Freedom Line Blog

It’s almost as if the wave of deregulation and tax cuts had some sort of impact.  The Congressional Budget Office (CBO), no refuge of supply-side enthusiasts, just boosted its job growth estimate by 2.6 from last year’s estimate:

Deregulation and Tax Cuts: Jet Fuel For Jobs

So after just one year of tax-cutting and deregulation under the Trump Administration, the Congressional Budget Office (CBO) has revised its estimate of job growth over the next decade upward by over 2.5 million new jobs.  As they say in the legal field, “res ipsa loquitur” – “the fact speaks for itself.”

Upward Job Growth Estimate

From the National Association of Manufacturers (NAM):

[T]he latest jobs numbers confirm that the labor market has tightened significantly, with manufacturers increasing employment by a rather robust 18,876 per month on average since the end of 2016.  That is quite a turnaround from the sluggish job growth in 2016, and it is a sign that firms have continued to accelerate their hiring as the economic outlook has strengthened and demand and production have improved considerably.  Indeed, manufacturers have told us that challenges in recruiting new workers is their primary business concern right now.”

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Manufacturing Jobs Up, Unemployment Down

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So while Donald Trump enforced Barack Obama’s chemical weapon “red line” abroad, Gallup brings news today that things continue to hum with the Trump employment bump here at home:

The Gallup Job Creation Index rose to +37 in March from +35 in February.  This is the third month in a row the index has hit a new record high after remaining relatively flat for much of 2016.  Since the start of the year, the index has already increased by four points — the same increase seen throughout all of 2016.”

Obama blamestormed Bush for eight years while the U.S. economy and employment conditions stagnated, but as Syrian dictator Bashad al-Assad learned this week, there’s a new sheriff in town and he appears to be achieving quick results.

Trump Job Creation Boom

Remember back in 2008, when the unemployment rate stood essentially where it stands this year, the deficit over the preceding seven years was a tiny fraction what it has been over the past seven years, and liberals were acknowledging how great the economy was?

This is hardly exhaustive, but it provides a rough illustration of why Obama, his apologists and the political left skate on thin ice when they attempt to trumpet their economic performance.

Economic Performance Record

The road to underemployment is paved with (so-called) good intentions.

In case you missed it, the Obama Labor Department is trying to raise the compensation threshold so that managers making at least $50,000 annually will qualify for overtime pay. The current threshold is $24,000.

To the liberal mind this policy change can only benefit workers by putting more money into their pockets. But to actual business owners like Andy Puzder, the real world consequences will mean less money and less work for the very people the Obama administration is trying to help.

Writing in the Wall Street Journal, Puzder – the CEO of several quick service restaurant chains like Carl’s Jr. and Hardee’s – notes that current managers are eligible for performance bonuses of up to 28 percent of their salary. But if the new overtime rules go into effect, many of these will lose their managerial status and go back to hourly employment. Along with being demoted, they will very likely be assigned less hours to work to avoid triggering more expensive overtime pay. And for those that do qualify, their raise will translate into less money for the store’s operating budget, meaning less hours for someone else.

In a very tangible way, the Obama Labor Department’s new overtime rule seems destined to exacerbate the underemployment crisis in the American economy. How is is that the people proposing this can be so short-sighted?

Matthew Continetti of the Washington Free Beacon has a must-read opinion piece today explaining why President Barack Obama’s policy agenda ignores the economic and employment concerns of millions of Americans to focus on much less salient issues like gun control and amnesty.

In short, to understand Obama’s refusal to concentrate like a laser beam on improving the nation’s economic outlook, one has to remember that the President cares more about wealthy liberal pet projects from the likes of New York’s billionaire mayor Mike Bloomberg than about anyone on Main Street.

The Bloomberg style has several distinctive features. The first is a complete indifference to or dismissal of middle class concerns. In this view, it matters less that the middle class is enjoying full employment or economic independence or a modicum of social mobility or even action on issues it finds important, and more that it has access to government benefits generous enough to shut it up.

