Commentary Magazine


Topic: economy

The Jobs Report

The employment picture brightened somewhat in June, with 288,000 new jobs (up from a revised 224,000 in May) and a decline in the unemployment rate to 6.1 percent from 6.3. That’s the lowest unemployment rate since August 2008, on the eve of the financial crisis. We have now had job growth above 200,000 for the last five months, the first time that has happened since the very prosperous years of the late 1990s. The number of long-term unemployed (over 27 weeks) declined by 293,000. Unemployment among African-Americans fell from 11.5 percent to 10.7.

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The employment picture brightened somewhat in June, with 288,000 new jobs (up from a revised 224,000 in May) and a decline in the unemployment rate to 6.1 percent from 6.3. That’s the lowest unemployment rate since August 2008, on the eve of the financial crisis. We have now had job growth above 200,000 for the last five months, the first time that has happened since the very prosperous years of the late 1990s. The number of long-term unemployed (over 27 weeks) declined by 293,000. Unemployment among African-Americans fell from 11.5 percent to 10.7.

But the picture was not all bright. The number of involuntary part-time workers increased by 275,000. Teenage unemployment increased to 21 percent. Among black teenagers it was a horrendous 33.4 percent, up from 31.1 percent in May. One in three black teenagers in the labor force are unemployed. The participation rate stayed steady at 62.8 percent for the third month in a row. But that is down from a year ago, when it was 64 percent and way down from before the recession. So much of the drop in unemployment came from people dropping out of the labor force, not finding jobs.

And many of the new jobs were at the low end of the pay scale. While retail jobs increased by 40,000 and leisure and hospitality 39,000, higher-paying jobs in manufacturing (16,000) and construction (6,000) were far fewer.

So while the news is good, it is not unalloyed good. We’ll know we are finally in a full-fledged recovery when the participation rate begins to climb steadily as discouraged workers see more opportunity and begin looking for jobs. That might send the unemployment rate up at first, but that, paradoxically, would actually be good news.

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Obama’s Climate Laughs No Substitute for Sound Economics

President Obama had a good time mocking congressional Republicans yesterday for being skeptics about climate change. But even he seems to know that selling his radical proposals that will cause serious economic pain will not be as easy a sell as jokes about Flat Earth Republicans.

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President Obama had a good time mocking congressional Republicans yesterday for being skeptics about climate change. But even he seems to know that selling his radical proposals that will cause serious economic pain will not be as easy a sell as jokes about Flat Earth Republicans.

As Politico noted, Obama’s speech to the League of Conservation Voters was notable mainly for the president’s comedy routine aimed at depicting those who haven’t bought into every aspect of the radical environmentalist agenda as extremists with a screw loose. The reason for this strategy is easy to understand.

If Obama’s talking about regulations, he’s losing. If he’s talking about carbon caps for power plants or energy emissions for air conditioners, no one cares. But if he’s talking about crazy Republicans who don’t make any sense—and by the way, are putting children at risk, he charges—well, that’s an argument he can wrap his arms around.

Given the stranglehold that the global warming crowd has on the mainstream media and, even more importantly, in popular culture, the president’s confidence that a majority of Americans may agree with him on climate issues is well founded. But the gap between a general belief that the earth may be warming and a suspicion that human activity may be causing it and support for some of the administration’s prescriptions to address these issues is considerable.

As even the president acknowledged in his speech, his attempt to get rid of coal-fired power plants and force car manufacturers to alter their plans will have economic consequences. But the disconnect here isn’t merely a matter of marketing and better communication, as the White House seems to think.

As I noted back in March, polls have consistently shown that while the American people may believe the climate is changing, they don’t consider this to be a priority when it comes to government action. Liberals tend to think the reason for this is that the public is not yet sufficiently alarmed by the prospect of global warming. But instead of attempting to make a reasonable case for changes that will send electricity and gas prices skyrocketing and the refusal to undertake projects, like the Keystone XL Pipeline, that would increase America’s available resources, they engage in scare tactics that, generally, backfire.

That’s because what the public wants is not so much mockery of skeptics or hysterical and wildly exaggerated predictions of a warming apocalypse but a measured analysis of the cost/benefit ratio of climate legislation. And that is exactly what is lacking in the president’s comedy routine. Even if the courts have given the president the power to enact far-reaching changes without benefit of congressional approval, that doesn’t translate into widespread approval for carbon regulations that will damage the economy and cause genuine economic hardship. Nor will that problem be solved be reports filled with alarmist predictions funded by wealthy activists like Tom Steyer and Michael Bloomberg that liberals cite to justify the suffering that will be imposed on the public. Though most Americans may think the climate is changing, they don’t think the apocalypse is at hand and aren’t interested in lowering their standard of living merely to gratify extremist ideology.

Merely branding his opponents as crazy won’t resolve this problem. Nor will the usual amorphous rhetoric about the power of green jobs that never seem to materialize and new technologies that will leapfrog over current difficulties that may take decades before they can take the place of fossil fuels, if, in fact, they ever do. In the meantime, they are left facing the prospect of Obama’s proposals creating economic havoc. As some Democrats in energy-producing states are learning, Obama may be getting laughs from coastal elites but his backing for environmentalist extremism may cost his party some Senate seats to the same Republicans he’s been mocking. While he may be thinking in terms of his 2008 boast about turning back the oceans, that seems a poor exchange for unpopular policies even if most Americans don’t agree with the skeptics.

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First Quarter GDP Is Down 2.9 Percent

The Commerce Department announced this morning that American GDP in the first quarter of 2014 declined a stunning 2.9 percent. That’s the first decline in GDP since the first quarter of 2011 and the biggest decline since the first quarter of 2009, while the economy was still in the throes of the Great Recession.

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The Commerce Department announced this morning that American GDP in the first quarter of 2014 declined a stunning 2.9 percent. That’s the first decline in GDP since the first quarter of 2011 and the biggest decline since the first quarter of 2009, while the economy was still in the throes of the Great Recession.

When the Commerce Department first announced first quarter GDP, in April, it measured it at being up .1 percent. In May it revised the figure to down 1 percent, and now it’s down 2.9 percent. Early GDP figures are often substantially revised, but this beat the estimate of economists surveyed by the Wall Street Journal, which was a 2 percent decline.

To be sure, the awful winter much of the country suffered had caused shoppers to stay home and many construction projects to be halted. But manufacturers drew down inventory and exports were down by a substantial 8.9 percent as other economies, especially in Europe, remain subpar.

The economy is expected to rebound in the second quarter, which ends on Monday, and no one is expecting a further decline in GDP. (Two consecutive quarters of declining GDP is the standard definition of a recession, by the way.) But even if the second quarter lives up to expectations of 3.6 percent growth, the growth for the first half of 2014 will be well below the 2 percent average since the economy began to expand in June 2009. American GDP growth over the long term has been a little over 3 percent.

