jobs

Jobs report far below expectations, labor participation rate back at 35-year low

 

Though the unemployment rate dropped to 6.7% in December 2013, the lowest point since in more than five years, the economy added an unimpressive 74,000 jobs, according to the jobs report released this morning by the Bureau of Labor Statistics (BLS).

Coming off consecutive months of solid gains, economists expected the economy would add 200,000 jobs in December. The ADP survey released earlier this week estimated that 238,000 jobs were added to private payrolls. Unfortunately, the BLS report comes in well below those expectations, adding the fewest number of jobs since October 2008.

The disappointment isn’t limited to the total number of jobs added, but also that 347,000 people left the workforce in December. That brings the labor force participation rate to 62.8%, where it was in October 2013 and, also, its lowest point since 1978.

Here’s the chart via Zero Hedge (click to enlarge):

Labor Force Participation Rate

Ted Cruz knocks Obama’s proposed “promise zones”

Sen. Ted Cruz (R-TX) isn’t too fond of President Barack Obama’s proposed “promise zones,” the latest gimmick from the White House in its latest push to focus on economic inequality. In fact, the Texas senator says that the economic policies pushed by the administration have led to inequality.

“It’s altogether fitting that President Obama is today talking about income inequality because income inequality has increased dramatically as a direct result of his economic policies,” said Cruz yesterday in a statement. “Out-of-control government spending, debt, taxes, and regulations have killed millions of jobs. Unfortunately, rather than stop Washington’s job-killing policies, President Obama proposes yet more government spending and debt.”

The so-called “promise zones” purport to “create jobs, increase economic security, expand access to educational opportunities and quality, affordable housing and improve public safety.” The cost of the proposal hasn’t been released, but The Detroit News points to an administration memo from last month which stated that designated areas “will not receive direct funding, but will benefit from technical assistance, federal staff support, and more extensive preference points and access to other federal grant programs.”

Economist: Eliminating corporate income tax would help American workers

Staring down what could be a tough year, President Barack Obama and congressional Democrats are focusing their message on the tired theme of “income inequality,” focusing state-based measures to raise the minimum wage and extend jobless benefits to the long-term unemployed.

But the focus on heavy-handed and expensive government programs is misguided. In an op-ed yesterday at The New York Times, Laurence Kotlikoff explained that the best way to help American workers is to eliminate the corporate income tax.

“That might sound like a giveaway to the rich. It’s not,” wrote Kotlikoff, an economic professor at Boston University. “The rich, including Boeing’s stockholders, can take their companies and run — and not just from Washington State to, say, North Carolina.”

“To avoid our federal corporate tax, they can, and often do, move their operations and jobs abroad,” he noted. “Apple’s tax return says it all: The company, according to one calculation, paid only 8.2 percent of its worldwide profits in United States corporate income taxes, thanks to piling up most of its profits and locating far too many of its operations overseas.”

Democrats, Big Labor plan state-based minimum wage initiatives in 2014

Well, this is entirely unsurprising. With Obamacare looking like a political liability for Democrats in the 2014 mid-term election, the White House and its Leftist allies are looking to launch initiatives to raise the minimum wage in states where vulnerable incumbents face tough bids for re-election:

Democratic Party leaders, bruised by months of attacks on the new health care program, have found an issue they believe can lift their fortunes both locally and nationally in 2014: an increase in the minimum wage.

The effort to take advantage of growing populism among voters in both parties is being coordinated by officials from the White House, labor unions and liberal advocacy groups.
[…]
“It puts Republicans on the wrong side of an important value issue when it comes to fairness,” said Dan Pfeiffer, the president’s senior adviser. “You can make a very strong case that this will be a helpful issue for Democrats in 2014. But the goal here is to actually get it done. That’s why the president put it on the agenda.”
[…]
At the same time, Democratic campaign officials and liberal activists — conceding that Democrats face tough prospects in some Senate races — are working to put minimum-wage increases on the ballot next year in places like Arkansas, Alaska and South Dakota. The hope is to stoke Democratic turnout in conservative-leaning states where the party’s Senate candidates have been put on the defensive by the mishandled rollout of the Affordable Care Act.

Poll: Americans pessimistic about the economy

More than five years after the recession officially ended, there are some signs of life in the economy. There have been a couple months solid job growth and the stock market is surging. But the vast majority of Americans are still pessimistic about the economy as they head into 2014, according to a new CNN poll:

A new CNN/ORC poll released Friday showed people were pessimistic that the economy was improving. Nearly 70% said the economy is generally in poor shape, and only 32% rated it good.

Two-thirds of respondents said most of the economic news they’ve heard recently was bad news. More rural than urban dwellers said the economy was in poor shape.

And just over half expected the economy to remain in poor shape a year from now.
[…]
Those people aren’t buying big-ticket items like furniture or appliances, and some were cutting back on essentials. Thirty-six percent said they were cutting back spending on food or medicine, up from 31% in late 2008, the year the housing market collapsed.

It hard to blame people for feeling this way about the economy and for doubting that there will be any improvement in the next year. They’ve been told time after time by President Obama that the economy was improving. How many times were we told that the 2009 stimulus saved the economy or hear the phrase “summer of recovery”?

Paul, McConnell introduce Economic Freedom Zones Act in Senate

Sen. Rand Paul (R-KY) formally introduced a measure on Wednesday to empower impoverished cities by giving them and their residents a break from the onerous federal tax and regulatory burdens which keep them from prosperity in tough economic times.

