons for slow job growth boil down to basic common sense. (Fair disclosure: my wife Jeanette is the director of the organization.)
Think of it this way. When an employer hires a full-time worker, the employer thinks of the relationship as long term. During an initial training and learning period, the employer probably pays out more in wages and benefits than the company gets back in production. But over a longer period, the hope is to turn that around and make a profit.
When employers hire new employees, then, they are making a gamble. They are betting that over time, the economics of the relationship will pan out.
The problem in the current economy is that hiring new workers and committing to new production has become extremely risky. As the JCA folks explain, an employer who hires workers today has no idea what the company’s future labor costs will be. Or its building and facility costs. Or its cost of capital. Or its taxes.
What’s causing all this uncertainty? You guessed it. Nobody knows what is going to happen in Washington, D.C.
Take the cost of labor. The Affordable Care Act (what some people call ObamaCare) is designed to force employers to provide full-time employees with comprehensive health insurance in less than three years. While the goal may be admirable, the consequences are not. Although no one knows how much this extra burden will cost, estimates are that the required family coverage will reach $15,000 a year or more — the equivalent of an additional $6 an hour minimum wage.
Employers could decide to drop their health insurance altogether; and if they do so they must pay a fine of $2,000 per employee per year. Yet if a lot of employers do this (and apparently a lot of them are thinking about it), don’t you think the federal government will respond by making the fine a lot higher?
Then there is the National Labor Relations Board (NLRB). After the aircraft maker Boeing spent $1 billion building a new plant and hiring 1,000 workers in South Carolina, the agency brought a halt to the whole thing, calling it an unfair labor practice. Boeing’s sin? South Carolina is a right-to-work state. The company should have built the plant in Seattle, where it would be required to use union labor.
There is more bad news. The NLRB is considering rule changes that would make it much easier to unionize workers. Would you like to see employers across the country facing the same kind of turmoil state governments are now facing in dealing with public sector unions? Most employers don’t relish that idea either.
Under the Obama presidency, the NLRB has made a radical change of direction. Some would say it is much more pro-labor, but this is a misnomer. What the agency is dedicated to is not labor, but making labor more costly.
As for capital investments such as new buildings and new equipment, here again there is considerable regulatory uncertainty. It should come as no surprise that the Obama administration is overly friendly to environmental groups who see carbon dioxide emissions as pollution. Yet every act of production emits carbon dioxide. You even emit it when you exhale.
As for the cost of financial capital, what is going to happen is anybody’s guess. When the Bush tax cuts finally do expire, the tax on capital gains will increase by a third and the tax on dividends will more than double. The administration has made no secret that it would like to accelerate these tax increases and make them even higher.
Bottom line: even if there were no Republican opposition in Washington, we would be in trouble. The Obama administration is profoundly anti-labor. It thinks it is pro-labor, of course. But that is because it is so naïve about economics that it doesn’t understand that when you make hiring more costly there will be less hiring.
But there are Republicans in Washington, and (ironically) their presence in some ways adds to uncertainty. While the two parties are battling, who knows what the outcome will be? No one can.
So the best strategy from a business perspective is to sit on cash, delay the employment of labor and capital and wait to see what happens next.
There are no jobs because that is the plan.
All dirt, no shovels.
http://www.truth-out.org/silent-liquidity-squeeze/1310652572
Ask the 40 million illegal immigrants. The families I see all seem to be working.
We are so stupid in this country.
zero president, zero jobs.
Krugman and the other DU types call this the ‘confidence fairy’. They actually believe this is a big bunch of bull and businesses don’t really care about the potential economic climate going south due to extreme government nonsense. Bunch of lunatics.
Wrong. It's not a binary issue of "need" vs. "don't need." They hire new workers when and only when they think hiring those workers will add to their profitability over time, and will add more to their profitability than the other things the employer can do with the money available.
In his testimony before congress in June, Bernanke inicated that he was puzzled by the slow growth of employment in the country. This was, of course, a political dodge as the Chairman is a very smart man. He could not bring himself to use the phrase that puts the blame squarely where it belongs. A truthful and intellectually honest reponse would have gone as follows...”Sirs, the Fed has done everything it can possibly do with monetary policy. It will never be enough to overcome the ‘regime uncertainty’ that permeates every aspect of our economy. This, and the criminal fecklessness of our fiscal policy has killed any hope for growth.”
Obama is pro-labor union and could care less about the individual workers except for their money and votes.
There are plenty of new jobs.
Not in this country, though.
Obamanomics has to go. He is injecting too much risk here and abroad. His strategy of supporting the muslim brotherhood against Israel has put the whole mid east on a new war trajectory. This effects global business and returns as the risk is factored in to the costs of the goods.
We see it in every market place right down to commodities.
Here? employers , potential employers, investors and the private sector have put out their gone fishing sign until the phenomena in the White House passes.
The problem is not in economics, its the philosophy, the e-manure from the Out House parked at the White House.
There are jobs but the pay sucks, OR the company hiring makes you do 3 jobs for the price of one. Just check out Craigslist jobs and the pay rate is demeaning.
“An employer hires new workers because the employer needs new workers.”
“Wrong. It’s not a binary issue of “need” vs. “don’t need.” They hire new workers when and only when they think hiring those workers will add to their profitability over time, and will add more to their profitability than the other things the employer can do with the money available.”
According to our Democratic leaders, you are both wrong. Employers add employees because the employers are given an opportunity to exist as businesses in this country and it is their reciprocal and civic duty to employ as many people as possible without going bankrupt.
Extreme </s>
Labor unions and the minimum wage are job killers.
Kenyan Marxist in the White House.
If you got it now, it will be taken away.
If you don’t got it, 0bummer gonna spread the wealth around.
Why work anyway?
Easy answer: 20 years of systematic dismantling of the great American industrial base in order to make insane profits for Wall St. and promote the international communists/globalist vision of one world at the same economic level with them in charge. When you don’t build anything and only recycle ponzi scheme money to keep people employed you have basically allowed the short term thinking or greed and stupidity to trump the long term strategy of economic health and longevity.
GATT/NAFTA/WTO is just another way for them to turn the American public into but yet another cheap pool of easy-to-exploit labor. Compound this with the age of automation and we are looking at very hard times for very long times unless we put to death the myth of global/free/fair trade.
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