Indigo Labor Day

 

shutterstock_87947731The front-page headline caught my attention: “Tide may be turning for working-class Americans.” Really? We just learned on Friday that a record 94 million Americans are not participating in the labor force. How can this be good news seven years after the Great Recession? Bloomberg columnist Al Hunt explains why we are in fact on the verge of Morning in America, Obama-style:

On the surface, this Labor Day holiday caps another dark year for U.S. unions and many working-class Americans.

Union membership in the private sector is 6.6 percent; it was 16.8 percent 30 years ago. Union members account for 35.7 percent of public sector workers, down slightly from a decade earlier.

Wages for middle- and working-class Americans continue to stagnate, and income inequality has worsened. Labor’s clout in Washington is a shadow of what it used to be: Both houses of Congress voted to give President Barack Obama greater authority to negotiate trade agreements, in defiance of labor opposition, and initiatives such as raising the national minimum wage are stalled.

Feeling better?

Negotiating the jump to page A8, we finally find Hunt’s reasons for hope:

There are signs of change, however. Obama has issued several employee-friendly executive orders, including one that enables salaried workers to qualify for more overtime pay. And the president’s appointees on the National Labor Relations Board voted to give workers more bargaining power.

So Hunt’s evidence for imminent repair of the dismal job market of the past eight years is the president of the past six years and eight months issuing further orders and appointing additional bureaucrats.

The back half of the article recycles nostrums familiar to Hunt’s readers through the decades. More unionization, corporate wealth-spreading, and executive salary shaming will save the day. Even Pope Francis makes an appearance, which at least is new.

Why are we still waiting hopefully and expectantly for the job tide to turn nearly two full terms after the Left’s ideal transformative president assumed office?

A refresher in basic economics should help. For decades the United States has steadily increased the relative cost of conducting high value-added activities like manufacturing in the USA. This starts with the world’s highest corporate income tax rate, an enormous incentive to send profitable activities elsewhere. Then there is the the Environmental Protection Agency, falsely categorizing carbon dioxide as pollution and working tirelessly to engineer ever-higher energy prices. Mandated non-wage labor costs are also increasing. Exhibit One is Obamacare. HHS regulations are a major reason why the 30-hour workweek is the new standard for an entry-level job.

Fewer factories, higher taxes, and climbing employee costs—all reduce demand for labor. What about supply?

Immigration, legal and illegal, is at a record high in the United States, with new arrivals greatly outstripping job growth. The Center for Immigration studies reports: .

Government data collected in December 2014 show 18 million immigrants (legal and illegal) living in the United States who arrived in January 2000 or later. But only 9.3 million jobs were added over this time period. In addition, the native-born population 16 and older grew by 25.2 million. Because job growth has not come close to matching immigration and population growth, the share of Americans in the labor force has declined dramatically — a clear indication there is no labor shortage.

So here is an easy essay question this Labor Day: Are persistent joblessness and stagnating wages the result of supply and demand, or want of the right wording of an executive order from President Obama’s pen?

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  1. Man With the Axe Member
    Man With the Axe
    @ManWiththeAxe

    George Savage: Then there is the the Environmental Protection Agency, falsely categorizing carbon dioxide as pollution and working tirelessly to engineer ever-higher energy prices.

    Your post is so obviously true that it’s hard to find something to comment about. But I do want to say something about the issue of higher energy prices.

    These prices, as everyone knows, make all prices higher. But what a liberal is unable to comprehend is that raising prices is equivalent to lowering wages. They complain about wage stagnation and want to raise the minimum wage, but have no problem with making everything more expensive for poor and working class people to afford. Their thinking just doesn’t go that far.

    • #1
  2. James Gawron Thatcher
    James Gawron
    @JamesGawron

    George,

    Thank you for confirming one fact that I was mostly sure of anyway but now can not bother to think about ever again.

    Al Hunt is an idiot.

    Regards,

    Jim

    • #2
  3. BrentB67 Member
    BrentB67
    @BrentB67

    Highlighting inconsistencies in Al Hunt’s economics is like knocking over bowling pins, but since the machine keeps setting the pins up, the beer is cold, and shoes colorful may as well keep rolling ball and knocking down the pins.

    Very appropriate article on this Labor Day.

    • #3
  4. Chris Campion Coolidge
    Chris Campion
    @ChrisCampion

    Man With the Axe:

    George Savage: Then there is the the Environmental Protection Agency, falsely categorizing carbon dioxide as pollution and working tirelessly to engineer ever-higher energy prices.

    Your post is so obviously true that it’s hard to find something to comment about. But I do want to say something about the issue of higher energy prices.

