Lost In The Partisan Hype

Guy Benson posted an article today at Townhall about the American economy under President Trump.

The article quotes a Wall Street Journal article listing economic milestones:

The number of Americans claiming new unemployment benefits has never been so low for so long.  Initial jobless claims, a proxy for layoffs across the U.S., decreased by 9,000 to a seasonally adjusted 233,000 in the week ended April 7, the Labor Department said Thursday. This means claims have now held below 300,000 for 162 consecutive weeks, cementing the longest streak for weekly records dating back to 1967...The current streak eclipsed the previous longest stretch that ended in April 1970. Taking into account the size of the labor force, claims today compared to the late 1960s and early 1970s are much lower…The consistently low claims levels point to labor market health because they mean relatively few Americans are losing their jobs and applying for benefits to tide them over until they can find new employment. After several years of consistent job growth, firms are reluctant to let employees go in a tightening labor market in which many available workers are quickly snapped up.

Wow.

Further good news:

Trump’s speech came amid surging optimism among American manufacturers thanks to the after-effects of the GOP’s recently-implemented tax reform law. More than 93% of manufacturers have a positive outlook on their company’s prospects in the U.S. economy – the second-highest level ever recorded by the National Association of Manufacturers –  its most recent quarterly survey revealed. Meanwhile, optimism among small manufacturers was at its highest level ever recorded throughout the survey’s 20 year history; 94.5% of companies reported that they were positive about their future. Wage growth among those manufacturers surveyed also rose at the fastest pace in 17 years…The survey showed that manufacturers expected full-time employment to increase by 2.9% on average over the next year, an all-time high by the survey’s standards. Companies also said capital investments are likely to rise by 3.9% over the next 12 months, while inventories are expected to rise by 1.7%.

The two main causes for the economic boom are cutting the regulations that make it difficult for businesses to grow and changing the tax codes so that Americans get to keep more of what they earn. Small business is one of the main engines of job growth in America, and changing the way small businesses pay taxes has a very positive impact on job growth. One other factor in the economic boom is the move toward American energy independence. Low energy costs and low taxes are two things that attract foreign businesses. Because America now has both of these assets, we are more attractive as a place for foreign business to relocate. We are more competitive in the global marketplace because of the policies of President Trump. That is a really good thing.

The Trump Economy

CNBC is reporting today that more private-sector jobs were created in October than economists expected.

The article reports:

The ADP National Employment showed private-sector businesses added 235,000 jobs in the month. ADP was expected to show private employers added 200,000 jobs in October, up from 135,000 in September.

Goods-producing companies benefited strongly with 85,000 new jobs, 62,000 of which came from construction. Manufacturing also saw 22,000 positions added.

…Overall, the service sector accounted for the bulk of the job creation, adding 150,000 jobs. Professional and business services added the most positions, up 109,000. Job losses were seen in the trade, transportation, and information sectors, as well as education.

“The job market rebounded strongly from the hit it took from Hurricanes Harvey and Irma,” Mark Zandi, chief economist of Moody’s Analytics, said in a statement. “Resurgence in construction jobs shows the rebuilding is already in full swing. Looking through the hurricane-created volatility, job growth is robust.”

Leisure and hospitality contributed 45,000 to the total while health care and social assistance grew by 44,000.

In terms of business size, job gains were spread evenly, with companies that have more than 500 employees hiring 90,000 while those with fewer than 50 added 79,000.

Part of this growth is the result of deregulation, and part of this growth is in anticipation of tax cuts that will be favorable to the middle class and to business growth. It will be interesting to see how the increase in the number of people re-entering the job market looking for jobs impacts the unemployment numbers that will come out this week.

A Law Went Quietly Into Effect January 1

The American Spectator posted an article today about a law that quietly went into effect on January 1, 2016.

The article reports:

One of the worst of Obamacare’s ill-conceived provisions went quietly into effect on January 1. The employer mandate, previously inflicted only on businesses with 100 or more employees, will now be imposed on those with as few as 50. This mandate will prevent countless small employers from hiring workers they would otherwise have hired and incentivize many others to replace full-time employees with part-timers. It is such an obvious job killer that the Obama administration delayed enforcement until after the 2014 midterms, the liberal Urban Institute has called for its repeal, and it has even been obliquely criticized by Hillary Clinton.

The employer mandate requires all businesses with 50 or more full-time employees to provide health coverage to at least 95 percent of these employees as well as any dependents they may have under age 26 — or pay crippling fines. But not all small employers can afford to offer insurance. Those which lack the resources to do so will avoid the mandate by assuring that the number of full-time workers they employ remains below 50. And, because Obamacare has arbitrarily redefined “full-time” to mean 30 or more hours per week, the employer mandate effectively caps both the number of workers many businesses can hire and how many hours they will work.

As someone who spent most of my working career working for small businesses, I can state from personal experience that small companies are very aware of government regulations and how to avoid them. One way to get around this rule is to keep the size of a company under 50 employees–this impacts unemployment–companies that might want to hire additional people will not hire them because they want to avoid coming under the employer mandate. The other way to get around this is to use contract workers that are self-employed and do not receive any company benefits, but there are very strict rules governing contract workers, and they are not practical for every business. Either way, the employer mandate is going to have a chilling impact on hiring. The labor force participation rate has been dropping consistently during the Obama Administration. The employer mandate will cause it to drop further. Bringing companies of more than 50 employees under the employer mandate will not be a good thing for the economy.