Recall that in the aftermath of Hurricane Sandy Bloomberg was far more interested in seeing the Yuppie-filled New York City Marathon take place, and in linking the storm to apocalyptic climate change, than in mobilizing the combined forces of municipal and state and federal government to take care of the white working class on Staten Island and in the Rockaways. Similarly, Barack Obama has nothing new to say on the economy or deficit, but delivers speech after speech on gun regulations that would not have stopped the Sandy Hook massacre, while his allies in the Senate work to import low-wage labor on the one hand and high-end Silicon Valley labor on the other. Meanwhile, the vast majority of the nation hopes for better days.

Another hallmark of the Bloomberg style is its insufferable condescension. One need only have heard the tiniest whine of a Bloomberg speech to know what I’m talking about. The preening attitude of superiority manifests itself in a form of moral blackmail. Adversaries of the Bloomberg-Obama agenda are not simply mistaken. There is, it is implied, something wrong with them personally.

Sound familiar? You can read the entire piece here.

Get a load of this economic reasoning from Peter Orszag, Obama’s first Director of the Office of Management and Budget and current vice chairman at megabank Citigroup:

More graduates would mean lower inequality, because the wage premium for a college degree would be reduced by the additional supply. And it would mean higher national income, because better-educated workers are, on average, more productive.

So, lowering the “wage premium” means that income for college graduates will go down with more of them in the job market.  This is a good thing according to Orszag because reducing the value of a college degree will have a leveling effect on incomes (in a downward direction, of course).

On the bright side, it’s a remarkably honest admission about everything that’s wrong with the analysis of people who obsess over economic inequality.  In this worldview, government policies that devalue education and distort the labor market should be praised if it means less people have an opportunity to be rewarded for superior ability.

Thus, while Orszag’s analysis doesn’t square with the diminished aspirations of millions of under- and unemployed college graduates in the Age of Obama, it does help explain why his former boss isn’t putting any muscle behind addressing the depressed job market.  In Obama World, so long as more people make the same – even if it’s less – everything is just fine.

I don’t know of a major journalist other than Byron York continually highlighting the plight of the under- and unemployed in Barack Obama’s America.

Summarizing the findings of a new Rutgers study, York excerpted this cautionary stat:

The researchers asked people — unemployed and employed alike — about the “major causes” of joblessness. Seventy percent named “competition and cheap labor from other countries.” The next-highest number, 40 percent, blamed “illegal immigrants taking jobs from Americans.” That 40 percent is more than blame Wall Street bankers (35 percent), the policies of George W. Bush (23 percent) or the policies of Barack Obama (30 percent).

“These strong and enduring concerns about globalization and fears that illegal immigrants hurt job prospects for Americans citizens are likely to make it more difficult for policymakers in Washington, DC to negotiate free-trade agreements and reform immigration laws,” the report concludes, in what is probably a serious understatement.

Whether this perception is correct or not, Republicans in Congress need to take care how they handle immigration reform.  As I wrote last week, conservatives like Mark Krikorian of the Center for Immigration Studies make a strong case that increasing the legal labor supply when jobs are scarce hurts native workers.  If Republicans are seen as complicit in increasing the Democrats voting base and hurting job prospects for working class citizens, the party will have no one to blame but its leadership for its dwindling popularity.

So far, a busy half week on Capitol Hill saw Senator John Kerry (D-MA) become Secretary of State after the U.S. Senate confirmed him 94-3; gun-control politicians getting righteous blowback from the NRA and an advocate for young mothers; and another round of immigration reform heating up.

On this last point, it’s helpful to remember that a big part of what’s missing from the illegal immigration debate is how to fix the problems with the legal immigration system.  For an idea of how byzantine is the process of getting into America the right way, check out these charts prepared the libertarian Reason Foundation and the liberal Immigration Road.  (Each is a pdf.)

The worst lowlight: Waiting up to 28 years to become a citizen.

But before policy wonks and political advocates jump to conclusions and start proposing ways to fix immigration by reducing wait times and streamlining the process, it’s worth having a serious national discussion about what principle should drive our immigration policy.

If it’s about the national interest, in this case defined as what’s best for Americans already here, then it’s far from clear how importing any foreign workers, skilled or unskilled, improves the economic lot of domestic skilled and unskilled workers.  If anything, basic economics suggests that importing more labor reduces the value of the labor already here, which, while a boon for employers, translates into a pay cut for workers.  (For more on this, see Mark Krikorian’s thought-provoking book, “The New Case Against Immigration.”)