So the American economy in the Obama recovery continues to sputter and wheeze.

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The Jobs Report

The economy added 217,000 jobs in May while the unemployment rate remained unchanged at 6.3 percent. The jobs number is a bit above the monthly average over the last six months, enough growth to keep the economic situation from getting worse but not enough to produce what anyone would call boom times.

The number of people employed in the United States reached 138.5 million, a new record, finally surpassing the previous record set in January 2008 before the financial crisis. But the population since then has increased by five percent. So the labor participation rate, at 62.8 percent (unchanged from last month) is well below the rate in January 2008, when it was 66.2 percent.

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The economy added 217,000 jobs in May while the unemployment rate remained unchanged at 6.3 percent. The jobs number is a bit above the monthly average over the last six months, enough growth to keep the economic situation from getting worse but not enough to produce what anyone would call boom times.

The number of people employed in the United States reached 138.5 million, a new record, finally surpassing the previous record set in January 2008 before the financial crisis. But the population since then has increased by five percent. So the labor participation rate, at 62.8 percent (unchanged from last month) is well below the rate in January 2008, when it was 66.2 percent.

There are still 7.3 million workers working part-time because they cannot find full-time employment or have had their hours cut back. There are 697,000 “discouraged” workers, little changed from a year ago. Overall teenage unemployment remains a dismal 19.2 percent while for black teenagers it’s an appalling 31.1 percent. That’s down from 36.8 percent last month, but this number tends to be volatile.

All in all this is about an average jobs report for the Obama era. Nothing to write home about but not calamitous either.

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Solving the GOP’s Middle Class Problem

Yesterday the YGNetwork released a new book, Room To Grow: Conservative Reforms for Limited Government and a Thriving Middle Class. It includes essays by some of the top thinkers and policy experts in the conservative world, offering reforms in the areas of health care, K-12 and higher education, energy, taxes, job creation, the social safety net, regulations and finances, and the family. Yuval Levin articulated a conservative governing vision while Ramesh Ponnuru wrote a chapter on recovering the wisdom of the Constitution.  

(The New York Times story on the release of the book can be found here, a related event held at the American Enterprise Institute can be viewed here, and the book itself and chapter summaries can be found here.) 

For my part, I contributed an opening chapter to Room To Grow, the purpose of which is to define the middle class and summarize the attitudes of those who comprise it. Here’s what I found. 

When speaking of the middle class, there’s both a technical and a practical definition. The technical definition is households with annual incomes ranging from roughly $39,400 to $118,200. The practical definition is the broad base of Americans. Fully 85 percent of Americans consider themselves as part of an expanded definition of middle class (lower, upper, and simply middle class). It’s people who don’t consider themselves rich or poor and who can imagine their fortunes going either way. 

Any successful political movement and party need to be seen as addressing their concerns.

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Yesterday the YGNetwork released a new book, Room To Grow: Conservative Reforms for Limited Government and a Thriving Middle Class. It includes essays by some of the top thinkers and policy experts in the conservative world, offering reforms in the areas of health care, K-12 and higher education, energy, taxes, job creation, the social safety net, regulations and finances, and the family. Yuval Levin articulated a conservative governing vision while Ramesh Ponnuru wrote a chapter on recovering the wisdom of the Constitution.  

(The New York Times story on the release of the book can be found here, a related event held at the American Enterprise Institute can be viewed here, and the book itself and chapter summaries can be found here.) 

For my part, I contributed an opening chapter to Room To Grow, the purpose of which is to define the middle class and summarize the attitudes of those who comprise it. Here’s what I found. 

When speaking of the middle class, there’s both a technical and a practical definition. The technical definition is households with annual incomes ranging from roughly $39,400 to $118,200. The practical definition is the broad base of Americans. Fully 85 percent of Americans consider themselves as part of an expanded definition of middle class (lower, upper, and simply middle class). It’s people who don’t consider themselves rich or poor and who can imagine their fortunes going either way. 

Any successful political movement and party need to be seen as addressing their concerns.

As for what I discovered in my analysis of the middle class, let me start with their mood, which is anxious, insecure, and uneasy. National Journal‘s Ronald Brownstein, in analyzing the data from an April 2013 Heartland Monitor Poll, said, “The overall message is of pervasive, entrenched vulnerability–a sense that many financial milestones once assumed as cornerstones of middle-class life are now beyond reach for all but the rich.” 

These concerns are largely justified. Since the turn of the century, middle class Americans have been working harder yet losing ground. Wages are stagnant. (The typical household is making roughly the same as the typical household made a quarter of a century ago.) Meanwhile, the cost of living–especially health-care and higher education costs–has gone way up. For example, health-care spending per person, adjusted for inflation, has roughly doubled since 1988, to about $8,500. The average student debt in 2011 was $23,300. (For middle class families, the cost of one year of tuition equals about half of household income.)   

The middle class is also increasingly pessimistic, with two-thirds of Americans thinking it’s harder to reach the American Dream today than it was for their parents and three-quarters believing it will be harder for their children and grandchildren to succeed.

The middle class holds the political class largely responsible for the problems they face. Sixty-two percent place “a lot” of blame on Congress, followed by banks/financial institutions and corporations. 

If Congress in general is held in low esteem, the situation facing the GOP is particularly problematic. Middle class Americans are more likely to say that Democrats rather than the Republicans favor their interests. Polls indicate 62 percent of those in the middle class say the Republican Party favors the rich while 16 percent say the Democratic Party favors the rich; 37 percent of those in the middle class say the Democratic Party favors the middle class while only 26 percent say the GOP does. When asked which groups are helping the middle class, 17 percent had a positive response to Republican elected officials; 46 percent were negative. (For Democrats, the numbers were 28 percent positive v. 40 percent negative.) 

The challenge of the GOP, then, is to explain how a conservative vision of government can speak to today’s public concerns; and to explain how such a vision should translate into concrete policy reforms in important areas of our national life. 

“Policy is problem solving,” I wrote in the introduction:

It answers to principles and ideals, to a vision of the human good and the nature of society, to priorities and preferences; but at the end of the day it must also answer to real needs and concerns. And public policy today is clearly failing to address the problems that most trouble the American people.

Room To Grow suggests some ways forward, with special emphasis on what can be done to assist and empower those who are, and those who want to be, in the middle class.

Reactionary liberalism is intellectually exhausted and politically vulnerable. There is therefore an opening for conservatism to offer a different way of thinking about government, to move from administering large systems of service provision to empowering people to address the problems they confront on their own terms; to provide people with the resources and skills they need to address the challenges they face rather than to try to manage their decisions from on high. The task of the right isn’t simply to offer new policies, as vital as they are, but to explain the approach, the organizing principle, behind them. It is, as my Ethics and Public Policy Center colleague Yuval Levin puts it, replacing a failing liberal welfare state with a lean and responsive 21st century government worthy of a free, diverse and innovative society. It’s time we get on with it.

