President Obama, Clueless on Construction, Unemployment, Economics

 

I just skimmed the remarks by the President on the dreadful monthly jobs report that Mollie and Rob have already discussed in detail below.  The first thing to jump out at me:

I believe that we can make things better.  How we respond is up to us.  There are a few things that we can and should do, right now, to redouble our efforts on behalf of the American people.

Let me give you some examples.  Right now, there are over a million construction workers out of work after the housing boom went bust, just as a lot of America needs rebuilding.  We connect the two by investing in rebuilding our roads and our bridges and our railways and our infrastructure.  And we could put back to work right now some of those construction workers that lost their jobs when the housing market went bust.

President Obama claims that we have a million construction workers out of work as a direct result of the “housing boom [going] bust,” which is probably accurate, if not an understatement.  One of the hardest hit industries during this recession, the unemployment rate among construction workers as of this month is 15.6 per cent, 6.4 per cent higher than the national unemployment rate.  As housing starts remain low, recovery in this industry is likely to be slow-going. 

Obama’s solution to this industry’s high unemployment rate is to put a million highly specialized and unemployed roofers, tile setters, cabinet makers, trim carpenters, painters, plasterers, stucco masons, drywall installers, plumbers, and electricians back to work building roads and bridges and railroads. Either the man is clueless about how everything outside of Washington works, or he thinks Americans are so stupid as to be fooled by this type of rhetoric.  The idea that the man who sets bathroom tile can be put to work building a bridge is nearly as ludicrous as proposing that an unemployed attorney go find work building a road.

One other point worth noting: a very small number of giant companies like Granite Construction, Bechtel, and Peter Kiewit Sons’ take on the roads/bridges/railroads projects.  The labor force of these companies is highly unionized.  In contrast, the labor force hardest hit by the housing bust is largely non-union.  That the focus of the President’s jobs platform is on projects within the jurisdiction of Big Union is no coincidence.  Just days after the AFL-CIO submitted its “Where are the jobs?” Tweet to Obama’s Twitter Town Hall, the President is apparently feeling pressure to deliver.

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  1. Profile Photo Inactive
    @FrozenChosen

    Oh c’mon, Diane! Finish carpenter, plumber, road grader – they’re all the same thing. You know, one of those jobs the little people who can’t be professors or community activists do.

    Besides, Obama is a big picture guy. He can’t be bothered with those small (and time consuming) details! That’s right, one big, static, blurry picture…

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    @Copperfield

    “The idea that the man who sets bathroom tile can be put to work building a bridge is nearly as ludicrous as proposing that an unemployed attorney go find work building a road.”

    Let us hope January 20, 2013 there is but one more unemployed attorney. (Sorry, couldn’t resist.)

    • #2
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    @TheNewClearOption

    Also, keep in mind, his blaming of these job losses on the housing bust, is yet another very thinly-veiled blame-Bush maneuver. After all, it was Bush and all his EEEville Wall Street banker cronies who created the housing bust anyway. “It wasn’t me! But I got the fix for what ails ya!

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    @GreatGhostofGodel
    Diane Ellis, Ed.: One of the hardest hit industries during this recession, the unemployment rate among construction workers as of this month is 15.6 per cent, 6.4 per cent higher than the national unemployment rate. As housing starts remain low, recovery in this industry is likely to be slow-going.

    For pete’s sake, can we at least, as so-called conservatives, quit talking about “housing recovery?” Housing recovery is happening—it’s called “bursting the asset bubble created by disastrous monetary and housing policy.” That led to malinvestment in housing, which is now being corrected through deflation and, yes, job destruction in that industry. Those jobs should not come back.

    • #4
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    @DianeEllis
    Midget Faded Rattlesnake: Diane, who’s rejoicing? This is the tragic outcome of malinvestment.

    I’m sure Paul’s not rejoicing. Assuming he’s not, how is he wrong?

    You’re right, Midge. I had a kneejerk reaction to this statement:

    Those jobs should not come back.

    I would certainly agree that houses were overvalued and all that, but so long as the population continues to grow, and folks are allowed to accumulate wealth, there will always be a need for housing starts.

