The Real Economic Crisis of 2013 Is Jobs
Obama and His Economic Policies Are Retarding Job Creation
As Congress moves toward the highly charged issues of raising the debt ceiling and passing a budget for the next fiscal year, the air will be filled with reminders of the headlong rush towards national bankruptcy.
The leading indicators are the nearly $17 trillion national debt and another $1 trillion deficit. There will be justifiable handwringing over the need to trim spending and the failure to tackle entitlement reform.
Writing in the National Review, Michael Strain of the American Enterprise Institute says that these are not the most pressing problems facing the United States. While they deserve attention, the real problem is the labor market that he says is treading water and remains badly damaged…
Unemployment came in at 7.5 percent in April. Unemployment has exceeded 7 percent for 53 months since it inched above that figure in December 2008. Unemployment has been above 7 percent throughout Barack Obama’s tenure in the White House.
Strain points to the broad measure of unemployment—13.9 percent—which includes workers marginally attached to the labor force and workers who want a full-time job but have to settle for part-time employment. He notes that the economy has 2.6 million fewer jobs than it had when the recession began, adding that only 58.6% of the overall working age population is currently employed.
“Our labor-market crisis represents an enormous loss of economic potential—one that will linger for quite some time even while the economy improves—with millions of capable people who want to work tragically sidelined,” Strain writes.
What can be done to put people back to work? Here are some examples of policies that Strain says deserve support from conservatives in Congress:
- Obamacare’s requirement that firms with 50 or more full-time workers provide their employees with health insurance should be delayed until the labor market is much closer to its pre-crisis state. This requirement provides an incentive for firms to keep their payrolls at 49 or fewer employees. At a time of extremely low employment, encouraging firms not to hire is unwise.
- A conservative program to help the unemployed should also include a push for more states to adopt right-to-work laws. These weaken the power of labor unions by eliminating the requirement that workers pay fees to a union as a condition of employment. If the power of unions is restricted, firms may hire more workers; the economics literature suggests that by increasing the cost of wages and benefits for workers, unions reduce employment growth.
- We should also reduce the paperwork, licensing, and administrative barriers facing would-be entrepreneurs. Encouraging domestic energy production by, among other things, allowing for more exploration on federal lands in reducing regulatory compliance burdens should be part of the program.
- We should consider temporarily eliminating the capital-gains tax on new businesses’ investments because doing so might help would-be entrepreneurs to attract capital. And we should discuss permanently reducing the payroll tax – which, in theory, would lead to more hiring – by, say, increasing the eligibility ages for Medicare and Social Security.
- We should also consider taking advantage of low interest rates to offer assistance to those long-term unemployed workers who want to start businesses. Government can take on risk that private banks cannot, and given the stigma facing the long-term unemployed in the labor market, banks may be wary of lending to them due to their lengthy unemployment spell.
Strain says Republicans need to be more than the party of entrepreneurship, lower taxes, balanced budgets, and small government. They need to show that they are willing to pitch in and help the vulnerable.
“A great place to start would be tackling the most serious economic problem facing the country today, by championing creative, generally conservative public policies to decrease unemployment.”