A good job report this month drops the “official” unemployment rate to 8.3%. That, of course, will be touted as significant progress and, on one level, it is. The number of jobs created is above the maintenance level. That means a real net gain.
While the job creation is “well above expectations”, there’s another record that masks the real unemployment number.
Namely 1.2 million workers (another record) fell out of the labor force. That’s one reason the official rate looks good.
And, probably the most important number to be considered – the labor participation rate – fell to 63.7% which is a 30 year low and reflects the loss of those 1.2 million workers from the work force. Neither of those numbers are good.
That said, the report on the numbers of jobs created is a good report and may signal some growth. It is, for a change, above the maintenance level of jobs. But you have to keep in mind that in overall terms, and despite the official numbers, the job situation still has a very, very long way to go.
This is just the theater of the absurd masquerading as government:
With the approval of the Obama administration, an electric car company that received a $529 million federal government loan guarantee is assembling its first line of cars in Finland, saying it could not find a facility in the United States capable of doing the work.
Vice President Joseph Biden heralded the Energy Department’s $529 million loan to the start-up electric car company called Fisker as a bright new path to thousands of American manufacturing jobs. But two years after the loan was announced, the job of assembling the flashy electric Fisker Karma sports car has been outsourced to Finland.
"There was no contract manufacturer in the U.S. that could actually produce our vehicle," the car company’s founder and namesake told ABC News. "They don’t exist here."
That’s just absurd. Half a billion dollars of taxpayer guaranteed money to a company in Finland with no guarantee that the coal powered cars they’re building would be built here and create jobs here.
Nope, according to the company’s founder, “no contract manufacturer in the US could actually produce the vehicle”.
We’re finding out about that now? They didn’t know that before they approved the loan guarantees?
Yet another example of government picking winners and losers with your money. And, as usual, doing a dismal job. They’d like you to think they do due diligence on these sorts of deals, but example after example point to utter incompetence, not to mention the fact that government shouldn’t be doing this in the first place.
Dumb and dumber at work with your tax dollars.
Don’t you feel all warm and fuzzy inside?
Oh … and it will be the “Volkswagon” of electric cars made for the little people:
Fisker is more than a year behind rolling out its $97,000 luxury vehicle bankrolled in part with DOE money.
Rep. Keith Ellison, a Democrat member of the House from MN, explained why he thought creating more and more regulations was a good idea. You see, the more you pass, the more people businesses have to hire to comply with them, per Ellison:
"I think the answer is no," Ellison said when asked if he believes regulations kill jobs. "And here is why: When we talked about increasing fuel efficiency standards, the industry responded, and they need engineers and designers and manufacturers, and they need actually more people to help respond to the new requirement."
"I believe if the government says, look, we have got to reduce our carbon footprint, you will kick into gear a whole number of people that know how to do that or have ideas about that, and that will be a job engine. I understand what you mean, because if anything adds a cost to a business, you could assume that that will diminish that business’s ability to hire. But I don’t think that’s actually right. I think what businesses want is customers and what — if they are selling product, if they have a product to sell they will do well even if they have some new regulations to meet," the Congressman said.
The economic ignorance in that statement is dumbfounding. The man obviously has no idea of what productive vs. non-productive work entails. Bureaucrats don’t “produce” anything but cost. They impose a cost burden that the producer must pass on or eat.
Most producers choose to pass on the cost burden in the price of what they produce (it obviously depends on the competitiveness of the market, profit margins, etc.). So in essence, every new regulation that imposes a compliance cost on a producer means those who consume the product end up paying the compliance cost in the price of the product at some point or another. And the man hours that could have been used in a productive job are wasted in seeking compliance with bureaucratic regulation.
These are the guys in Washington DC making decisions about your future. They’re deciding what portion of what you earn you should be allowed to keep. And they have no idea of what makes an economy run.
Here’s a representative that figures a job is a job. And he actually thinks he’s creating jobs what will benefit the economy by increasing regulation and bureaucracy.
Unfortunately his type are more prevalent that you might imagine. And our present situation is beyond their understanding. How does one go on a national television network and make statements like that and think they’re being profound when in fact what they say is profoundly ignorant? He obviously doesn’t know that. That’s just scary.
When all is said and done about our current situation, when the hindsight evaluations are made and the scope of the disaster is understood, it will be clear that people like Rep. Keith Ellison were as responsible as anyone for our economy’s inability to recover.
And he won’t even know it.
And frankly, I think they’re right:
– There is little appetite among American voters for additional regulations coming out of Washington. Three quarters (74%) of voters throughout the country believe that businesses and consumers are over-regulated. Further, another two thirds (67%) believe that regulations have increased over the past few years. These percentages include majorities of all partisan affiliations, with 91% of Republicans, 75% of Independents and 58% of Democrats saying businesses/consumers are over-regulated.