On the other hand, if immigration policy is about ensuring that America is the preeminent land of opportunity within the world community, then a small but clear set of filters (e.g. screening out convicted criminals, terrorists, and those fleeing tax problems) need to be put in place to allow the greatest number of opportunity-seeking immigrants to come, live, and hopefully contribute to the nation’s growth.

Personally, I’m conflicted about which route to take.  With Americas suffering from 7.8 percent unemployment – which is really 14.4 percent when underemployed and those too discouraged  to look for work are counted – it’s hard to justify adding to the labor market.  And yet an immigration policy focused on opportunity for those seeking it is an attractive extension of Ronald Reagan’s city on a hill, of which he said “And if there had to be city walls, the walls had doors and the doors were open to anyone with the will and the heart to get here.”

This much I do know: Finding a solution to the illegal immigration problem can’t be done until Americans decide on legal immigration’s foundational principle.

Thanks to The Daily Caller’s Nicholas Ballasy for posting an extended exchange between House oversight committee chairman Darrell Issa (R-CA) and two officials from the Bureau of Labor Statistics on what occupations count as “green jobs.”

REP. DARRELL ISSA: Well, let me — let me run you through some questions here because you’re here because we’re having a green jobs counting discussion.
Does someone who assembles turbines — is that a green job?

MS. JANE OATES: Wind turbines?

REP. ISSA: Yeah. Wind turbines.

MS. OATES: I think we would call any kind of sustainable manufacturing –

REP. ISSA: OK.

MS. OATES: — fitting the definition that was –

REP. ISSA: Does someone who sweeps — does someone who sweeps the floor in a facility that makes solar panels, is that a green job?

MS. OATES: Solar? I’ll give that to –

REP. ISSA: To Galvin?

MS. OATES: — if you don’t mind.

MR. JOHN GALVIN: We define — we have a two-part definition –

REP. ISSA: We already had the briefing on that. So just answer the question. If you’re sweeping the floor in a solar panel production facility, is that a green job?

MR. GALVIN: If you ask me for the number of health care jobs in the United States, I’ll give you the employment from the health care industry.

REP. ISSA: Look, Mr. Galvin –

MR. GALVIN: — nurses and doctors –

REP. ISSA: You did not want to come here as a witness. You are not a delighted witness. So let’s go through this. I asked you a question. You know the answer. Would you please answer it.
If you sweep the floor in a solar panel facility, is that a green job?

MR. GALVIN: Yes.

REP. ISSA: Thank you. If you drive a hybrid bus — public transportation — is that a green job?

MR. GALVIN: According to our definition, yes.

REP. ISSA: Thank you. What if you’re a college professor teaching classes about environmental studies?

MR. GALVIN: Yes.

REP. ISSA: What about just any school bus driver?

MR. GALVIN: Yes.

REP. ISSA: What about the guy who puts gas in the school bus?

MR. GALVIN: Yes.

REP. ISSA: How about employees at a bicycle shop?

MR. GALVIN: I guess I’m not sure about that.

REP. ISSA: The answer is yes, according to your definition. And you’ve got a lot of them.
What about a clerk at the bicycle repair shop?

MR. GALVIN: Yes.

REP. ISSA: What about someone who works in an antique dealer?

MR. GALVIN: I’m not sure about that either.

REP. ISSA: The answer is yes. Those are — those are recycled goods. They’re antiques; they’re used.
What about someone who works at the Salvation Army in their clothing recycling and furniture?

MR. GALVIN: Right. Because they’re selling recycled goods.

REP. ISSA: OK. What about somebody who opened a store to sell rare manuscripts?

MR. GALVIN: What industry is that?

REP. ISSA: People sell rare books and manuscripts — but they’re rare because they’re old so they’re used.

MR. GALVIN: OK.

REP. ISSA: What about workers at a consignment shop?

MR. GALVIN: That’s a green job.

REP. ISSA: Does the teenage kid who works full time at a used record shop count?

MR. GALVIN: Yes.

REP. ISSA: How about somebody who manufacturers railroads rolling stock — basically, train cars?

MR. GALVIN: I don’t think we classified the manufacture of rail cars as –

REP. ISSA: 48.8 percent of jobs in manufacturing, rail cars counted, according to your statistics. About half of the jobs that are being used to build trains.
OK. How about — just one more here. What about people who work in a trash disposal yard? Do garbage men have green jobs?

