Freedom Line Blog

In our Liberty Update commentary entitled “No, Scandinavia Doesn’t Vindicate Socialism” this week, we rightly ridicule admitted socialist Bernie Sanders, including his odd claim that “we now have an economy that is fundamentally broke and grotesquely unfair.”  Well, as this Gallup survey illustrates, he’s swimming upstream against American public opinion.  Specifically, in a survey that Gallup has conducted periodically since 2001, the public’s view of the job market has now hit an all-time record high:

Sorry, Socialists

Perhaps this helps explain why Sanders has suddenly plummeted in 2020 Democratic candidate surveys, although one wonders how long people like Elizabeth Warren can avoid the same fate.

Last week, new jobless claims fell below the milestone 200,000 level, and to the lowest point since the 1960s (when the labor force was significantly smaller).   In this chart, note also the steep drop starting in 2017 with the tax-cutting and deregulatory agenda that arrived with the Trump Administration, after the number of new claims had plateaued toward the end of the Obama Administration:

Jobless Claims Plummet

Obama apologists desperately claim that the current economic acceleration is somehow attributable to him, never mind that the acceleration began as soon as the Trump Administration began reversing Obama policies by cutting taxes and reducing regulation.  In The Wall Street Journal today, two Arizona State University professors – Nobel laureate Edward Prescott and Lee Ohanian – debunk that claim in a commentary entitled “The Good Times Can Roll On.” As an ASU alumnus, it offers particular pleasure to recommend their entire piece for reading and passing along to others who may need it:

It’s clear the recovery ended in 2014 because the two hallmarks of recovery –  investment’s share of gross domestic product and labor input relative to the adult population – stopped increasing.  This left a large gap between actual output and the output level that would have occurred had the economy recovered to its prerecession growth path.  According to our calculations, the U.S. cumulatively lost about $18 trillion in income and output between 2007 and 2016.  Everything suggested this shortfall would persist or even grow.

Yet economic performance began to improve beginning in the first quarter of 2017.  Real GDP growth accelerated to about 2.7% between the end of 2016 and the second quarter of 2018, up from about 2% between 2014 and the end of 2016.”

Oh, and as football season approaches, go Sun Devils.

Here’s what a steady diet of deregulation and tax cuts have done in terms of job creation expectations from even the notoriously wet-blanket Congressional Budget Office:

Deregulation + Tax Cuts = Jobs Boost

Today brought yet another impressive U.S. employment report from the Labor Department, with an unexpectedly high 213,000 new jobs added in the month of June (versus the expected 195,000).

But the report includes a particularly impressive number after nearly a decade of people just giving up on working during the Obama era malaise.  Over 600,000 Americans decided that the market is so hot that they got off the sidelines and entered the game:

The increase in the unemployment rate came due to a rise in the labor force participation rate, which increased 0.2 percentage points to 62.9 percent as 601,000 people came off the sidelines and re-entered the labor force.”

Continuing the sports analogy, The Wall Street Journal notes that what we’re witnessing is a different kind of ballgame under the Trump Administration than the unprecedented economic sluggishness that characterized the Obama “expansion”:

Steady hiring and low unemployment shows the labor market continues to be an area of strength for the economy since the recession ended nine years ago.  What might be different now is that other aspects appear to be picking up steam.  Some economists project economic output rose at better than 4% annually in the second quarter for the first time since 2014.

Rising consumer spending, manufacturing output and exports are expected to have contributed to the gain, set to be officially reported later this month.  If sustained, that would be a turn from much of the expansion in which hiring has been consistent, but growth has been sluggish, holding near a 2% annual rate.  One explanation is wages.  Even though Americans were finding jobs, scant raises left them with little room in their budgets to step up spending.”

It’s amazing what an economic agenda of tax cuts and deregulation can do for an economic cycle that was supposedly on weary legs and amid an era of “secular stagnation” when solid growth was a thing of the past.

In our latest Liberty Update, we note how the U.S. has quickly reclaimed its position as the world’s most competitive economy under President Trump after slipping under Barack Obama.  This image vividly illustrates one point we highlight – that for the first time ever, the number of job openings exceeds the number of unemployed Americans in the workforce to fill them:

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Jobs, Jobs, Jobs

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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

According to The Washington Post, Congress is considering legislation carving out a special exception from federal labor laws for professional baseball:

A massive government spending bill that Congress is expected to consider this week could include a provision exempting Minor League Baseball players from federal labor laws, according to three congressional officials familiar with the talks.  The exemption would represent the culmination of more than two years of lobbying by Major League Baseball, which has sought to preempt a spate of lawsuits that have been filed by minor leaguers alleging they have been illegally underpaid.

