Jobs and Governance

Oct 18, 2012 |  William H. Young

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Jobs and Governance

Oct 18, 2012 | 

William H. Young

Earlier this year, President Obama famously said: “The private sector is doing fine. Where we’re seeing weaknesses in our economy have to do with state and local government.” (The White House, Remarks by the President, Press Conference on the Economy, June 8, 2012) He offers select statistics to portray the economy and jobs as continually improving as much as can be expected. Even before the drop in the unemployment rate to 7.8 percent, the public had come to accept his depiction of stasis as progress.

A mid-September Wall Street Journal /NBC News poll (Neil King Jr. and Danny King, “Obama Extends Lead in New Poll,” The Wall Street Journal, September 19, 2012) found that “more voters now think the economy will improve over the next 12 months—42 percent—than at any time since late 2009.” Another such poll found that over the past year, the public view of whether the country is headed in the right direction improved from 26 percent to about 40 percent, the level last reached in 2009. (Neil King Jr. and Danny King, “Poll Shows Slim Obama Lead,” The Wall Street Journal, October 2, 2012)

The Gallup Economic Confidence Index, which measures consumer attitudes, improved from -52 in mid-2011 to -19 In September, nearly matching “the highest monthly reading since the start of Gallup Daily tracking in 2008.” (Lydia Saad, “Monthly Economic Confidence Up Sharply in September,” Gallup.com, October 2, 2012) Gallup indicates that:

Confidence has surged among Democrats and…improved somewhat among Independents….The improvement in Democrats’ and Independents’ economic confidence occurred mainly in their outlook for the economy, rather than in their ratings of current conditions.

Gallup concluded that “politics is playing an inordinately large role in economic perceptions.”

Consumer confidence was actualized by an increase of 1.1 percent in retail sales for September, which included the launch of the Apple iPhone 5. Along with August, this produced “the best two months of sales in two years” and could “help revitalize President Barack Obama’s campaign,” said AP economics writer Martin Crutsinger (“Confident consumers give U. S. retail sales a lift,” Associated Press, October 15, 2012). But growth is still sluggish, and America’s job situation remains dire. Let’s examine the overall state of jobs.

Between 1982 and 2000, the Civilian Employment‒Population Ratio (provided by the Bureau of Labor Statistics or BLS) rose from 58.5 percent to 64.6 percent. Since 2001, the ratio has fallen back to 58.5 percent and, since 2009, has bumped along at that level. Mortimer Zuckerman adds (“Unemployment is Still the Biggest Election Issue,” The Wall Street Journal, July 23, 2012) that:

Fewer Americans are working today than in the year 2000, despite the fact that our population has grown by 31 million and our labor force by 11.4 million….A record number of Americans have been out of work for more than six months…

Between 1982 and 2000, the BLS working-age Labor Force Participation Rate increased from 63.7 percent to 67.3. Between 2001 and 2009, the rate fell back to about 66 percent, but since 2009, has plummeted to 63.5—the level in 1981—and continues to decline. For men, the participation rate is the lowest on record at 69.8 percent, perpetuating a descent from about 85 percent in 1948. Part of this decline is attributable to early retirement of some of the large baby boom cohort. But David Malpass adds (“Economic Signals Point to a 2013 Recession,” The Wall Street Journal, September 28, 2012) that:

Nearly 25 percent of Americans ages 25 to 55 are not employed, the highest percentage in 30 years, pointing toward atrophy in job skills that may take decades to repair.

And  “Half of recent college grads underemployed or jobless, analysis says,” reported the Associated Press on April 23, 2012.

American business continues to implore Washington to face up to economic reality. A recent nationwide survey of its members by the National Association of Manufacturers (NAM) and the National Federation of Independent Business (NFIB) (“Small Businesses and Manufacturers: Government a Barrier, Not a Help, to Economic Growth,” September 25, 2012) found “a majority (55 percent) saying the national economy is in a worse position compared to three years ago.” Among the chief factors were “federal regulations, taxes, government spending, and the cost of health insurance and energy.” Other key survey findings were that:

69 percent of small business owners and manufacturers say President Obama’s Executive Branch and regulatory policies have hurt American small businesses and manufacturers….55 per cent say they would not start a business today given what they know now and in the current environment.

NFIB President and CEO Dan Danner said,

The small businesses who are the engine of our economy are clamoring for their elected representatives to stand up and lead so they can focus on the business of getting America back on its feet. Yet, instead of smoothing the way, our government continues to erect more barriers to growth through burdensome regulations that increase costs for small businesses and all Americans. It’s time Washington started listening to America’s job creators and offered real solutions to help us back to prosperity.

Perhaps worst of all, America’s historical trademark strength—jobs and growth from innovation and entrepreneurial start-ups—has degenerated substantially. “In my estimate,” said Gallup CEO Jim Clifton (The Chairman’s Blog, gallup.com, September 24, 2012):

The country needs a minimum of 2 million start-ups per year to keep an economy and jobs pumping—and it’s now running at a measly 400,000 start-ups annually. If this pace keeps up, it’s game over.

The Economic Survey of the United States, released on June 26, 2012 by the Organization for Economic Cooperation and Development (OECD), found that:

The United States is losing its cutting edge in innovation….Particularly worrying is the performance in education, which is essential to provide skills necessary to become more productive and to adapt to technological change.

Higher education is failing to produce the number of STEM graduates needed to support innovation. Ironically, President Obama touts government “investments” in innovation and education, but his administration continues on the ineffectual gender feminist path “to litigate, regulate, and legislate the nation’s universities until women obtain half of all academic degrees in science and technology.” It will now swing the hammer of Title IX to make that goal. (See my previous article STEM) This strategy will not only fail in the long run, it provides no answer in the short run. 

Tragically, an alternative solution that could promptly increase the STEM graduates available to advance American innovation has also just been blocked. A Republican bill to provide permanent resident visas for foreigners who graduate from our universities with advanced…STEM degrees was defeated by Democrats in the House of Representatives on September 20, a setback for several dozen technology companies that had strongly supported it. The bill was brought up under a fast-track procedure that requires a two-thirds majority vote and failed by a 257‒158; only 30 Democrats supported the measure. (Julia Preston, “Bill to Keep Graduates in U. S. Fails in the House,” The New York Times, September 20, 2012) 

Democrats opposed the bill because it would have replaced the Diversity Visa Lottery Program, which issues visas for less-educated foreigners, about half from Africa. (Associated Press, “House bill to increase visas for science and technology students defeated,” The Washington Post, September 20, 2012) In Diversity (2003), Peter Wood identified the deadening effects of that ideology, which NAS properly opposes. Its tentacles have strangled an urgently needed driver for American innovation and jobs.

The slow-motion American economy is not producing anywhere near the jobs needed to recover from stagnation. President Obama’s prescription is greater taxation of the successful to redistribute income, stolen from the middle class, to enable even more government spending targeted to favored groups. He substitutes ideological illusion for economic understanding and truth. But messages from American businesses confound his claim that “the private sector is doing fine.”

Ignoring their cries for reform, the President continues to pursue equality, the subject of  next week’s article.

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This is one of a series of occasional articles applying the lessons of Western civilization to contemporary issues relevant to the academy.

The Honorable William H. Young was appointed by President George H. W. Bush to be Assistant Secretary for Nuclear Energy and served in that position from November 1989 to January 1993. He is the author of Ordering America: Fulfilling the Ideals of Western Civilization (2010) and Centering America: Resurrecting the Local Progressive Ideal (2002).

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