MR. GALVIN: Yes.

REP. ISSA: OK. I apologize. The real last last is, how about an oil lobbyist? Wouldn’t an oil lobbyist count as having a green job if they are engaged in advocacy related to environmental issues?

MR. GALVIN: Yes.

In a recent report and video, the Institute for Justice gives an excellent summary of how government licensing requirements to enter occupations like interior design, massage therapy, or shampooing are raising time and cost barriers to people who just want to work.

In this video IJ research director Dick Carpenter shares the results of a study of 102 low to middle income jobs (i.e. not doctors and lawyers) that impose on average require would-be workers to: (1) pay $209 in fees, (2) pass an exam, and (3) endure 275 days of training, or the equivalent of about 9 months.  All this before earning a paycheck!

IJ also notes that burdensome licensing requirements have not been shown to protect public health and safety.  Rather, they increase costs to consumers and keep would-be competitors out of legally protected (i.e. licensed) industries.

As the IJ video and study show, not every regulatory problem is a federal creation.  State lawmakers have an easy method for spurring job growth and entrepreneurial activity – reduce or eliminate licensing requirements so that citizens can get working.

Jonathan V. Last at The Weekly Standard shares an eye-popping chart on the Bureau of Labor Statistics employment-population ratio; i.e. the percentage of employed Americans relative to the number of Americans able to work.

Below are the worst 30 months of the employment-population ratio from the last 25 years.  Notice a trend?

1. (tie) July 2011, 58.2 percent, President Barack Obama
1. (tie) June 2011, 58.2 percent, Obama
1. (tie) November 2010, 58.2 percent, Obama
1. (tie) December 2009, 58.2 percent, Obama
5. (tie) August 2011, 58.3 percent, Obama
5. (tie) December 2010, 58.3 percent, Obama
5. (tie) October 2010, 58.3 percent, Obama
8. (tie) April 2012, 58.4 percent, Obama
8. (tie) October 2011, 58.4 percent, Obama
8. (tie) September 2011, 58.4 percent, Obama
8. (tie) May 2011, 58.4 percent, Obama
8. (tie) April 2011, 58.4 percent, Obama
8. (tie) February 2011, 58.4 percent, Obama
8. (tie) January 2011, 58.4 percent, Obama
15. (tie) March 2012, 58.5 percent, Obama
15. (tie) January 2012, 58.5 percent, Obama
15. (tie) December 2011, 58.5 percent, Obama
15. (tie) November 2011, 58.5 percent, Obama
15. (tie) March 2011, 58.5 percent, Obama
15. (tie) September 2010, 58.5 percent, Obama
15. (tie) August 2010, 58.5 percent, Obama
15. (tie) July 2010, 58.5 percent, Obama
15. (tie) June 2010, 58.5 percent, Obama
15. (tie) March 2010, 58.5 percent, Obama
15. (tie) February 2010, 58.5 percent, Obama
15. (tie) January 2010, 58.5 percent, Obama
15. (tie) November 2009, 58.5 percent, Obama
15. (tie) October 2009, 58.5 percent, Obama
29. February 2012, 58.6 percent, Obama
30. (tie) May 2010, 58.7 percent, Obama
30. (tie) April 2010, 58.7 percent, Obama
30. (tie) September 2009, 58.7 percent, Obama

According to Last, “the 30 (or 32, including ties) worst months for employment in the past 25 year have all come after the most recent recession ended, in June 2009.  In other words, they’ve all come during the Obama ‘recovery.’”

Remember this the next time President Obama repeats his mantra that the American economy is “moving in the right direction.”

One can only imagine the emotional travails of being a devoted liberal; of being completely seduced by the philosophical purity of your ideals, only to so regularly see them falsified by practical experience.

One area where this regularly plays out is with labor unions, where the dream of worker empowerment often yields to the reality that the high costs imposed by big labor weaken businesses and frequently undermine the jobs of the very workers the union is supposed to be defending (see “Automobile Industry, American”).

