Last week President Barack Obama hosted a seven-and-a-half-hour televised health care summit. This week the President launched his “final” campaign for passage of his health care plan. Next week, President Obama will travel to Missouri and Pennsylvania to continue this “final” effort to jam his unpopular plan through Congress. With this all-health-care-all-the-time White House agenda it seems like eons ago that the Obama administration announced, following the complete rejection of its health care plan in the Massachusetts Senate special election, that President Obama’s first State of the Union would mark a “pivot” from health care and to a “razor sharp focus on jobs”. So how is that pivot to jobs going? Well, the Labor Department’s Bureau of Labor Statistics released its monthly jobs report this morning and it showed the U.S. economy shed another 36,000 net jobs last month. Our nation’s unemployment rate is still at 9.7%.
So why is our economy having such a tough time pulling out of recession? Here are the facts: the most recent data available show that the U.S. economy actually lost fewer jobs during this recession than were lost during the 2001 recession. Specifically, 50.8 million jobs were lost through the first six months of the ‘01 recession while 48.2 million jobs were lost through the first six months of this recession.
But if out economy is losing fewer jobs this time, then why is our unemployment rate so much higher under President Obama’s stewardship of the economy? The answer: job creation. Or actually the lack thereof. Back to the BLS data: through the first six quarters of the 2001 recession 47.6 million jobs were created, while only 40.3 million jobs have been created through the second quarter of 2009. That’s a 7.9 million jobs gap. The reason our unemployment rate is so much higher now is low job creation, not high job loss. So why aren’t businesses creating jobs? Here is what entrepreneurs have been trying to tell the Obama administration:
- At one of President Obama’s many jobs summits, Fred Lampropoulos told The New York Times that businesses were uncertain about investment because “there’s such an aggressive legislative agenda that businesspeople don’t really know what they ought to do.” That uncertainty, he added, “is really what’s holding back the jobs.”
- Dan DiMicco, CEO of steelmaker Nucor Corp, told the Wall Street Journal: “Companies large and small are saying, ‘I am not going to do anything until these things — health care, climate legislation — go away or are resolved.’”
- Porta-King CEO Steve Schulte told USA Today his company is not investing because “proposals in Congress to tackle climate change and overhaul health care would raise costs.”
- The New York Post’s Charles Gasparino reported on the 600 companies stock analyst Peter Sidoti covers: “‘There hasn’t been one bankruptcy,’ he tells me. How did they survive the recession? By cutting costs and hoarding cash, not expanding their business and hiring more people, even as the economy now is starting to recover. During other recoveries, Sidoti says, firms like these would be hiring workers in droves as demand picks up for goods and services. This time around, they’re not — because ‘they don’t know what their costs are going to be.’”
- National Federation of Independent Business chief economist Bill Dunkelberg writes: “The horizon is filled with cost unknowns, from healthcare to cap and trade to yawning deficits and the need to come to grips with them, from paid family and medical leave to card check, from expiration of the Bush tax cuts to state decisions about their finances. Washington cannot expect small business owners, facing difficult economic circumstances anyway, to commit themselves to investing in new employees or equipment and vehicles without acknowledging and revealing the policy-inspired costs that will be imposed on them. It is all about uncertainty and confidence.”
Our economy’s job creators have been trying to send a message to the Obama administration for months: stop creating so much uncertainty in the tax and regulatory environment so that we can figure out how to invest our money and start creating jobs. Stop taking over car companies. Stop shedding financing contracts. Stop taking over 1/6th of our economy. Stop raising taxes on our energy sector. Just stop.
Our economy will eventually recover and start producing jobs again, probably very soon. But that recovery has already been delayed by an administration that saw this recession as an opportunity to fundamentally rewrite our nation’s relationship with the federal government. Unless this administration completely abandons its far reaching transformation agenda, this recovery will be a very slow one.
Quick Hits:
- White House aides are telling The Washington Post the Obama administration is close to reversing Attorney General Eric Holder and will try Khalid Sheik Mohammed in a military tribunal.
- Speaker Nancy Pelosi (D-CA) lost another two votes on Obamacare yesterday when Rep. Nathan Deal (R-GA) announced he would delay his retirement till the end of the month and Rep. Kurt Schrader’s (D-OR) office moved said Schrader has moved from “yes” to undecided.
- President Barack Obama reportedly told House progressives that the Senate health care bill was a “foundation” for the public option.
- According to Rasmussen Reports, 66% of American voters say they prefer a government with fewer services and lower taxes.
- The Obama administration is pushing to carve out an exemption for China from legislation pending in the Senate and the House that would tighten sanctions on Iran.
Figures released today by the Bureau of Labor Statistics provide less encouragement than today’s GDP report. Total compensation increased by only 1.5 percent in 2009 (without adjusting for inflation) – the lowest increase on record. If a turnaround has begun, workers are not feeling it in their wallets.
However, this pain has not been distributed equally throughout the economy. In the private sector, total compensation grew just 1.2 percent in 2009. On the other hand the compensation paid to state and local government employees grew 2.4 percent. The average government employee got twice the raise that private sector workers did.
Why did government workers get higher raises? In the private sector workers compete to produce goods and services that others value. In a recession, production falls and employers have less money to pay raises with. On the other hand, taxes fund government paychecks. Government employees can continue getting raises no matter the health of the overall economy, so long as taxes keep coming in.
This fact has turned the labor movement into determined tax hikers. Union membership has grown in the government even as it has fallen in the private sector. Three times as many union members now work for the Post Office as in the Auto Industry. In 2009 the numbers crossed: a majority of union members now work for the government. Higher pay for government employees can only come through higher taxes on private sector workers.
Unions almost never go on strike anymore. Instead, they fight to get more for their members by lobbying for tax increases. Unions spent tens of millions of dollars last year campaigning for higher taxes across the country: Illinois. California. Minnesota. Washington State. Arizona. In many cases they have succeeded.
The latest example comes from Oregon, where public sector unions outspent businesses 3 to 2 to pass two ballot initiatives raising taxes by $700 million. The unions wanted higher taxes to prevent spending cuts. Had the taxes increases failed government employees in Oregon would have faced cost cutting measures such contributing toward the cost of their health benefits – something they currently do not do.
Government employees have done well in this recession. Few government jobs have disappeared – unlike in the private sector – and their pay rose at twice the rate of their private sector counterparts. No wonder that government employees are almost three times as likely as private sector workers to believe that the economy is in “good or excellent” shape. The question for policy makers is why should private sector workers have to pay for this?