The league has long claimed exemptions for seasonal employees and apprenticeships, allowing its clubs to pay players as little as $1,100 a month, well under the pay that would be dictated under federal minimum wage and overtime standards.  But with those exemptions under legal challenge, Major League Baseball has paid lobbyists hundreds of thousands of dollars to write a specific exemption into the law.”

We at CFIF maintain no opposition to that contemplated provision.  If Congress seeks to carve out exceptions from federal labor laws for professional baseball, however, they have no excuse for failing to finally pass the Save Local Business Act, which CFIF has long advocated, and reverse one of the most egregious abuses of the Obama Administration’s Labor Department:  the Joint Employer Rule.

That activist Obama Labor Department ruling reversed decades of established labor law by holding businesses liable and responsible for employees of franchisees whom they didn’t hire and over whom they exercise no control, as we explained last year:

Under longstanding court precedent and National Labor Relations Board (NLRB) interpretation, an ’employer’ for purposes of applying the nation’s labor laws was generally defined to include only those businesses that determined the essential terms and conditions of employment.

As a textbook illustration, imagine a franchise arrangement whereby the franchisee determines whom to hire, whom to fire, wages and other everyday working conditions.  The distant franchisor, in contrast, obviously doesn’t fly every potential franchisee employee in for an interview at corporate headquarters or micromanage its franchisees’ working conditions.

On that logic, the Third Circuit Court of Appeals ruled in NLRB v. Browning-Ferris Industries (1982) that the appropriate standard for defining an employer with regard to a particular set of employees was established by the U.S. Supreme Court in Boire v. Greyhound Corp. (1964).  It held that only businesses exercising control over ‘those matters governing the essential terms and conditions of employment’ were subject to collective bargaining requirements and liabilities.

Two years later, the NLRB formally adopted that standard, ruling in separate cases that ‘there must be a showing that the employer meaningfully affects matters relating to the employment such as hiring, firing, discipline, supervision and direction.’  In other words, an ’employer’ for purposes of labor law mandates required direct and immediate control over the terms and conditions of employment.

That stands to reason, since it makes no sense to impose legal liability upon employers that don’t actually control a bargaining unit’s employment conditions.

In August 2015, however, Obama’s NLRB suddenly and needlessly upended that established legal standard by redefining what’s known as the ‘Joint Employer Doctrine.’  Essentially, the Joint Employer Doctrine now allows multiple businesses to be held legally liable for the same set of employees.

Thus, in the infinite wisdom of the Obama NLRB, even employers with indirect or even merely potential ability to affect employment terms could suddenly find themselves subject to federal labor laws.”

That’s why the Save Local Business Act is of such immediate importance.  That legislation would overturn the Obama NLRB’s recent Joint Employer Rule redefinition, and restore longstanding legal precedent by subjecting only actual employers exercising control over the terms and conditions of employment to federal collective bargaining liabilities.

Today, nearly 800,000 franchise enterprises exist in the U.S., accounting for approximately 8.5 million jobs.  And according to an American Action Forum study, the Obama NLRB decision could reduce private sector employment by 1.7 million jobs, including 500,000 in the leisure and hospitality industry alone.

So if Congress can find the time to address professional baseball labor matters, they can certainly do the right thing by prioritizing language implementing the Save Local Business Act.  We urge all CFIF supporters and activists across America to contact their Senators and Representatives to demand it.

Call your Senators and Representative now at 202-224-3121.

Tell them that the joint employer issue impacts millions of workers in every community in the country.  Therefore, Congressional leaders must prioritize the Save Local Business Act in the upcoming spending bill.

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

In an interview with CFIF, Patrick Hedger, Policy Director of American Encore, discusses why Obama made the wrong decision on Keystone XL pipeline project and what it means for jobs, the economy and gas prices. 

Listen to the interview here.

Texas illustrates the real-world success of less government and free market principles, yet leftists like oft-discredited New York Times columnist Paul Krugman attempt to dismiss it as some sort of demographic or energy fluke.

