On Jobs: February 2012

As the unemployment rate continues to slowly lower, I offer the following thoughts.

  • In January 2008, 7.6 million were unemployed (4.9%)
  • In the 7 months prior to Sept 2008, unemployment grow by 1.259 million
  • From September 2008 through March 2009, unemployment grow by 5.779 million
  • In the 9 months following March 2009, unemployment grew by 1.495 million

If 8.533 million Americans lost their job in the economic collapse of 2008-2009 – and improving the job market by 100,000 per month will take approximately 86 months – that is over 7 years to return to the unemployment rate of January 2008 (4.9%), of course with assumptions.

However, the 86 months does not account for colleges continuing to graduate people ready to enter the job market, nor military personal returning to the civilian workforce – oh, surely we haven’t forgotten that the unemployment rate in those two groups is higher than the average.

If job growth continues to improves, the discouraged worker (unemployed, but not looking) will seek work, thus unemployment could rise. See this graph from Bruce.

Of course given that unemployed has an official definition and that other categories exist, this provides more statistics so any partisan can find numbers to justify their point and to say what other partisans want to hear.

Republicans continually complain about the slow jobs numbers, but they continue never to address the following:

  • Being for smaller government, how many federal workers do you plan to layoff?
  • Being against the auto bailout, how many additional workers would have lost their jobs in addition to the 8.533 million?

To the Democrats and the White House I ask the following:

  • Because the sensible already know, when are you going to stop emphasizing the inherited situation?
  • When are you going to admit that you spent too much political capital on the health care debate at a time when the economy was at the top of the list?

I could go on, but I have already set forth other tough economic questions in these posts: March 2011 and September 2011.

Although none of us are perfect and each of us use a preference filter of some sort, the American public needs to remove their head from their ideological anal orifice, shed the partisan filters, stop listening to political horseshit, and learn to understand the situation – thus checking out what the accuracy and inaccuracies from the talking heads. Then, and only then, the public can have meaningful discussions to not only agree and disagree, but to also determine the course.

Ah – at least now I feel better, but I have little hope for this.

On Some Economic Questions

The US economy is mired in a slump, the European economic crisis add to the woes, and Americans are wondering, “Jobs, jobs, jobs – where art thou job.” Americans have lost over 8 million jobs, yet the economy has created on 2.5 million since the upturn.

For starters, the private sector (not the public sector) is the main job source in a capitalist economy. No matter if consumers are individuals or corporate, increased consumer demand for goods and services is the main fuel for hiring and investment. In other words, regardless of all the partisan talk, government can only do so much. Therefore, it is time to ask some questions.

Reducing payroll taxes for employees increases the money available to workers, but what if workers save more because of the uncertainties in their life?

Tax credits to companies hiring those unemployed for 6 months is a noble thought, but this would primarily fill a vacant existing position – thus not a new job. Do you think any company would create a steady stream of hire-to-fire so can get more credits?

Why should a company expand payroll if their demand for the good or service has not increased?

With demand driving growth, how do reduced regulations increase demand?

Companies are achieving more with less, and are using offshore workers to lower costs. Even with the GOP talking points of lower taxes, less regulations, loosened lending practices, and increased demand, what guarantee do the taxpayers have that the companies will invest in American workers?

A strong financial sector is the foundation for a capitalist economy. With a large reason for our economic troubles directly aimed at the roulette nature of the financial industry and their pseudo-promotion of the housing industry, how can returning to the less-regulated casino environment be good for the economy?

If the housing/building industry drives the demand for much of the economy, what is the plan to stimulate this industry?

Taxes decreases must increase revenue to federal, state, and local governments. What if they don’t?

Infrastructure projects increase the demand for materials while putting more people to work, which also returns money in the form of tax withholdings. However, where/what is the funding source for this investment – and at the expense of doing without what?

Do our leaders construct trade agreements to increase demand?

We have a federal government struggling with the opposing forces of deficit reduction and stimulating demand by providing aid to financially struggling public sectors in order to help local public workers keep their job. Of course, one’s position directly correlates with a concern about the next election.

Meanwhile, as consumers drive demand, three main factors act as significant forces acting on their psychology: high unemployment, a depressed housing market, and a political atmosphere consuming all the oxygen in the room with their battle between the inept, the misguided, and the knowledgeable choosing to be inept or misguided.