Now you may argue that “over-regulation” may mean different things to different groups. However in each case the term “over” has specific meaning – it means there’s too much regulation. While they may argue about the degree of over-regulation, it appears that each and every group sees over-regulation in the same and proper light.
– A key fear among voters is that regulations will hinder job creation, as most believe the result of new regulation will be either job losses (47%) or increased prices for American made goods and services (22%).
Or both. You see, businesses will absorb only so much (job losses) before passing along the cost of regulatory compliance in the cost of their goods and services. We’re well past the first part in this recession. Businesses are about as lean and mean as they can stand to be and still function well. Additional regulatory cost, then, is likely to be passed on to consumers – another among many reasons consumer confidence is down.
– More than two thirds (70%) believe increasing the number of regulations on American businesses will result in more jobs moving overseas. Also, majorities agree that the increasing number of regulations have created uncertainty for large and small businesses (66%), and that agencies who enforce regulations fail to consider how their decisions lead to increased prices for consumers and job losses (69%).
All three of these beliefs among those polled is on the money. The amount of regulation is a key consideration for businesses when they assess a business climate. Their cost is calculated in the cost of doing business there. And when that cost is deemed to be too much or too unreasonable, businesses look around for a less costly place to establish themselves. We’ve seen this right here in the US as states with more regulation and higher taxes lose businesses to states that impose a less costly regime of taxes and regulations. They don’t call the Midwest the “Rust Belt” for nothing.
And those polled are right when they say they believe those who impose regulations “fail to consider how their decisions lead to increased prices for consumers and job losses”. But while regulators may not consider it, voters apparently do:
– One of the highest points of agreement in the survey is the fact that 73% concur that “every time the federal government mandates a new regulation on America’s large and small business, the prices of American made good and services like gasoline and food go up.” Only 22% supported the view that “while many federal regulations might be just another burden to operations of America’s large and small businesses, customers do not see major cost increases for American made goods and services like gasoline and food.”
In a study, The Small Business Association found that the regulatory burden on small business in this country was quite high:
The research finds that the cost of federal regulations totals $1.1 trillion; the cost per employee for firms with fewer than 20 employees is $7,647.
Under 20 employees is indeed a “small business” yet most would agree, $7,647 in compliance costs per employee is a lot of money. It is over $140,000 for the 20 employee firm. That money has to be made up somewhere, just to break even, much less turn a profit. And it is clear that depending on the type of firm and needs of the employer, any number of employees could be hired for that amount. And don’t forget, small businesses account for about 80% of the jobs in the US.
So it is clear that there’s a tremendous regulatory burden that has been placed on the businesses of America that most feel over-regulate them and cost jobs and increase prices.
There’s a move afoot within the Obama administration to cut regulation. That’s a good thing. But we have to remember, it’s the Obama administration where they usually talk the talk and never walk the walk. One way to get the economy moving is to lift some of the burdensome regulation and its related costs.
So who should be leading this charge? The executive branch. And, as the poll indicates, most voters don’t understand that it is at that branch the buck stops. But they are clear in what they want – much more consideration and an amended approval process before new regulations are imposed:
– Voters are simply unaware that Congress is not in a lead position with regard to regulation, as a majority say that Congress (52%) creates regulations. However, there is a strong desire for checks and balances in creating regulations, as two thirds (65%) favor requiring regulations be approved by Congress and the President before they are enforced. Voters do not want a regulatory process that takes away legislative duties reserved for Congress – just as they do not want judges legislating from the bench. This strong support for Congressional involvement is consistent across partisan groups, including among Democrats (67%), Republicans (65%) and Independents (64%).
Of course that would mean that most oppose the unilateral imposition of new regulation by the executive branch as we’ve seen during this administration.
All that is not to say that at some level, most Americans see some necessity for regulation:
– There are some positive connections to regulations, with solid majorities saying they are positively impacted by those that require certain safety levels for drinking water (72%) or require controls to ensure better safety at schools and in the workplace (66%).
But, not like this:
– When presented with a lengthy explanation of the Boeing case — where the federal government has filed a lawsuit over the their motivations for locating a new facility in the non-union state of South Carolina — fully 78% of voters side with Boeing in agreeing that a business should be able to open a facility in any state, and that the government should not be involve in the decision about where Boeing or any company locates new plants.
A very interesting poll, and one that needs to be in front of every politician and department executive in government. Back off, unchain the engine of prosperity and listen to the people. They’re pretty clear here in what they want. A less costly and intrusive regulatory regime and government out of places it doesn’t belong – like in the Boeing example.