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The Jobs Report

If the Commerce Department’s first-quarter GDP report that came out on Wednesday was bad news for the administration, the Bureau of Labor Statistics’ jobs report this morning is good news.

The economy added 288,000 new jobs last month and the February and March figures were upped from previous estimates to 222,000 and 203,000 respectively. The 288,000 figure represents the largest number of jobs added in a month since January 2012, and the second biggest since recovery began in June 2009. The statistics for most subgroups moved in the right direction as well. Black unemployment, for instance, fell from 12.4 percent to 11.6 percent.

But the big news is that the unemployment rate fell a whopping four-tenths of a percent to 6.3 percent, the lowest since September 2008, just before the financial crisis struck with full force. Economists had been expecting a drop to 6.6 percent. However, part of that drop can be attributed to a sharp drop in the total labor force, which shrank by 806,000. The labor force participation rate also fell by 0.4 percent to a dismal 62.8 percent. It was 66 percent in September 2008. If it were still at 66 percent the unemployment rate would be far higher than it is.

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If the Commerce Department’s first-quarter GDP report that came out on Wednesday was bad news for the administration, the Bureau of Labor Statistics’ jobs report this morning is good news.

The economy added 288,000 new jobs last month and the February and March figures were upped from previous estimates to 222,000 and 203,000 respectively. The 288,000 figure represents the largest number of jobs added in a month since January 2012, and the second biggest since recovery began in June 2009. The statistics for most subgroups moved in the right direction as well. Black unemployment, for instance, fell from 12.4 percent to 11.6 percent.

But the big news is that the unemployment rate fell a whopping four-tenths of a percent to 6.3 percent, the lowest since September 2008, just before the financial crisis struck with full force. Economists had been expecting a drop to 6.6 percent. However, part of that drop can be attributed to a sharp drop in the total labor force, which shrank by 806,000. The labor force participation rate also fell by 0.4 percent to a dismal 62.8 percent. It was 66 percent in September 2008. If it were still at 66 percent the unemployment rate would be far higher than it is.

If the trend of the last three months continues, one would expect more people to enter the labor force and that could push the unemployment rate back up for a while.

All in all, the Obama White House is happy this morning. Well, at least about the employment statistics if nothing else.

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The Growth Figures

New gross domestic product figures for the first quarter of 2014 were released this morning by the Commerce Department and they are dismal, a mere 0.1 percent growth. This was way below what economists had been expecting (the Wall Street Journal’s survey of economists had predicted a less-than-stellar 1.1 percent) and even more below the pace of the last half of 2013, which was 3.4 percent.

To be sure, it was a brutal winter in much of the country this year, but these figures are seasonally adjusted, to reflect normal winter slowdown in such industries as construction. Had it not been for considerably above normal spending on energy to heat homes, which caused consumer spending to rise by 3 percent (it rose 3.3 percent in the last quarter of 2013), the figures would have been worse.

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New gross domestic product figures for the first quarter of 2014 were released this morning by the Commerce Department and they are dismal, a mere 0.1 percent growth. This was way below what economists had been expecting (the Wall Street Journal’s survey of economists had predicted a less-than-stellar 1.1 percent) and even more below the pace of the last half of 2013, which was 3.4 percent.

To be sure, it was a brutal winter in much of the country this year, but these figures are seasonally adjusted, to reflect normal winter slowdown in such industries as construction. Had it not been for considerably above normal spending on energy to heat homes, which caused consumer spending to rise by 3 percent (it rose 3.3 percent in the last quarter of 2013), the figures would have been worse.

Business investment in such things as equipment and buildings fell 2.1 percent from the last quarter. Exports fell a startling 7.6 percent, the largest drop since the recession officially ended in June 2009 and reflecting lackluster economic growth abroad. Imports fell much less, only 1.4 percent.

To be sure, economists expect GDP growth to pick up next quarter, in part because the spending that was delayed this winter by the awful weather will be made up this spring and summer. But this continues a worrying pattern of not only lackluster growth overall, but very erratic growth, as can be seen in this chart from the Bureau of Economic Analysis. This is not at all typical of a recovery from a deep recession, which usually shows strong and steady growth.

Democrats had better pray that this is a blip in the statistics. Two more quarters like this and November will be an ugly political month for them.

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The Jobs Report

The monthly jobs report is modestly good news for the economy. While the unemployment rate stayed at 6.7 percent, the economy created 192,000 new jobs and the job totals for January and February were upped by a combined 37,000. There was other good news too. Teenage unemployment declined from 21.4 percent to 20.9. But the unemployment rate for black teenagers (which tends to be volatile) rose from 32.4 to 36.1. That might reflect more black teenagers coming into the job market, looking for employment. The participation rate ticked up from 63 to 63.2 percent. But it’s still down from a year ago, when it was at 63.3.

The economy needs at least 250,000 new jobs a month to achieve a steady decline in the unemployment rate and we have had only three months with job creation that robust since the end of 2011. So the recovery remains sluggish.

The administration will undoubtedly be touting the fact that the economy now has more private-sector jobs (116.09 million) than at the former peak in January 2008, when there were 115.98 million private-sector jobs. But don’t look for the administration to take note that since January 2008, governments have shed a total of 535,000 jobs, so the national job total is still well below the pre-recession peak. It won’t make the point either that the civilian labor force is 2 million people larger than it was six years ago, and that the participation rate was then 66.2 percent as opposed to today’s 63.2 percent.

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The monthly jobs report is modestly good news for the economy. While the unemployment rate stayed at 6.7 percent, the economy created 192,000 new jobs and the job totals for January and February were upped by a combined 37,000. There was other good news too. Teenage unemployment declined from 21.4 percent to 20.9. But the unemployment rate for black teenagers (which tends to be volatile) rose from 32.4 to 36.1. That might reflect more black teenagers coming into the job market, looking for employment. The participation rate ticked up from 63 to 63.2 percent. But it’s still down from a year ago, when it was at 63.3.

The economy needs at least 250,000 new jobs a month to achieve a steady decline in the unemployment rate and we have had only three months with job creation that robust since the end of 2011. So the recovery remains sluggish.

The administration will undoubtedly be touting the fact that the economy now has more private-sector jobs (116.09 million) than at the former peak in January 2008, when there were 115.98 million private-sector jobs. But don’t look for the administration to take note that since January 2008, governments have shed a total of 535,000 jobs, so the national job total is still well below the pre-recession peak. It won’t make the point either that the civilian labor force is 2 million people larger than it was six years ago, and that the participation rate was then 66.2 percent as opposed to today’s 63.2 percent.

All in all, the new jobs report displays an economy that is growing but hardly soaring. It’s not yet morning in America, to coin a phrase, but there is, perhaps, a hint of pink in the east.