The Economic Freedom Zones Act of 2013 would lower personal and corporate income tax rates in cities, counties or zip codes that meets certain criteria, such as those that have either filed for Chapter 9 bankruptcy and an unemployment rate of 1.5 times the national average. The measure would also provide federal regulatory relief, including exemptions from onerous EPA rules that result in the loss of federal highway and transit funds and Davis-Bacon prevailing wage work requirements.

“In order to change our course, we must reverse the trend toward more Big Government by ending the corporate welfare and crony capitalism that limits choice and stifles competition,” said Paul in a statement. “We must encourage policies that will lift up the individual, allow for the creation of new jobs, improve the school system and get these communities back to work.”

“The answer to poverty and unemployment is not another government bailout; it is simply leaving more money in the hands of those who earned it. The Economic Freedom Zones Act of 2013 will do just that,” he added.

Why we’ll see a minimum wage increase, whether we need it or not

Folks, there is going to be a minimum wage increase.  Despite the fact that only a fraction of workers actually draw minimum wage, and despite the fact that folks are actually living better on minimum wage than they did 20 years ago, we are going to see the minimum wage increase.

One of the problems with democracy is that the rule by the masses means that those who feel they have a tough spot in life will automatically vote with anyone who offers to make it better, while those who feel sorrow for such people will often vote along the same lines out of either guilt or pity.  This is why we have entitlement programs that, while having done absolutely nothing in the war on poverty, are here to stay.

Support for increasing the minimum wage is high.  In a recent report from the Wall Street Journal:

Americans strongly favor boosting the federal minimum wage to $10.10 an hour but oppose raising it above that, a Wall Street Journal/NBC News poll finds. In the survey, 63% supported a rise to $10.10 from the current $7.25 rate. Senate Democrats have proposed an increase of that size and it is supported by President Barack Obama.

In the poll, 43% said they backed an increase to $12.50 an hour. Only 28% backed a $15 wage—the rate sought by union-linked demonstrators at fast-food restaurants across the country.

Huntsman wrongly criticizes Paul unemployment benefits comments

Congress will soon weigh whether or not to extend benefits for unemployed Americans for another year, at a cost of $26 billion. Though the country has seen growth and job creation has picked up the pace, many Americans haven’t been able to find work in what is still a slow-moving economy.

During an appearance on Fox News Sunday, Sen. Rand Paul (R-KY) questioned the wisdom of extending unemployment benefits past the normal six-month period.

“When you allow people to be on unemployment insurance for 99 weeks, you’re causing them to become part of this perpetual unemployed group in our economy,” Paul, a potential Republican presidential candidate, told host Chris Wallace. “And it really — while it seems good, it actually does a disservice to the people you’re trying to help.”

Jon Huntsman, for Governor of Utah and Ambassador to China, criticized Paul on the issue on Monday. “This is language that’s suitable for the Republican primary, plain and simple,” he said on MSNBC’s Morning Joe, according to Politico. “This isn’t the language that’s good for all Americans and that gets us closer to solving the problem,” emphasizing the need for bipartisan solutions.

Huntsman, a failed Republican presidential candidate in 2012 who has made rumblings about 2016, may not like the “language,” but he didn’t do anything to prove Paul’s underlying point wrong. Why? Because he can’t.

Rand Paul proposes “Economic Freedom Zones” for Detroit, other challenged cities

Rand Paul

Sen. Rand Paul (R-KY) plans to introduce legislation that would empower impoverished cities to break the chains of big government tax and regulatory policies that have prevented economic opportunities.

In a speech in the heart of Detroit, arguably the most financially troubled city in the country, Paul detailed the principles behind the legislation — The Economic Freedom Zone Act — and explained that the resilience and optimism of its residents and economic freedom are a way to break the stagnation in which they currently find themselves.

“Detroit’s future…will not come from Washington. The magic of Motown is here in the city,” Paul said on Friday at the Detroit Economic Club. “It’s not in some central planner’s notebook. What Detroit needs to thrive is not Washington’s domineering hand — but freedom from big government’s mastery.”

“To thrive, Detroit needs less government and more freedom — less red-tape, less punitive taxes, more money left in Detroit,” he said. “The answer to poverty and unemployment is not another government stimulus, it’s simply leaving more money in the hands of those who earned it.”

“These ‘freedom zones’ will dramatically reduce taxes and red-tape so that Detroit businesses can grow and thrive,” he explained, noting that the idea is similar to one proposed by the late Rep. Jack Kemp (R-KY). “This bill will lower personal and corporate income taxes in Detroit to 5%. My bill will also lower the payroll tax — 2% for the employees, 2% for the employers.”

Obama’s economy: Labor participation drops again, recovery far below average

The October jobs report surprised analysts, many of whom thought that the government shutdown would have a negative impact on the economy. Not only were 204,000 jobs added last month, the two previous months were revised upward by 60,000.

The bad news is that the unemployment rate ticked up slightly to 7.3%, as did the U-6 unemployment rate, now at 13.8%. The worse news is that number of workers not in the labor force exploded by 932,000 in October, according to Zero Hedge, bringing the labor participation rate to 62.8%. Not only is this the lowest rate since the aftermath of the 2007-2008 recession, it’s the lowest since 1978.

(Chart via Zero Hedge - click to enlarge)

The Employment Policy Institute (EPI), a leftist think tank, offered a rather grim take on the jobs report and the long-term outlook.

 


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