While President Obama vacations on Martha’s Vineyard, he is supposedly committing to paper a plan to boost employment. During the recession unemployment has remained high, near 10%, and with the economy slowing again, that number is likely to go higher.
One area that hasn’t suffered jobs losses during Obama’s time in office is the government regulatory regime. In fact, it has managed to add a significant number of jobs, all, unfortunately, at the expense of business. While most Americans feel some level of regulation is necessary by the Federal government, over-regulation is always a danger. When that danger is realized, it is businesses who bear the brunt of the cost of compliance. And, of course, businesses pass their costs on to consumers in the price of their goods. So regulation compliance costs drive the price of goods up.
In the past three years of the Obama administration we’ve seen an explosion of regulations. Investors Business Daily brings you the gory details:
Regulatory agencies have seen their combined budgets grow a healthy 16% since 2008, topping $54 billion, according to the annual "Regulator’s Budget," compiled by George Washington University and Washington University in St. Louis.
That’s at a time when the overall economy grew a paltry 5%.
Meanwhile, employment at these agencies has climbed 13% since Obama took office to more than 281,000, while private-sector jobs shrank by 5.6%.
Michael Mandel, chief economic strategist at the Progressive Policy Institute, found that between March 2010 and March 2011 federal regulatory jobs climbed faster than either private jobs or overall government jobs.
Those agencies have churned out new regulations and rules at an amazing rate:
The Obama administration imposed 75 new major rules in its first 26 months, costing the private sector more than $40 billion, according to a Heritage Foundation study. "No other president has imposed as high a number or cost in a comparable time period," noted the study’s author, James Gattuso.
The number of pages in the Federal Register — where all new rules must be published and which serves as proxy of regulatory activity — jumped 18% in 2010.
This July, regulators imposed a total of 379 new rules that will cost more than $9.5 billion, according to an analysis by Sen. John Barrasso, R-Wyo.
And much more is on the way. The Federal Register notes that more than 4,200 regulations are in the pipeline. That doesn’t count impending clean air rules from the EPA, new derivative rules, or the FCC’s net neutrality rule. Nor does that include recently announced fuel economy mandates or eventual ObamaCare and Dodd-Frank regulations.
As mentioned above, regulations and rules impose a significant cost on businesses which must comply with them. In a time when the economy is staggering, these increases in costs delivers another body blow to any recovery. And most of them have been imposed via the Executive Branch through its various Departments and not Congress. The agenda brought to the White House by Barack Obama is being serviced by regulators and the legislators are being left out
"Our economy is continuing to sink," Sen. Barrasso said, "and it’s being weighed down by regulations coming out of this administration."
By 2008, the cost of complying with federal rules and regulations already exceeded $1.75 trillion a year, according to a 2010 study issued by the Small Business Administration.
Worse, the SBA found that small companies — which account for most of America’s new jobs — spend 36% more per employee to comply with these rules than larger firms.
Of course the administration flatly denies what the reports above tell us is happening:
Cass Sunstein, who runs the White House Office of Information and Regulatory Affairs, denies the regulatory upsurge, writing recently that "there has been no increase in rule making in this administration." He also notes Obama ordered a comprehensive regulatory review in January that uncovered $1 billion worth of needless red tape.
As is always the case, never believe what the administration tells you, always look behind the curtain at the facts. And the facts are that 379 new rules have been imposed under this administration and it has 4,200 new regulations “in the pipeline” not counting the exceptions to that count noted in the IBD article. So, as usual, the numbers tell a different story.
If President Obama is serious about creating job opportunities, this is an area in which he obviously exercises direct control via the federal government and the executive branch. Rolling back the regulator regime, suspending all new rules until a comprehensive study can be made of their economic impact and generally getting regulators out of the way of businesses would be a very good start.
Somehow I doubt any of that will find its way into the jobs plan Mr. Obama presents after his vacation.
In this podcast, Bruce and Dale discuss Rick perry, the Obama jobs plan, and much more.
The direct link to the podcast can be found here.
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It might come as a surprise to some, but the bill Democrat Representative Jan Schakowsky (IL) plans to introduce as a jobs bill is long on borrowing money we don’t have and funneling that money through ineffective government programs. Apparently they still don’t get it.
The member of the Congressional Progressive Caucus would spend $227 billion dollars and, best case, create 2.2 million jobs (or, again best case, a little over $108,000 a dollar a job). Her plan reads like something from the Franklin Roosevelt administration:
Under her plan, the following policies would be implemented:
- The School Improvement Corps would create 400,000 construction and 250,000 maintenance jobs by funding positions created by public school districts to do needed school rehabilitation improvements.