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Unskilled Labor and the Minimum Wage

Like single-payer medical care, the minimum wage has one great advantage as a political idea: It can be explained on the back of a post card.  If employers are forced to pay a living wage then no one will live in poverty. For low-information voters (and the vast majority of political reporters) that’s all there is to it. Q.E.D.

No wonder liberal politicians have been advocating the minimum wage since the New Deal era. It’s been winning them favorable headlines and elections for eighty years.

But, again like single-payer, because it is a good political idea doesn’t mean that it’s a good economic one. It isn’t. A mandated minimum wage is utterly the wrong way to approach the problem of some people being unable to earn a decent living. Here’s why.

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Like single-payer medical care, the minimum wage has one great advantage as a political idea: It can be explained on the back of a post card.  If employers are forced to pay a living wage then no one will live in poverty. For low-information voters (and the vast majority of political reporters) that’s all there is to it. Q.E.D.

No wonder liberal politicians have been advocating the minimum wage since the New Deal era. It’s been winning them favorable headlines and elections for eighty years.

But, again like single-payer, because it is a good political idea doesn’t mean that it’s a good economic one. It isn’t. A mandated minimum wage is utterly the wrong way to approach the problem of some people being unable to earn a decent living. Here’s why.

When we talk about the “U.S. economy” we are talking about the sum of all transactions that take place in the United States in a given time frame.  A transaction is nothing neither more nor less than, “an exchange of commodities between two parties that is to the benefit of both parties.” Each side of a transaction must value what it receives more than what it gives away or the transaction won’t take place. No one would willingly spend ten dollars to buy a five-dollar bill.

But a mandated minimum wage sometimes requires employers to do exactly that. No employer will willingly pay an employee X dollars an hour unless he is reasonably sure he will get more than X dollars worth of work from him. And workers just entering the marketplace are usually unskilled and therefore their labor isn’t worth much, especially as unskilled jobs are more and more being automated. In the 1940’s former Congressman Herman Badillo worked his way through high school and college by working as a pin-spotter in a bowling alley, as a dishwasher, and as an elevator boy. All three jobs are now extinct.

So a mandated minimum wage set at a level above what unskilled labor is worth has several pernicious economic effects.

First, it costs jobs. If we understand anything about economics, we understand that if you raise the price of a commodity there will be less demand for that commodity. That’s just as true of labor as it is of beef, cement, or automobiles. Teenage unemployment is currently at 20.7 percent (black teenage unemployment is at a horrendous 38 percent). Raising the minimum wage will increase that unemployment or the law of supply and demand is false. A job at a subpar wage is a lot better than no job at all. That’s especially true as very few full-time employees stay at the minimum wage they started at. Once they acquire some skills and become more valuable to the employer, they start getting raises. Raising the minimum wage just keeps them from getting on that all-important first rung of the ladder.

Second, it helps the wrong people. The typical minimum-wage earner is not a head of household or primary breadwinner. He’s a teenager flipping hamburgers or bagging groceries after school. Thirty-nine percent—well over a third—of minimum wage earners live in families with incomes at least three times the poverty level. The average family income of minimum wage earners is $48,000 a year.

Third, the people who need the help—heads of households—would be far better helped by the earned income tax credit, which is predicated on family income, not individual wages, with no economic disruption. In other words the EITC is a medicine with far fewer undesirable side effects than the minimum wage. One reason that politicians don’t like it is that it shows up on the federal books, adding to the deficit, which the minimum wage doesn’t.

Fourth, the reason the minimum wage is so strongly backed by labor unions (the prime lobbying force at work here) is that while few of their members earn the minimum wage, many of them contractually earn multiples of it. So raising the minimum wage for those earning $7.25 an hour bagging groceries also raises the wages of those earning, say, $29 an hour (plus benefits) as a skilled worker. In other words, raising the minimum wage tends to raise the price of labor across the wage-earning spectrum, reducing the demand for labor across that entire spectrum.

Fifth, raising the minimum wage will only accelerate the trend to robotics and automation replacing unskilled labor. Five years ago, the grocery store I often go to had fourteen checkout lines, all manned by clerks. Today it has fourteen checkout lines, six of them manned by computers. Jack up the minimum wage by 39 percent, as Obama wants to do, and do you think in a few years there might be only one line that’s manned by a minimum wage worker instead of a computer? I do.

The minimum wage is a classic example of a really lousy idea that, unexamined, sounds noble. It’s not, it’s economic poison.

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The Oil and Gas Boom Booms On

The domestic oil and gas boom is rolling on, with no end of positive effects for the American economy. At the official end of the recession, in June 2009, we pumped 158.266 million barrels of oil that month. In November 2013, we pumped 233.051 million barrels, a 47.2 percent increase. This has led directly to much less imported oil, a much improved balance of trade, and a less influential OPEC.

But as Investor’s Business Daily points out, the economic benefits of the energy boom spread far beyond the oil industry into the economy as a whole. Jobs in the oil and gas fields are up about 40 percent since the end of the recession, and the ten states that are seeing substantially rising hydrocarbon production all have had job growth above the national average. And as IBD explains, “These jobs, moreover, are ‘sticky’ — anchored in the local economy and ranging from information services to training, health care, housing, education and related manufacturing.” North Dakota, battening on the rich oil resources of the Bakken Shield, has the lowest unemployment rate in the country.

And low-cost energy is attracting foreign investment. “The boom has also attracted a similar scale of new foreign direct investment,” IBD reports. “Because of low-cost energy abundance, 100 factories are set to come on line by 2017. When all are up and running, another $300 billion will be pumped into GDP and 1 million more jobs created.”

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The domestic oil and gas boom is rolling on, with no end of positive effects for the American economy. At the official end of the recession, in June 2009, we pumped 158.266 million barrels of oil that month. In November 2013, we pumped 233.051 million barrels, a 47.2 percent increase. This has led directly to much less imported oil, a much improved balance of trade, and a less influential OPEC.

But as Investor’s Business Daily points out, the economic benefits of the energy boom spread far beyond the oil industry into the economy as a whole. Jobs in the oil and gas fields are up about 40 percent since the end of the recession, and the ten states that are seeing substantially rising hydrocarbon production all have had job growth above the national average. And as IBD explains, “These jobs, moreover, are ‘sticky’ — anchored in the local economy and ranging from information services to training, health care, housing, education and related manufacturing.” North Dakota, battening on the rich oil resources of the Bakken Shield, has the lowest unemployment rate in the country.

And low-cost energy is attracting foreign investment. “The boom has also attracted a similar scale of new foreign direct investment,” IBD reports. “Because of low-cost energy abundance, 100 factories are set to come on line by 2017. When all are up and running, another $300 billion will be pumped into GDP and 1 million more jobs created.”

