Where Are All the New Jobs? – John C. Goodman – Townhall Conservative

Where Are All the New Jobs? – John C. Goodman – Townhall Conservative.

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.

3 Responses to Where Are All the New Jobs? – John C. Goodman – Townhall Conservative

  1. Like much in our world today, some of our elected official’s logic dictates that for us to improve our economy we need to increase costs in every phase of business because unless we are charging more to build a widget in the US than anywhere else in the world then we won’t buy it… HUH????

    Yep that’s right that makes no sense! Well we increase the cost of labor till we are 4 to 6 times more than many other countries, we increase environmental regulation to the point we cannot produce any primary materials. We increase education until we have no one willing to work in a labor related field. Finally we inflate our economy to the point that we have to have all this money in order to pay all the debt that we ran up to print this money…

    Then we borrow money to pay for goods that we ship in from other countries because we can’t afford to buy what we build here in the first place… And the few things that we do build here, the government is subsidizing with taxes they collect from us to pay for the goods we can’t purchase in the first place, partly because our taxes are so high…

    The other argument I heard yesterday was we needed to slap huge import duties on these goods so American goods would be cheaper. Not appear cheaper! Be cheaper… And where will the money for the duties come from I asked this great pontificator? Well from the other countries was the response. And where will they get it? From their sales was the eventual response. And the sales come from us – right? Well yes of course. So the best thing to do is pay more for goods we can’t afford because we pay too much in costs and taxes, so we can afford to pay more for the goods and services we buy so the government can subsidize more of what we build here so we can buy it here and pay more……

    My head hurts!

    Yep, we are in great shape and only we realize it. The rest of the world thinks we are nutz!


  2. Pingback: Where Are All the New Jobs? « News You May Have Missed

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