    To bring this issue to a more personal level, my father is a painting contractor who works on upscale residential homes. The reason hes having a hard time providing work to his couple employees is that his upscale clientele has taken a huge hit on their personal wealth. Theyre now faced with lots of economic uncertainty, the prospect of higher state & federal taxes, and just arent in the mood to build right now, or even to repaint their huge homes.

    So I disagree that this is purely an instance of mismatched supply and demand. There are a lot of other economic considerations that go into a decision of whether someone is going to build or remodel.

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    @DavidFoster

    Meanwhile, here’s a shovel-read project that requires no government funding and has many benefits, which the Obama-ites are blocking.

    • #6
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    @MontMcNeil

    I’m about to agree with Pres. Obama on an economic point, so I’m probably wrong. But the skills of bridge building and the skills of home building (not architecture or engineering, but the blue collar skills that actually put things in place) are both learned, and my subjective observation is that someone who can learn one can learn the other, and probably pretty quickly (most people who learn either skill do so on the job.)

    And the country probably needs new bridges and roads more than it needs new houses and apartment buildings.

    In this economy nobody should assume that their next job will resemble their last one, or the one they were originally trained to do.

    • #7
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    @GreatGhostofGodel
    Diane Ellis, Ed. I would certainly agree that houses were overvalued and all that, but so long as the population continues to grow, and folks are allowed to accumulate wealth, there will always be a need for housing starts… So I disagree that this is purely an instance of mismatched supply and demand. There are a lot of other economic considerations that go into a decision of whether someone is going to build or remodel.

    Absolutely. Please chalk my reaction up to my own knee-jerk response to “recovery in housing.” I don’t mean to imply that malinvestment in housing means that no one in the housing industry is suffering for what might be, at best, tangentially related reasons. I completely agree that regulatory uncertainty has a dramatic effect on people’s employment circumstances also, and, especially when coupled with malinvested sectors, is all the more devastating. I hope your father’s business finds equillibrium very soon.

    • #8
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    @DanHanson

    This highlights the ultimate failure of Keynesianism – it treats demand and labor as ‘aggregates’ – single numbers that can be controlled by manipulating the levers of government.

    In the real economy, it’s ridiculous to say, “Demand is down” without asking, “Demand for what?” You don’t say “There’s an oversupply of labor,” you ask “What kind of labor is in oversupply?”

    There is plenty of demand for iPads. There are shortages of labor in engineering. My company has job vacancies that haven’t been filled in months because we can’t find people trained to do what we need.

    If your labor force isn’t trained for the jobs you need, and demand for goods is down because your manufacturing base isn’t building the things people want or providing the services they need, no amount of stimulus or monetary wizardry is going to make that problem go away. The only way to solve the problem is to allow market forces to work, which will give people and business the right incentives and provide to them the true informaiton about supply and demand so they can make smart choices with confidence.

    • #9
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    @DianeEllis
    Mont McNeil: I’m about to agree with Pres. Obama on an economic point, so I’m probably wrong. But the skills of bridge building and the skills of home building (not architecture or engineering, but the blue collar skills that actually put things in place) are both learned, and my subjective observation is that someone who can learn one can learn the other, and probably pretty quickly (most people who learn either skill do so on the job.)

    The types of skills that people develop to be good at their crafts take years, even decades to develop. I’m sure that someone who plasters walls can learn how to build a bridge quicker than someone who teaches Philosophy at Harvard can, but still — it’s a completely different occupation, and for the President to assert that we can solve unemployment in the construction industry by funneling guys who are pros in their field to a completely different one really exposes his ignorance of the part of the economy that is responsible for building stuff.

    • #10
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    @Pseudodionysius
    for the President to assert that we can solve unemployment in the construction industry by funneling guys who are pros in their field to a completely different one really exposes his ignorance of the part of the economy that is responsible for building stuff. · Jul 8 at 2:51pm

    If he believes that, then I’ve got a world to sell him that needs to be built in 6 days.

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    @Midge
    Diane Ellis, Ed.