The Obama administration, naturally, is taking entirely undeserved credit for this, for its policies have slowed the oil and gas boom to the extent possible. Other Democrats, with the president’s blessing, have also been impeding oil and gas drilling. While Pennsylvania has been exploiting the vast gas reserves of the Marcellus shale, Governor Andrew Cuomo in neighboring New York has decided to let deeply depressed upstate go on being deeply depressed rather than drill into the Marcellus shale and, Cuomo proclaims, risk ground water contamination. This is, of course, nonsense. Fracking began in 1947 and hundreds of thousands of wells have been drilled in the last 67 years using the technique. There has not been a single case of documented ground water contamination from any of those wells.

Domestically, President Obama has, at best, slow walked the best and most obvious means of increasing American economic prosperity and employment. Internationally, he has worked to limit his country’s influence and prestige. I can think of no other example in all human history of a head of state whose policies were designed to weaken the country he headed.

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Obama’s Priorities v. Those of the American People

President Obama has recently said that the trend of growing inequality is “certainly my highest priority.” He might be interested to know that it’s not the highest priority for the people he was voted to represent.

Not even close.

A new Gallup poll found the 10 most important issues facing the American people to be, in order, (1) unemployment/jobs; (2) economy in general; (3) government; (4) health care; (5) federal budget deficit/federal debt; (6) immigration/illegal aliens; (7) ethical/moral decline; (8) education; (9) lack of money; and (10) poverty/hunger/homelessness. Even among Democrats, income inequality doesn’t rate. Neither, by the way, does raising the minimum wage, climate change, and gun control–three other issues Mr. Obama has made central to his second-term agenda.

So why is the president talking about issues that the public has so little concern about?

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President Obama has recently said that the trend of growing inequality is “certainly my highest priority.” He might be interested to know that it’s not the highest priority for the people he was voted to represent.

Not even close.

A new Gallup poll found the 10 most important issues facing the American people to be, in order, (1) unemployment/jobs; (2) economy in general; (3) government; (4) health care; (5) federal budget deficit/federal debt; (6) immigration/illegal aliens; (7) ethical/moral decline; (8) education; (9) lack of money; and (10) poverty/hunger/homelessness. Even among Democrats, income inequality doesn’t rate. Neither, by the way, does raising the minimum wage, climate change, and gun control–three other issues Mr. Obama has made central to his second-term agenda.

So why is the president talking about issues that the public has so little concern about?

Part of the explanation, I suspect, is that Mr. Obama really believes in his (progressive) agenda and feels more liberated in his second term to pursue it. But I also imagine that the president has very little to say that’s helpful to him or his party about unemployment and jobs, the economy in general, health care, and the debt. So Mr. Obama is turning to other issues, hoping to shift the American people’s focus from what they care about to what he cares about.

This effort is turning out to be a bust. The public is tuning the president out and turning him off. His words are like white noise, and he increasingly looks to be a lame duck–one day impotent, the next day irrelevant, drifting along in a world of his own. 

Mr. Obama seems to think that as a second-term president, he can talk about what he darn well pleases. Maybe. We’ll see what the voters think about that in November, when they get their chance to render their judgment on his second term. 

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An Old Idea, Still as Dumb as Ever

The New York Times has an op-ed this morning whose very title gives away its bias, “A New Way to Rein in Fat Cats.” “Fat cats,” of course, is a highly pejorative term designating people who have large incomes. In this case it refers not to people who inherited lots of money and spend their lives yacht racing and polo playing, not to Hollywood stars pulling down $20 million a picture, but specifically to corporate executives.

The author of this op-ed, Douglas K. Smith, wants to limit the compensation of the executives of corporations who do business with the federal government to 20 times the pay of its lowest-paid workers. If President Obama’s executive order requiring a minimum wage of $10.10 is issued, then the highest paid worker in a company paying someone the minimum wage would, assuming a forty-hour work week, earn $420,160. But CEO’s are not paid wages, they are paid a salary and they work far more than 40 hours a week. Like the president, they get 3 a.m. phone calls. They have to testify before Congress. They travel a lot. They make tough decisions that can cost or earn billions. It takes years of on-the-job training to be ready for the top job in a huge corporation. (If you’d like an example of what happens when an unqualified person tries to run a large organization, I refer you to 1600 Pennsylvania Avenue.)

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The New York Times has an op-ed this morning whose very title gives away its bias, “A New Way to Rein in Fat Cats.” “Fat cats,” of course, is a highly pejorative term designating people who have large incomes. In this case it refers not to people who inherited lots of money and spend their lives yacht racing and polo playing, not to Hollywood stars pulling down $20 million a picture, but specifically to corporate executives.

The author of this op-ed, Douglas K. Smith, wants to limit the compensation of the executives of corporations who do business with the federal government to 20 times the pay of its lowest-paid workers. If President Obama’s executive order requiring a minimum wage of $10.10 is issued, then the highest paid worker in a company paying someone the minimum wage would, assuming a forty-hour work week, earn $420,160. But CEO’s are not paid wages, they are paid a salary and they work far more than 40 hours a week. Like the president, they get 3 a.m. phone calls. They have to testify before Congress. They travel a lot. They make tough decisions that can cost or earn billions. It takes years of on-the-job training to be ready for the top job in a huge corporation. (If you’d like an example of what happens when an unqualified person tries to run a large organization, I refer you to 1600 Pennsylvania Avenue.)

So corporate CEOs may be overpaid, they may underachieve, but no one off the editorial pages of the Times can argue that they don’t work hard. Running a multi-billion-dollar organization is a very time-consuming, demanding, high-stress task that very, very few people have the skills and talents to handle.

So corporate CEOs are highly paid because market forces dictate that they be so. If someone has rare skills and talents that are in high demand, they will earn lots of money. For instance, there are only a handful of people in the country who can throw a baseball 60 feet 6 inches through a strike zone at 95 miles per hour. But Cliff Lee of the Philadelphia Phillies can. That’s why he was paid about $7,500 per pitch last season to do so.

So Mr. Smith’s bright idea is nothing more than a price-fixing scheme to stick it to a group that’s perennially unpopular on the left. I doubt he advocates that Cliff Lee be paid no more than 20 times what the janitors at Citizens Bank Park are paid. I equally doubt that President Obama’s Hollywood friends, who bankroll him so generously at $50,000-a-plate dinners, would be willing to settle for a lousy $400,000 a year in income. Private jets are expensive. So are $50,000-a-plate dinners.

Besides, this nonsense has been tried before. In 1993, Congress and President Clinton limited the deductibility of corporate executive salaries to $1 million. What happened? Nothing. Corporations quickly found ways around the salary cap in order to get the executive talent they felt they needed.

So the government can dictate price controls. The editorial board of the New York Times can write glowing editorials about “fairness.” And market forces will work their inevitable way regardless.