A news feature this week in The Wall Street Journal, however, offers yet another objective refutation of their efforts.  Entitled “Texas’ Engine Keeps Revving,” the article details how jobs and population continue to grow despite the recent energy sector slump:

The continued economic success of the Dallas-Ft. Worth metro area, the nation’s fourth largest, with nearly seven million people, is one of the reasons Texas has so far managed to stave off a sharp downturn despite losing thousands of jobs in the oil patch and related industries.  The region lost more than 100,000 jobs during the recession, but it has added nearly four times that number since then…   Dallas isn’t the only Texas region that has diversified.  The San Antonio metro area, which has 2.3 million residents, now has a burgeoning biotech sector.  Austin, with its population of 1.9 million, had the lowest unemployment rate among the nation’s largest metro areas in April as it undergoes a hotel boom.”

That doesn’t happen by accident.  After all, California enjoys a higher population, better weather, diversified economic base and greater access to trade with its vast coastal area.  In other words, the sorts of things that Krugman offers as rationalizations for the Texas boom.  The reality is that Texas continues to flourish despite the rapid drop in oil prices because unlike states like California, Connecticut or Illinois, it opts for lower taxes, less regulation and freer markets.  Hopefully, that lesson will continue to sink in with the rest of the nation and our federal leaders.

As we’ve noted on multiple occasions, the cyclical economic recovery under Barack Obama is objectively the worst in recorded U.S. history.  Recessions and recoveries come and go, but never have we suffered one with declining median incomes, such low economic growth or this level of employment sluggishness.

Unfortunately, today’s unemployment report brought additional bad news and only serves to further cement Obama’s disastrous legacy.  Economists expected 250,000 new jobs for the month of March, but we only saw 126,000, the lowest since 2013:

The 126,000 increase was weaker than the most pessimistic forecast in a Bloomberg survey, and followed a 264,000 gain a month earlier that was smaller than initially reported, the Labor Department in Washington said.  The median forecast in a Bloomberg survey of economists called for a 245,000 advance.

‘There’s really no way to sugarcoat this.  This is a soft print all the way around, no matter how you slice it,’ said Omair Sharif, rate sales strategist at Newedge USA LLC in New York.  ‘It seems that it’s corroborating that the U.S. definitely hit a soft patch in the first quarter.'”

Making matters even worse, the labor participation rate continued it’s decline to 62.7%, the lowest since 1978, before women fully entered the U.S. workforce.

The unprecedented weakness of the economy under Obama establishes the backwardness of his policies.  Although he and his supporters remain unwilling to internalize the obvious lesson that lower taxes and less federal regulation lead to a stronger economy, the American electorate fortunately maintains the opportunity to do so as 2016 brings the opportunity to select new leadership.

Apparently, the president who has time to share his Final Four picks on national television can also squeeze in space on his schedule to erroneously charge Staples with oppressing its own workforce.

Earlier this week, Barack Obama was interviewed by BuzzFeed, an online news site. BuzzFeed claimed to have evidence that Staples, the office supply giant, threatens to fire part-time employees who work more than 25 hours a week. The reason – anything more could qualify the worker for employer-sponsored health insurance under ObamaCare. (30 hours per week is the threshold.)

Asked to respond, Obama unleashed his inner community organizer.

“I haven’t looked at Staples stock lately or what the compensation of the CEO is, but I suspect that they could well afford to treat their workers favorably and give them some basic financial security,” Obama replied. “…when I hear large corporations that make billions of dollars in profits trying to blame our interest in providing health insurance as an excuse for cutting back workers’ wages, shame on them.”

On the contrary, shame on the President of the United States.

“Unfortunately, the president appears not to have all the facts,” a Staples spokesman told CNN Money. The cap on part-time work hours has been in place for a decade, and the company has many opportunities for hourly employees to move into full-time positions.

It’s striking that a man who doesn’t blink at proposing a federal budget more than $472 billion in the red next year thinks himself capable of lecturing a private business on how it should spend its profits.

Maybe he should stick with basketball brackets, and let the professionals manage the books.

President Barack Obama is on pace to have the most polarized approval ratings in history, according to a new Gallup poll.

Polarized approval ratings mean the gap between those in a president’s party that approve of him compared to those in the opposition party that don’t. “So far in his presidency, there has been an average party gap of 70 points in Obama’s approval ratings, which, if it continues, would be easily the highest for a president to date,” says the Gallup summary.

For context, former President George W. Bush “is second with a 61-point gap throughout his presidency, followed by Clinton (56) and Reagan (52). The other presidents [going back to Eisenhower] had party gaps of no more than 41 points.”