The article further reports:

Ironically, considering that the question came from an obvious audience plant, Mrs. Clinton got it wrong on the Family and Medical Leave Act. FMLA eligibility isn’t based on full time or part time status. And she also seems unaware that an employee can work fewer than 40 hours per week and still be considered full-time in the brave new world of Obamacare. But the most telling part of her answer was her use of the word “believe.” Playing off the questioner’s placement of the FMLA issue in the realm of “discrimination,” she implied that employers who are simply following federal law are in reality just crooks who want to deny benefits to their workers.

She was clearly waiting for that question and the opportunity to suggest that, as President, she would work to fix the “unfortunate incentives” created by Obamacare. However, considering that Hillarycare included an employer mandate, and that it was an integral part of the health care reform plan she offered the last time she ran for President, it’s extremely unlikely that she would follow the eminently sensible policy recommended by the authors of the Urban Institute report: “In summary, eliminating the employer mandate would eliminate labor market distortions in law, lessen opposition to the law from employers, and have little effect on coverage.”

Is there anyone in the Obama Administration that understands basic economics and business?

The Jobs Report In Wisconsin

Right now, Scott Walker is the top Republican fund raiser in the Presidential primary. He is also a favorite of the conservatives, which makes him a prime target of attack for the Clinton machine and anyone out there on the liberal side of the spectrum that has designs on the presidency. Get ready for the attacks–here are some of the facts.

Today’s Wall Street Journal posted an article about his record on employment in Wisconsin. Scott Walker took office in 2011. He faced a recall almost immediately, which he won. Despite the opposition, he continued his policies of cutting spending and lowering taxes.

The article reports the results:

Yet Wisconsin’s employment-population ratio has jumped 2.5%—significantly more than the national improvement rate. Wisconsin is also gaining ground against other states. In February 2011 Wisconsin ranked 12th in employment-population ratio. It now ranks ninth.

The U.S. employment-population ratio has grown 1.5% since Mr. Walker took charge.

The article further explains:

Some will rightly point out that the unemployment rate fails to account for people who can’t find a job and stop searching. And so a low unemployment rate is more meaningful if it is accompanied by high participation in the labor force. Since February 2011, the national labor-force participation rate has dropped to 62.7%, from 64.2%. Wisconsin’s rate, much healthier than the national average, has also declined but by significantly less, to 68.4% from 69.1%.

Wisconsin’s current 68.4% labor-force participation rate is particularly noteworthy because it represents an uptick over the past year from a low of 68.1%. Nationally, the average labor-force participation rate has declined to lows last seen during the Carter administration.

Given that Wisconsin’s unemployment has dropped to 4.6% from 5.6% in the past year, the state is in the enviable position of having lowered unemployment while increasing labor-force participation. Not surprisingly, this has helped Wisconsin move up to eighth place in state labor-force participation, from 12th in 2011.

Keep these figures in mind as you hear the attacks on Scott Walker that will be coming from the political left. I have not yet made up my mind as to whom I am supporting in the Republican presidential primary, but these are impressive statistics.

Who Is Working And Who Is Not

The National Review Online posted an article today about job growth since the recession began in December 2007.

The article reports:

From November 2007 through November 2014, the number of employed native-born Americans has decreased more than 1.45 million, while the number of employed immigrants has risen by more than 2 million (as the immigrant population grew rapidly, too), according to data compiled by the Department of Labor’s Bureau of Labor Statistics.

“Native employment has still not returned to pre-recession levels, while immigrant employment already exceeds pre-recession levels,” the report says. “Furthermore, even with recent job growth, the number of natives not in the labor force (neither working nor looking for work) continues to increase.”

This might be something to consider when debating President Obama’s amnesty memo. I suspect there are two main reasons for this statistic–first of all immigrants (legal or illegal) may be willing to work for lower wages, and secondly, many immigrants may have a stronger work ethic than many Americans. Either way, this does not bode well for America’s future.

 

An Obvious Example Of Economic Growth

The Washington Examiner posted an article today about job growth in Texas since the recession began in December 2007.

These two charts tell the story:

So what is the secret? The article reports:

For starters, Texas does not collect an individual income tax or a corporate income tax. It does collect a gross receipts tax. Still, the Tax Foundation’s 2015 State Business Tax Climate Index says Texas has the tenth best business tax climate in the U.S.

Texas has one of the highest sales taxes in the nation to make up for lost income tax revenue. The combined state and average local sales tax rate of 8.15 percent is 11th highest in the nation. However, sales taxes are more efficient than income taxes, since they don’t punish work.

Texas is also a right-to-work state, which studies have shown is better for the economy. Texas is the freest labor market in the country, according to the Mercatus Center. Their labor market freedom rankings include right-to-work status, in addition to minimum wage laws and workers compensation regulations, among other factors.

It seems to me that Congress and the Obama Administration could learn a lot about economics from Texas. Hopefully the new Republican Congress will copy some of the things that have worked in Texas.