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The Jobs Report

Job creation slowed markedly in December, with only a dismal 74,000 jobs created last month, the worst monthly report in three years. Economists, notorious for their clouded crystal balls, had been predicting 200,000 new jobs, above the 2013 average of 182,000 per month.

They also predicted that the unemployment rate would remain steady at 7 percent. It didn’t, it fell a full three-tenths of a percent to 6.7. But that was only because the labor participation rate fell to 62.8 percent, down two-tenths. As has been happening all through the so-called recovery, improvement in the unemployment rate has been largely the result of a shrinking labor force, not a growing jobs market. The labor participation rate is the now lowest since the days of Jimmy Carter.

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Job creation slowed markedly in December, with only a dismal 74,000 jobs created last month, the worst monthly report in three years. Economists, notorious for their clouded crystal balls, had been predicting 200,000 new jobs, above the 2013 average of 182,000 per month.

They also predicted that the unemployment rate would remain steady at 7 percent. It didn’t, it fell a full three-tenths of a percent to 6.7. But that was only because the labor participation rate fell to 62.8 percent, down two-tenths. As has been happening all through the so-called recovery, improvement in the unemployment rate has been largely the result of a shrinking labor force, not a growing jobs market. The labor participation rate is the now lowest since the days of Jimmy Carter.

Unemployment in hard-hit sectors showed little if any improvement. Teenage unemployment is at 20.3 percent (raising the minimum wage would make that worse, probably much worse, as teenagers make up a very large percentage of minimum-wage workers). Black unemployment was at 11.9 percent. People unemployed for more than 27 weeks stood at 3.9 million, 37.7 percent of total unemployment, up from 37.4 percent last month.

The question is how much longer President Obama can avoid major political damage from these numbers. The “recovery” began in June 2009, according to economists. According to millions of unemployed, under-employed, and dropouts from the labor force, it has yet to begin.

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The Jobs Report

The Bureau of Labor Statistics unemployment report for November came out at 8:30 this morning. The unemployment rate fell to 7 percent in November, its lowest rate since November 2008, as the country was plunging into the deep recession. Partly, however, that reflected the recall of federal workers who had been furloughed in the shutdown of October. The economy added 203,000 jobs last month, above the average of 180,000 per month for 2013 (but which, in turn, was below 2012’s average of 183,000).

Still, while the number of those unemployed less than five weeks declined by 300,000, those unemployed for more than 27 weeks remained essentially flat at 4.1 million. The labor force participation rate, which has been in decline throughout the recession and anemic recovery, rose from 62.8 percent to 63.0.

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The Bureau of Labor Statistics unemployment report for November came out at 8:30 this morning. The unemployment rate fell to 7 percent in November, its lowest rate since November 2008, as the country was plunging into the deep recession. Partly, however, that reflected the recall of federal workers who had been furloughed in the shutdown of October. The economy added 203,000 jobs last month, above the average of 180,000 per month for 2013 (but which, in turn, was below 2012’s average of 183,000).

Still, while the number of those unemployed less than five weeks declined by 300,000, those unemployed for more than 27 weeks remained essentially flat at 4.1 million. The labor force participation rate, which has been in decline throughout the recession and anemic recovery, rose from 62.8 percent to 63.0.

These numbers might be good enough for the Federal Reserve to consider scaling back on its bond and mortgage purchases at the monthly meeting of its Open Market Committee later this month. That would account for the Dow being down about 70 points, as Wall Street likes the low interest rates that the Fed’s purchases have produced.

Meanwhile, the government on Thursday revised upwards its estimate of third-quarter GDP growth to 3.6 percent, the best showing since the first quarter of 2012. But much of that growth came by means of inventory growth rather than increased sales. So most economists expected fourth-quarter growth to be much more modest. The New York Times reports that Barclay’s has cut back its estimate of fourth-quarter growth to a mere 1.5 percent annual rate.

Overall, the news is moderately good. There is still no boom in sight, but at least things are moving in the right direction, if modestly.

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The Jobs Report

The new jobs report showed much stronger than expected job growth in October, up 203,000 when the forecast had been 120,000. The job growth for September and August were also revised upwards, giving an average for the three months of over 200,000, which is the number economists think is needed to bring unemployment down in the long term (the drop in unemployment in recent months was mostly due to people dropping out of the job market).

The unemployment rate actually ticked up last month, however, to 7.3 percent, but that was due to counting temporarily laid-off federal workers because of the shutdown early in the month.

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The new jobs report showed much stronger than expected job growth in October, up 203,000 when the forecast had been 120,000. The job growth for September and August were also revised upwards, giving an average for the three months of over 200,000, which is the number economists think is needed to bring unemployment down in the long term (the drop in unemployment in recent months was mostly due to people dropping out of the job market).

The unemployment rate actually ticked up last month, however, to 7.3 percent, but that was due to counting temporarily laid-off federal workers because of the shutdown early in the month.

Markets immediately reflected the possibility that the Federal Reserve might now begin to scale back the stimulus. The yield on 10-year treasury bonds rose to 2.72 percent in early trading from last evening’s 2.60 percent. But it will take more than one month’s good news to induce the Fed to move more than slightly.

And the jobs report was by no means all good news. The participation rate (the percentage of working-age people in the labor force) continued to decline, now down to 62.8 percent from 63.2 last month. The unemployment rates for teenagers (22.2 percent) and blacks (13.1 percent) remain dismal. The rate for teenagers is likely to go up in the future, as several localities, such as the state of New Jersey, raised their minimum wages in the election on Tuesday. When the teenage (i.e. unskilled) unemployment rate is over 20 percent, increasing the price of unskilled labor is economic lunacy.

The broader measure of unemployment, which includes discouraged job seekers and those involuntarily working part time, increased last month from 13.6 percent to 13.8 percent. It is only when this rate begins to decline substantially month-over-month that we can say we are, finally, on the way up.

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The Jobs Report

Thanks to the government shutdown, the jobs report, due out October 4, only came out today. Next month’s will be late as well, coming out on November 8 instead of November 1.

The economy added 148,000 jobs last month and the unemployment rate fell by a tick, to 7.2 percent. These numbers will, of course, be touted as good news by the administration, but it’s basically more of the same: slow job grow and an unemployment rate more affected by people dropping out of the work force than by growth. In the last year of “recovery” the unemployment rate has fallen only from 7.8 percent to 7.2 percent, while the participation rate (the percentage of adults in the workforce) declined from 63.6 to 63.2.

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Thanks to the government shutdown, the jobs report, due out October 4, only came out today. Next month’s will be late as well, coming out on November 8 instead of November 1.

The economy added 148,000 jobs last month and the unemployment rate fell by a tick, to 7.2 percent. These numbers will, of course, be touted as good news by the administration, but it’s basically more of the same: slow job grow and an unemployment rate more affected by people dropping out of the work force than by growth. In the last year of “recovery” the unemployment rate has fallen only from 7.8 percent to 7.2 percent, while the participation rate (the percentage of adults in the workforce) declined from 63.6 to 63.2.