As Tim explained in his column last week, it’s no surprise that people concerned about the country’s fiscal future disapprove of Obama’s job performance. Economic growth is in a nine-year rut, the percentage of the U.S. population with jobs is as low as when Jimmy Carter was in office, and the median income has actually declined since Obama’s economic “recovery” was announced.

The real question after reading through the Gallup results isn’t, What’s the matter with Republicans? It’s, How in the world can Democrats see the current president as worthy of such lofty praise?

Today’s Labor Department unemployment report contains a fresh round of ominous news beyond the headline numbers.

Specifically, the labor participation rate fell to a new 37-year low, which is particularly negative news because women hadn’t yet fully entered the U.S. workforce during that previous 1970s low.  Additionally, wages continued their decline:

Businesses had been creating jobs at a monthly pace of 224,000, though wage growth remained modest and the drop in the headline rate had come in large part due to a decline in the labor force participation rate.  Indeed, the participation rate continued to plummet, falling to a fresh 37-year low of 62.7 percent.  Job quality did not fare well either, with wages actually declining for the month by 5 cents an hour, pulling the annualized gain down to 1.7 percent.”

That annualized gain doesn’t substantively exceed inflation, and since the last recession ended almost six years ago in 2009, median U.S. income has actually declined.  That is unprecedented for a supposed post-recession “recovery,” and Americans continue to simply drop out of the workforce.  Something to keep prominently in mind when Barack Obama trumpets his supposed economic success.

In an interview with CFIF, Marita Noon, Executive Director for Energy Makes America Great and Citizens’ Alliance for Responsible Energy, discusses what President Obama has not done for American energy workers, the lessons he could learn from Texas Governor Rick Perry’s efforts to convince companies to relocate to Texas, and the important role that energy plays in our lives.

Listen to the interview here.

“By boosting our energy production, the U.S. could restore its diminishing influence in the world without expending blood and treasure – in fact, we would reap major economic benefits,” writes Rep. Devin Nunes (R-CA).

Nunes is an up-and-coming member of the House Ways and Means Committee and is known for thinking big on how to use tax reform as a means to reestablish American leadership in the global economy.

Rationalizing our energy policy would go a long way too.

Thanks to improvements in technology large, untapped domestic oil and natural gas reservoirs are now reachable. States like North Dakota, Texas and Oklahoma are moving to capitalize, while huge potential awaits enterprising politicians and businesses in California and Colorado.

The benefits are many. More energy production means more jobs in extracting, refining and shipping. For example, an entry-level rig worker in North Dakota averages about $66,000 a year, while the average oil industry job in the state was $112,462 as of 2012. That also means more jobs for people serving workers flush with disposal income.

There’s also a national security angle. With Iraq’s oil fields under siege by Islamic militants, Venezuela constantly swayed by demagogic collectivists and Russia threatening to cut off natural gas shipments, it’s time for the United States to take the steps necessary to ensure greater energy independence.

Unsurprisingly, Nunes wants President Barack Obama to approve the Keystone XL pipeline, as well as implement other measures to put the nation in a game-changing position. Of course, that isn’t happening unless Obama adopts Bill Clinton’s triangulation strategy.

Don’t hold your breath.

Still, Nunes makes a compelling case for using national energy policy as a way to improve both our domestic economy and global prestige.

It’s an angle that economically recessed, war-weary Americans might soon embrace.

“The number of jobs requiring medium levels of skill has shrunk, while the number at both ends of the distribution – those requiring high and low skill levels – has expanded,” says a new research report from the Dallas Federal Reserve.

This employment polarization is changing the standard of living for those in the middle class since, “The number of people performing low-skill, low-pay, manual labor has grown along with the number undertaking high-skill, high-pay, non-routine, principally problem-solving jobs.”

Moving to the wealthier pole requires adapting to non-routine cognitive work since computer automation and off-shoring makes jobs such as “brokers, clerks, tellers, cashiers, telemarketers, title examiners, bookkeepers, insurance underwriters, travel agents and technicians” increasingly irrelevant.

This is sobering news for those aspiring to middle class status. There was a time when a college degree qualified a person’s cognitive abilities, and working according to a companywide routine virtually guaranteed a middle class lifestyle. That time is past. Going forward the likelihood that a person will escape the perils of low-income will depend greatly on her ability to be increasingly entrepreneurial in every facet of her work; whether as a full-time employee or independent contractor.

It’s a reality many formerly comfortable middle class workers would like to avoid. But with computing power and automation spreading quickly everywhere, it looks like the only option available.

Welcome to the brave new job market.