    To bring this issue to a more personal level, my father is a painting contractor who works on upscale residential homes. The reason hes having a hard time providing work to his couple employees is that his upscale clientele has taken a huge hit on their personal wealth. Theyre now faced with lots of economic uncertainty, the prospect of higher state & federal taxes, and just arent in the mood to build right now, or even to repaint their huge homes.

    So I disagree that this is purely an instance of mismatched supply and demand.

    Sorry to hear your dad’s struggling, I hope he can keep his employees.

    That domestic construction workers aren’t suffering from pure malinvestment makes sense — the whole economy is suffering from uncertainty, which would include people who want to maintain homes, not just build new ones.

    Paul’s remarks actually got me thinking about how professional home builders not building new homes might try to switch to maintenance and remodeling, only to find that many people can’t afford to refurbish right now.

    • #12
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    @Jonesness
    Either the man is clueless about how everything outside of Washington works, or he thinks Americans are so stupid as to be fooled by this type of rhetoric.

    Its probably both.

    • #13
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    @Midge
    Diane Ellis, Ed.: Obama’s solution to this industry’s high unemployment rate is to put a million highly specialized and unemployed roofers, tile setters, cabinet makers, trim carpenters, painters, plasterers, stucco masons, drywall installers, plumbers, and electricians back to work building roads and bridges and railroads. Either the man is clueless about how everything outside of Washington works, or he thinks Americans are so stupid as to be fooled by this type of rhetoric. The idea that the man who sets bathroom tile can be put to work building a bridge is nearly as ludicrous as proposing that an unemployed attorney go find work building a road.

    Oh, I dunno.

    Around where we live, the latest recovery plan is to build a wood and stucco bridge inlaid with decorative tiles. It won’t hold up to much traffic, but by gum, it will be quaint!

    Plus its constant need for maintenance will provide these workers with a lasting source of employment.

    • #14
  15. Profile Photo Contributor
    @DianeEllis
    Paul Snively

    Diane Ellis, Ed.: One of the hardest hit industries during this recession, the unemployment rate among construction workers as of this month is 15.6 per cent, 6.4 per cent higher than the national unemployment rate. As housing starts remain low, recovery in this industry is likely to be slow-going.

    For pete’s sake, can we at least, as so-called conservatives, quit talking about “housing recovery?” Housing recovery is happening—it’s called “bursting the asset bubble created by disastrous monetary and housing policy.” That led to malinvestment in housing, which is now being corrected through deflation and, yes, job destruction in that industry. Those jobs should not come back. · Jul 8 at 11:52am

    What a great thing to rejoice over, eh? Unless that’s how your family puts bread on the table…

    • #15
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    @Midge

    Diane, who’s rejoicing? This is the tragic outcome of malinvestment.

    I’m sure Paul’s not rejoicing. Assuming he’s not, how is he wrong?

    • #16
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    @StevenDrexler

    Sure, Diane. Laugh if you want to. But at least those bridge and road projects are “shovel ready.”

    • #17
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    @GreatGhostofGodel
    Midget Faded Rattlesnake: Diane, who’s rejoicing? This is the tragic outcome of malinvestment.

    I’m sure Paul’s not rejoicing. Assuming he’s not, how is he wrong?

    Exactly. I’m left contemplating precisely the horror of the intersection of specialization and malinvestment. Malinvestment is always bad, but historically it could be mitigated somewhat by labor mobility, as less specialization meant that work was more fungible. Specialization intensifies malinvestment’s shearing effect, which in the abstract is “bad for the economy,” and at the level of individual human beings is absolutely heartbreaking.

    Tragically, that still doesn’t make propping up burst bubble industries the right thing to do. Other than support for job retraining, though, I don’t pretend to know what the best response actually is.

    • #18
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    @wilberforge

    Most anyone working in the constuction field is willing to change hats to bring home the bacon if given the chance.

    It is painfully obvious that Obama has no clue and could only create short term solutions via handouts. If someone is currently in with government it is seen as a good thing, all others must be economically punished, pummelled and abused to support that goal…

    • #19

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