The number of jobs created in September was below expectations (economists were expecting about 185,000 jobs created) and way below the average for the last year (193,000). And the unemployment rate for teenagers (21.4 percent) and blacks (12.9) remain dismal. The unemployment rate for those 18-29, many of them just entering the workforce, is 15.9 percent, a tremendous headwind for somebody with a necessarily short résumé.

The broader measure of unemployment, which includes discouraged workers and those working part time who want full-time jobs, is 13.6 percent.

Altogether, the numbers are depressing if not indicative of a depression.

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The Fed Stands Pat on the Stimulus

In a bit of a surprise, the Federal Reserve’s Open Market Committee voted 11-1 to continue its program of buying $85 billion worth of federal and mortgage bonds in order to continue stimulating the economy. It had announced in June that it would begin cutting back on these purchases by the end of the year and many expected it to begin doing so today. 

Both Paul Krugman who wrote earlier this week, “Memo to the Fed: Please don’t do it” and the financial markets, which love low interest rates, are happy. The S&P 500 index hit a new high on the news.

By buying these bonds, the Fed is, in effect, creating money, almost $1 trillion a year in new money. Since the financial meltdown in 2008, the Fed has created many trillions of dollars trying to stabilize the economy and then revive it. At some point it will have to begin to reduce and then reverse its bond purchases and get that money back into its capacious vaults lest a virulent inflation break out.

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In a bit of a surprise, the Federal Reserve’s Open Market Committee voted 11-1 to continue its program of buying $85 billion worth of federal and mortgage bonds in order to continue stimulating the economy. It had announced in June that it would begin cutting back on these purchases by the end of the year and many expected it to begin doing so today. 

Both Paul Krugman who wrote earlier this week, “Memo to the Fed: Please don’t do it” and the financial markets, which love low interest rates, are happy. The S&P 500 index hit a new high on the news.

By buying these bonds, the Fed is, in effect, creating money, almost $1 trillion a year in new money. Since the financial meltdown in 2008, the Fed has created many trillions of dollars trying to stabilize the economy and then revive it. At some point it will have to begin to reduce and then reverse its bond purchases and get that money back into its capacious vaults lest a virulent inflation break out.

The timing will be tricky, to put it mildly. Too quickly and it could throw the economy back into recession. Too slowly and we could be back to the 1970′s, with double-digit inflation.

Let’s hope they get it right.

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Too Bad ObamaCare Works as Intended

Year after year, Forbes magazine places Wegmans Food Markets high on its “100 Best Companies to Work For” list, usually in the top five in the country. The supermarkets are based in Rochester, New York, a region that has been hit hard by economic stagnation, with downsizing at several companies (like Xerox and Kodak) that were once the biggest employers in the region. Wegmans has been a refuge for many employees, drawn to its generous salaries, bonuses, and benefits package. Last year Forbes cited its low turnover rate (3.4 percent last year) as a factor in why the supermarkets are such popular places to work. Despite the critical role that the supermarket chain plays in the local economy, Wegmans became a less coveted place to work this summer when it was announced that some part-time workers’ health benefits would be cut thanks to ObamaCare, and earlier this week it was announced that Trader Joe’s would do the same.

I’ve discussed the impact of ObamaCare on businesses quite a few times on this blog: on the restaurant industry, on individual small businesses, and on young people and part-time workers. This summer two stories emerged from two supermarket chains, Wegmans and Trader Joe’s, which have been held up by many on the left as shining examples of “responsible” corporate behavior. Their workers are paid highly (liberals describe it as “fairly”) and are rewarded with coveted and expensive perks like health insurance coverage. According to the Huffington Post, a number of part-time workers interviewed at Trader Joe’s worked there just to receive the subsidized insurance. Now that the insurance will have to be purchased on the ObamaCare exchanges market, workers are understandably wary of how far their budgets will be stretched in order to maintain the coverage they had before the president swooped in to make their insurance more “affordable.”

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Year after year, Forbes magazine places Wegmans Food Markets high on its “100 Best Companies to Work For” list, usually in the top five in the country. The supermarkets are based in Rochester, New York, a region that has been hit hard by economic stagnation, with downsizing at several companies (like Xerox and Kodak) that were once the biggest employers in the region. Wegmans has been a refuge for many employees, drawn to its generous salaries, bonuses, and benefits package. Last year Forbes cited its low turnover rate (3.4 percent last year) as a factor in why the supermarkets are such popular places to work. Despite the critical role that the supermarket chain plays in the local economy, Wegmans became a less coveted place to work this summer when it was announced that some part-time workers’ health benefits would be cut thanks to ObamaCare, and earlier this week it was announced that Trader Joe’s would do the same.

I’ve discussed the impact of ObamaCare on businesses quite a few times on this blog: on the restaurant industry, on individual small businesses, and on young people and part-time workers. This summer two stories emerged from two supermarket chains, Wegmans and Trader Joe’s, which have been held up by many on the left as shining examples of “responsible” corporate behavior. Their workers are paid highly (liberals describe it as “fairly”) and are rewarded with coveted and expensive perks like health insurance coverage. According to the Huffington Post, a number of part-time workers interviewed at Trader Joe’s worked there just to receive the subsidized insurance. Now that the insurance will have to be purchased on the ObamaCare exchanges market, workers are understandably wary of how far their budgets will be stretched in order to maintain the coverage they had before the president swooped in to make their insurance more “affordable.”

The latest liberal spin from ThinkProgress posits that the fact that more people are being pushed onto ObamaCare exchanges proves that the law is working as intended. Sadly, that’s not untrue. When the president stood in front of crowds of nervous Americans, he assured them that if they liked their insurance they’d be able to keep it. Conservatives expressed doubt. Conservatives knew then, as we know now, that it was a baldfaced lie. It was never the intention of the law to keep Americans on their own privately obtained health insurance plans. The few people who read the bill beforehand knew that, and human resources departments nationwide are coming to the same conclusion. It is prohibitively expensive to continue to provide the coverage mandated by the law, which is why we hear stories every day of workers being pushed to part-time status, and why many previously fortunate part-timers are losing the coverage they once enjoyed.

Full-time workers aren’t safe from ObamaCare’s grasp either. Companies and universities, big and small, have announced that they can no longer provide the generous plans they once offered to families of full-time workers either. Several large companies like the United Parcel Service have announced that the spouses of their employees that can obtain insurance elsewhere will now be required to do so. Many of these spouses, along with these part-time workers, will now find themselves without coverage or navigating the ObamaCare exchanges in the new year. The exchanges, it seems, will be far less affordable than the plans they were on, despite the promise that ObamaCare would be the “Affordable Care Act.”