- The Park Improvement Corps would create 100,000 jobs for youth between the ages of 16 and 25 through new funding to the Department of the Interior and the USDA Forest Service’s Public Lands Corps Act. Young people would work on conservation projects on public lands including the restoration and rehabilitation of natural, cultural, and historic resources.
- The Student Jobs Corps would create 250,000 more part-time work study jobs for eligible college students through new funding for the Federal Work Study Program.
- The Neighborhood Heroes Corps would hire 300,000 new teachers, 40,000 new police officers and 12,000 new firefighters.
- The Health Corps would hire at least 40,000 health care providers, including physicians, nurse practitioners, physician assistants, nurses, and health care workers to expand access in underserved rural and urban areas.
- The Child Care Corps would create 100,000 jobs in early childhood care and education through additional funding for Early Head Start.
- The Community Corps would hire 750,000 individuals to do needed work in communities, including housing rehab, weatherization, recycling, and rural conservation.
Perusing the list, there’s absolutely no possible threat of waste, fraud and abuse, is there? 750,000 people hired to “work in the community” doing “recycling” and “rural conservation?” “Weatherization”? Nope, no chance of waste, fraud and abuse, none at all.
Of course, nowhere in there other than initially, is there any mechanism to fund the “jobs” created in the future. They’d last as long as the $227 billion did and then the jobs would go away. That would include the teachers, police officers and firefighters. Those are simply in the plan to make it sound more acceptable. If the localities who will get the teachers, police and firefighters funded by this boondoggle can’t afford to hire them now, chances are very good they won’t be able to keep them when the money runs out.
The jobs listed are also mostly make work jobs on make work projects that might be nice to have done, but aren’t going to contribute to the private economy (the actual engine of the economy) in any meaningful way. Nothing is really “produced”, no wealth is created, no revenue – other than salaries – is taxable.
And finally, which health care providers is “Health Corps” going to hire? There’s a shortage of health care providers in the private market. Why in the world would they leave that to work for government in “underserved rural and urban areas?”
It is clear with Rep. Schakowsky’s proposal that the Progressive side of the aisle still don’t get it. How much louder do the American people have to shout to be heard?
Cut spending. Make government smaller. Make government less costly.
Rep. Schakowsky and the Progressives are still stuck in the 20th century. We’re already living the Raw Deal thanks to spendthrifts like her.
Much more so than does the President of this country apparently:
Chancellor George Osborne has announced a number of measures to try to help business in his Budget.
Corporation Tax will be reduced by 2% from April 2011, rather than 1% as previously intended, and fall by 1% in the next three years, to reach 23%.
Mr Osborne also said that he was looking to boost enterprise and exports, as part of a Budget "for making things".
He said he also wanted the UK to be the best place to establish a company.
"Cuts in the burden of corporation tax, that will be worth around £2bn per annum when implemented over the coming years, are likely to be particularly beneficial for big multinational companies," said BBC business editor Robert Peston.
"And a significant lifting of planning constraints will delight much of the corporate sector."
He added: "With the corporation tax changes – and the recent pledge by Vince Cable to slash red tape – they represent a loosening of alleged shackles on the corporate sector."
And business body the CBI said the Budget would help business grow and create jobs.
Wow … what a concept. Cut business taxes and attract businesses, create jobs and actually increase government revenue.
Now, there’s a “jobs bill” for you.
The employment numbers from this morning are no cause for any sighs of relief, yet. The number of persons employed increased faster than the increase in population–which seems to be unusually small compared to recent months.
In any event, according to my calculation method, this is where we stand (all numbers in thousands):
Civilian Non-Institutional Adult Population: 238,889
Average Labor Force Participation Rate: 66.2%
Proper Labor Force Size: 158,145
Actually employed: 139,206
UNEMPLOYMENT RATE: 13.6%
The labor force participation rate continues to decline, coming in at 64.3% this month, a 30-year low. The actual size of the labor force was 153,690. Using the historical average participation rate of 66.2%, that means the current labor force is running with about 4.45 million fewer workers than it should.
This month’s non-farm payroll increase of 103k new jobs is really just a drop in the bucket. We would need 11 million jobs created to get the unemployment rate back to 5%. Even if there were no increase in population at all, we would need to create 300k new jobs per month for 37 months to get those 11 million jobs back. The only possible bright spot is that, this year, the first of the baby boomers hit 65 and begin retiring. So maybe the actual labor force participation rate is due to naturally drop, as is the size of the labor force.
All we have to do, then, is figure out how to pay social security to more retirees with a shrinking labor force. That should be fun.