Focusing on the Wrong Things

The number of unemployed workers (now at 6.7 per cent) is not the issue. The issue is the number of people working which is at its lowest point since 1978 (62.8). If the normal number of people rejoined those looking for work, the unemployment rate would be a point higher. More people working, of course, would be a huge boost to the economy, but the number working continues to decline or remain flat.

In the meantime, 6.3 per cent of men are unemployed and 6 per cent of women. The white unemployment is at 5.9 per cent; black, 11.9 per cent; Hispanics, 8.3.; Asians, 4.1; and teenagers 20.2. These statistics come from the Bureau of Labor Statistics and are as of the end of December. These make good material for arguing for more aid to the unemployed in unemployment benefits. Though already extended from the normal 26 weeks (one half a year) to 99 weeks (nearly two years), many are arguing for a continuation.

That sounds fine, but some contend that there are studies showing that extending benefits is an incentive not to grab whatever job that can be had and starting the personal recovery. This is combined with other studies showing that the longer not working the less desirable the worker becomes. Those may be valid, but are statistics and difficult to apply individually. When applied to individual cases, the arguments for termination of benefits become more difficult.

Thus, the government talk is about extending benefits, increasing minimum wage, and solving the problem of pay inequality.  Increasing minimum wage, which again sounds humane, does put pressure on the job providers because not only do the lower, usually temporary, wages go up, but those on the next rung expect an increase, too. The teenage unemployment rate is unlikely to drop and might increase. As for solving the pay inequality problem, a growing work force and a vigorous economy helps in the middle ranks and capping salaries or government dictated caps can ruin an economy. Research wage controls.

So, we’re back to the real issue. How to create jobs. No one just creates jobs, but certain steps can be taken. One would be to approve the oil pipe line project from Canada to the U.S. Gulf. This has been on hold and President Obama apparently has no intention of approving it although it helps jobs both here and in Canada. Another step would be to stop the attack on the coal industry. This is killing jobs. Not only that but increased federal paper work, referred to generally as regulations, is stifling job creation. This does not necessarily mean lifting environmental and safety regulations, but speeding up the processes needed for approval.

Along that line, I would normally (believe it or not) favor a major government stimulus program related to infrastructure. However, the one bill put forth a few years ago was so mammoth, so complicated, so filled with handouts and political favors, that it would have made the Affordable Care Act(DemoCare) implementation look like a cake walk. Besides, as discovered, there are no “shovel ready projects”. Part of that problem is that it takes years to approve the shovel. So, unless we can clear away the morass of paper work and regulations, as well as more narrowly focus the infrastructure projects, such a bill wouldn’t have an effect for another ten years.

In the meantime, DemoCare is stifling jobs. The confusion, vagueness, costs, known and unknown, the 30 hour benefit level, and exemptions for some and not others, and overall thousands of pages of regulations and controls, some not yet written, are all drags on job creation.

Government now appears to be focusing on controlling as many aspects of the economy as it can, putting in place certain protections and guarantees regardless of the immediate or long term negative effects. All this under the mantra that federal government knows best and we should just take our medicine. It might hurt for a few more years, but it is good for you. In the meantime, government will give you a handout to live on.

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