Among conservatives there are a few famous, perhaps infamous, phrases that the sponsors and authors of ObamaCare uttered during their push to pass the bill into law. One of the most well-known was Nancy Pelosi’s statement that Congress would have to pass the bill in order to find out what was in it. The text of the bill has been available for several years now. As deadlines have approached Americans are seeing first-hand just how much the contents of the law will impact them and their families. It’s no wonder there has been, according to Politicoa “sharp increase” in opposition to the health-care law compared to earlier this year. 

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The Jobs Numbers

The Obama “recovery” continues in the latest jobs report. The economy added 169,000 jobs last month, but jobs for June and July were revised downwards by 72,000. The unemployment rate fell by a notch to 7.3 percent. But that was only because 310,000 people left the labor force. The participation rate (the percentage of working-age people in the labor force) dropped to 63.2 percent, the lowest since August of 1978.

Underemployment, people with part-time jobs who want full-time ones, continues to be a major problem, with 40 percent of part-time workers unable to find full-time employment.

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The Obama “recovery” continues in the latest jobs report. The economy added 169,000 jobs last month, but jobs for June and July were revised downwards by 72,000. The unemployment rate fell by a notch to 7.3 percent. But that was only because 310,000 people left the labor force. The participation rate (the percentage of working-age people in the labor force) dropped to 63.2 percent, the lowest since August of 1978.

Underemployment, people with part-time jobs who want full-time ones, continues to be a major problem, with 40 percent of part-time workers unable to find full-time employment.

And most of the jobs created so far this year (848,000—a dismal number in itself) have been part-time jobs. The percentage of those jobs that were part-time was either 96 percent, 63 percent, or 59 percent, depending on how you interpret the Bureau of Labor Statistics data. If you would like to induce a headache, you can follow the arguments among professional economists for which number is correct here. But, regardless, even the lowest number, 59 percent, is dreadful. Prosperity is not built on part-time jobs.

How many of these part-time jobs are due to current economic conditions and how many are due to the impending implementation of Obamacare is anyone’s guess.

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Wanted: A Republican Governing Agenda

The New York Times reports on a study issued yesterday by two former Census Bureau officials. The study shows that although median annual household income rose to $52,100 in June, from its recent low of $50,700 in August 2011, it remained $2,400 lower—a 4.4 percent decline—than in June 2009, when the recession ended.

According to the Times:

Since the end of the recession … household income has declined for all but a few population groups. Some of the largest percentage declines occurred for groups whose income was already well below the median, like African-Americans, Southerners, people who did not attend college, and households headed by people under age 25.

“Groups with low incomes tended to have steeper declines in income,” said Gordon W. Green Jr., who wrote the report with John F. Coder, a colleague at Sentier Research, which specializes in analyzing household economic data.

Households headed by people ages 65 to 74 were the only group in the study that experienced a statistically significant increase in post-recession income, helped perhaps by the decision of some older workers to remain in the work force or re-enter it.

There are several things to make of these findings, the first of which is that we’ve seen a decline in median income in the aftermath of a recession. During a recovery. That’s a fairly remarkable (and discouraging) development.

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The New York Times reports on a study issued yesterday by two former Census Bureau officials. The study shows that although median annual household income rose to $52,100 in June, from its recent low of $50,700 in August 2011, it remained $2,400 lower—a 4.4 percent decline—than in June 2009, when the recession ended.

According to the Times:

Since the end of the recession … household income has declined for all but a few population groups. Some of the largest percentage declines occurred for groups whose income was already well below the median, like African-Americans, Southerners, people who did not attend college, and households headed by people under age 25.

“Groups with low incomes tended to have steeper declines in income,” said Gordon W. Green Jr., who wrote the report with John F. Coder, a colleague at Sentier Research, which specializes in analyzing household economic data.

Households headed by people ages 65 to 74 were the only group in the study that experienced a statistically significant increase in post-recession income, helped perhaps by the decision of some older workers to remain in the work force or re-enter it.

There are several things to make of these findings, the first of which is that we’ve seen a decline in median income in the aftermath of a recession. During a recovery. That’s a fairly remarkable (and discouraging) development.

As for President Obama’s response to all this, a recent editorial by the Wall Street Journal gets it quite right: “For four and a half years, Mr. Obama has focused his policies on reducing inequality rather than increasing growth. The predictable result has been more inequality and less growth… The core problem has been Mr. Obama’s focus on spreading the wealth rather than creating it.”

Mr. Obama, then, is not only not up to confronting the problems of this era; he is exacerbating them. But even those of us who are critics of the president should admit that the problems afflicting the American economy–including (but not exclusive to) wage stagnation among the middle class, less social mobility among the lower class, and increased inequality–predate the Obama presidency. They are complex and defy simplistic partisan explanations.

Depending on which trend we’re talking about, they are rooted in deep cultural shifts (including a weakening marriage culture), globalization and advances in technology (which have moved us toward an economy that favors skilled over unskilled labor), a decline in workforce participation rates, rising health care costs, educational mediocrity (and downright awful education for the underclass), the structure of our entitlement programs (our transfer payments are increasingly regressive and benefit households headed by older adults, who tend to be wealthier than young adults), a byzantine tax code, and slow growth (the post-2008 recession growth rate has been roughly 2 percent).

In the face of America’s deep cultural and structural problems, assembling an agenda–including a comprehensive social-capital agenda that equips Americans, especially poor Americans, with the skills, values and habits that will allow them to succeed in a modern, free society–is a hugely complicated task. It will require a thoroughgoing reform agenda focused on entitlements, education, immigration, our financial system, and our tax code. A lot of good work is being done by policy experts and public intellectuals, by governors, and some members of Congress. (At a later date I’ll lay out what I think would constitute the broad outlines of an agenda, but for starters it might be worth reading thisthis, and this.)

For the most part, however, Republicans and conservatives sound out of touch, their solutions stale, as if they fail to take into account new circumstances. And it is no wonder that Republican policies seem stale; they are very nearly identical to those offered up by the party more than 30 years ago. I’ve argued before that “For Republicans to design an agenda that applies to the conditions of 1980 is as if Ronald Reagan designed his agenda for conditions that existed in the Truman years.” It doesn’t help, of course, that prominent Republicans occupy their time pursuing tactics that are unworkable and qualify as primal screams (e.g., threatening to shut down the government unless the Affordable Care Act is defunded).

The public is in the process of concluding that President Obama and the Democratic Party, the embodiments of reactionary liberalism, are intellectually bankrupt. They are overmatched by events. This affords an opening for Republicans to put forward a positive governing vision. The elements of a conservative reform agenda certainly exist. But for the GOP to win over new hearts and minds will require the party to embrace that agenda more fully than it has; to overcome some old (bad) habits, to put a new frame on events, and to convince the public that they are the party of modernization, reform, and renewal.

It still has some distance to go. 

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