With another round of budget ideology ahead of a September 30th deadline, count on Washington lowering not only consumer confidence, but the confidence of the business and banking sectors, thus promoting consumers, businesses, and lending institutions to keep more money on the sidelines.

On Playing with Words

Over the past several weeks, there has not been a shortage of discussions and commentaries around the debt ceiling. If nothing else, this topic demonstrates that politics involves playing the word game, which sometimes capitalizing on what the listeners do not know. For instance, let’s consider the following phrases/terms: size of government, deficit, and debt.

What is the meaning of size of government? To me, size refers to how big government is … the size of the organizational chart. On the other hand, some use size of government to refer to the amount the government spends. However, amount refers to the number of dollars involved. If the org chart remains the same, a budget decrease means the amount spent decreases while the government’s size remains the same. Of course, some also incorrectly use size of government when they actually mean the role of government.

Does the user mean debt or deficit? The two are not interchangeable terms. The recent debate involves plans for deficit reduction, but not necessary the debt. Yep, they actually agreed upon a budget decrease that reduces the rate of debt increase. That is, the debt still increases.

Deficit and surplus refer to the difference between income and spending – specifically, during a particular 12-month fiscal year. If income is greater, that’s a surplus. If spending is greater, that is a deficit. In other words, deficit and surplus only refer to a one-year period.

Debt is a long-term word involving an ongoing accumulation of yearly deficits. Interestingly, if the surplus does not cover the interest on the debt, a surplus does not reduce the debt. Even the GOP recognizes that it will take 10-years of concentrated deficit reduction to reach a point of the debt not increasing. Yep, at that point, a large debt remains.

The moral of this post is the following. As you either listen or read the commentaries, or even better, read comments and letters to the editor or comments on blogs, take note of these terms and you will notice correct and incorrect use … and misleading use.

On Trickle-Down Ryan

Rep Paul Ryan (R-WI), Speaker John Boehner (R-OH), and any other bandwagon Republican want to cut corporate taxes in order to stimulate investment. Why not? Profits go up, thus companies can invest more. News Flash: Hey … Trickle Down does not Work!

Hope about a few reality checkpoints on the matter.

Profits go up, and the shareholders are happier. Corporations are first accountable to their shareholders. Yep, the shareholders get preferential treatment over the community, over the state, and over the country. You see, capitalism is not patriotic.

Profits go up, and the executives get more (thus cutting into investment). As if people in these positions don’t already get enough. Then again, more means more.

Cash reserves increase, which then allows one company to purchase another – thus a loss of jobs.

Let’s say the company is willing to invest, thus increase employment. What is the guarantee that they do so within US borders? For those in the GOP who down know, the answer is, There is no guarantee!

Bottom line: You want to stimulate companies to invest in America, don’t give them a tax break to do something – give them a tax credit for doing something.

On Double Standards and Deficits

Presumably, our elected representations are facing voter anger. Presumably, American voters are tired of Washington’s inability to reduce the federal deficit. With the possibility of majority changes in one or both Capitol Hill chambers, the news is running rampant with various polls regarding the upcoming election. My take – what a bunch of crap!

All of the House of Representatives’ 435 seats are on the upcoming ballot. As analysts focus on the 100 or so seats that are up for grabs, 335 are safe. On the Senate side, voters will determine the fate of 37 seats; the majority of incumbents are safe. If voters are angry and fed up with our elected representation, why will the majority of incumbents get re-elected? Obviously, voters must be fed up with others representatives rather than their own.

Deficits, a 40-year trend, occur when expenses exceed income. I firmly believe that voters believe that our elected officials need to get control on the spending. The real point of contention is finding agreement of where to cut the expenses while determining how much. Even without special interest influence, what is good for some is probably bad for others. In other words, who is to sacrifice?

As extending the Bush tax cuts remains a current debate, one fact remains fixed: taxes are the major source of government income. Republicans love the cut taxes mantra, but would you go to your boss asking for a cut in pay if you were operating a personal deficit?

Interesting, conservatives are now Great Britain’s party in power. Although they do not have a majority, conservative leadership is approaching their deficit with a novel two-prong approach: cut expenses and raise taxes. Besides these recent columns by Ruth Marcus and David Broder, seems I mentioned this approach in October 2008 in relationship to the Obama-McCain campaigns. Thus, I continue to maintain that much of America wants leadership capable of making tough decisions that are contrary to campaign rhetoric and party ideology.