Based on a recent story in Northern California’s Bay Citizen — about a strip club on the verge of closing down — it seems that there’s no industry free from the corrosive union influence:

Most strip club dancers are “independent contractors” who earn money dancing for tips. Often they have to pay the clubs for stage time, a system that can make the dancers vulnerable to exploitative business practices.

When the Lusty Lady’s dancers voted to unionize in 1997, they wanted to protect themselves from such practices. In 2003, the workers bought the business and turned it into a cooperative, making it perhaps the most San Francisco strip club in San Francisco. The club’s employees receive hourly salaries and those who are part of the co-op also share in its revenue (when there is revenue.)

… Tempest, another Lusty Lady dancer, told the pro-labor newsmagazine “In These Times,” that she has had second thoughts about unionizing, a move she once supported. She questioned whether unionization “is conducive to strip club profits.”

She’s got a point, although the words “strip club” in that last sentence are extraneous. It’s hardly a shame that these young women will likely have to find a more edifying line of work. That being said, the Lusty Lady’s travails are representative of the plight of union shops throughout the nation. It turns out that profits, when ignored, tend to evaporate — no matter the industry.

If you or a family member are weighing a decision about whether or how much college loan money to request from the government next fall, consider this nugget from Michael Barone’s column on the coming burst in the higher education bubble:

Peter Thiel, co-founder of PayPal, is adept at spotting bubbles. He cashed out for $500 million in March 2000, at the peak of the tech bubble, when his partners wanted to hold out for more. He refused to buy a house until the housing bubble burst.

“A true bubble is when something is overvalued and intensely believed,” he has said. “Education may still be the only thing people still believe in in the United States.”

Owning a college degree may certify completion of a program, but it does not guarantee that the holder has marketable skills to land a job, as this report on the ongoing talent shortage details.  Higher education – like all levels and kinds of education – is an investment only if the students, faculty and administrators involved focus on learning and teaching things that matter.  And with a 9.2 percent unemployment rate, that increasingly means basic comprehension of grammar, logic and rhetoric, with some grounding in finance thrown in for good measure.

So, if you know someone thinking about going back to school for a master’s in Religious or Women’s Studies – for the good of your fellow citizens and taxpayers, urge them to reconsider.  We can’t afford the experience.

City Journal’s Nicole Gelinas describes the Bush-era “TARP” bailout as a massive case of moral hazard.  With the financial sector able to fob off its bad debts to the American taxpayer while suffering almost no consequences, it’s no wonder the jobless rate is not recovering.

The politicians we elect have three choices—the same choices they had four years ago. They can admit that this debt isn’t worth much and allow the financial sector to bear the consequences. They can hope that the Fed tries to use inflation to raise the price of everything else, making the debt seem a lighter burden in comparison. Or they can maintain their silence, letting the financial sector take another half-decade or more to make enough money on new ventures so that it can finally admit what it should have admitted back in the fall of 2007: bad debt is never good. At least the Fed acknowledges this strategy: it says that it’s using “time” to manage toxic securities and “minimize disruption to the financial markets.” But prolonging government control of financial markets just prolongs investors’ uncertainty.

If Congress and President Obama, as well as the candidates who would like to succeed the president in 2013, maintain their silence, people should at least understand that the lousy jobs numbers are no mystery. They are the result of a policy that Washington has willfully chosen. As the Fed notes, the cost of this policy isn’t measured in dollars but in something more precious: time. Washington’s refusal to confront the debt problem is costing millions the most productive years of their lives.

Moments ago, the Labor Department announced that the nation’s unemployment rate, which had stagnated at 9.6% for three consecutive months, actually rose to 9.8%.

Alarmingly, this means that unemployment has now stood above 9% for 19 consecutive months, a post-World War II record.  Analysts had predicted 150,000 new jobs for October, but it turned out that only 39,000 were added, far below the number necessary to reduce the unemployment rate.

No American should take pleasure in others’ blight, but we simply must face the fact that the Obama-Reid-Pelosi Keynesian economic agenda has failed, and a course correction is critical.  In the 20 months since Obama signed the budget-busting $1 trillion “stimulus,” unemployment has only risen from 8.4% to 9.8%.  In contrast, in the 20 months following the effective date of the Reagan tax cuts, unemployment plummeted from 10.4% to 7.3%.  The facts speak for themselves.  It’s time for remedial free market action.