    These prices, as everyone knows, make all prices higher. But what a liberal is unable to comprehend is that raising prices is equivalent to lowering wages. They complain about wage stagnation and want to raise the minimum wage, but have no problem with making everything more expensive for poor and working class people to afford. Their thinking just doesn’t go that far.

    The Real Wages metric hits this piece – even with higher salaries, if prices of all other goods go up, your Real Wage remains exactly the same.

    Idiots rarely take the time to make themselves less idiotic.  Witness:  Our Selfie President.

    • #4
  5. Misthiocracy Member
    Misthiocracy
    @Misthiocracy

    Increase the cost of labour. That’ll get companies hiring again.

    • #5
  6. David Sussman Podcaster
    David Sussman
    @DaveSussman

    George, the ‘right wording’ will be applied, collateral economic damage be damned.

    Franchise associations and private business are now spending precious resources in preparing their unlikely effort to overturn Browning-Ferris. Franchises have built almost 800,000 businesses and employ millions of people with the specific agreement they are not owned or operated by anyone but the business owner. Now, the NLRB will assume each are subject to generous collectivist regulations of unions.

    NLRB is now an Obama administration proxy, a supposedly ‘independent’ federal agency which yielded to intense lobbying of labor unions led by the SEIU, which has all along been seeking to unionize franchise chains and undermine the proven, time-tested franchise business model. One can argue the merits of Browning-Ferris, but most everyone sees this as a Trojan horse about to unleash big labor on private sector small business.

    With your aforementioned immigration deluge of low skill wages, how will this impact not only the economics of small business, but the next generation of voting patterns?

    These guys are nothing but devious macro thinkers, implementing a bottom fed labor power structure, and they are succeeding.

    • #6
  7. SParker Member
    SParker
    @SParker

    Maybe because I’m still bedazzled (or hung-over) from reading George Gilder’s monograph on money last night (John Tamny’s review with link to monograph here),  this just doesn’t seem like an easy essay question, Dr. S*.  Wouldn’t a few correctly worded executive orders be the trick?  Start with taksie-backsies on just about all Hisself’s previous orders.  Follow with taking a fire-axe to the last 100 years of misguided regulation partially outlined in the economics refresher course (and even the immigration paragraph).  He doesn’t even have to act imperially on most of this stuff.  Congress makes it so easy for the modern president to fill in the details anyway he damn well pleases (see Dodd-Frank).   It wouldn’t be everything, but if stultifying labor and investment regulation is a piece of the puzzle, picking up the pen to set down a few choice words would be a good start.

    It could happen.  Even panicky commies can come up with a better “short-termism” solution than Mrs. C (and Jimmy P).

    Please, I just need a C to graduate.

    *In fact, it reminds me of a Vector Calculus 2nd midterm in which the instructor promised “easy surfaces so you can finish in under 3 hours and not p.o. the next class waiting for the room.”  As promised until the page flip to the last question.  Something 7 bizarrely misshapen monkeys could ride.  Deer in Peterbilt’s headlights. Bastard.

    • #7
  8. MarciN Member
    MarciN
    @MarciN

    Under Reagan, we got individual retirement accounts (IRAs) and the growth of the mutual fund industry. Under Reagan, we got real estate investment trusts (REITs) and tremendous growth in our cities.

    One person can make a difference in millions of lives.

    Obama and the Democrats may have hurt us, but they cannot destroy the American spirit that creates new things and new possibilities.

    One of my all-time favorite articles that I’ve ever read was this one about “China’s Gilded Age” because it is a vivid illustration of the resilient human spirit. The communists raised their foot off the backs of the Chinese people by only an inch, but that little bit of freedom alone was enough to give birth to China’s great surge in prosperity.

    We need to be confident in ourselves and keep working to install a government that is committed to taking its heavy foot off the back of American businesses.

    • #8
  9. Misthiocracy Member
    Misthiocracy
    @Misthiocracy

    SParker: Please, I just need a C to graduate.

    At my school you could graduate after three years with a C, but you needed a B to continue into the fourth year and receive honours, and you couldn’t enter a graduate program without honours.

    • #9
  10. Misthiocracy Member
    Misthiocracy
    @Misthiocracy

    Chris Campion:Idiots rarely take the time to make themselves less idiotic. Witness: Our Selfie President.

    < devil’s advocate mode = on >

    Selfie videos by politicians get really positive response from Facebook followers. I’ve been trying to get my candidate to do them, but he refuses because he’s afraid of someone snapping a photo like the one above.

    < devil’s advocade mode = off >

    • #10
  11. Vance Richards Member
    Vance Richards
    @VanceRichards

    Misthiocracy:Increase the cost of labour. That’ll get companies hiring again.

    Well, doesn’t everyone just “deserve” more stuff?

    deserves

    • #11
  12. George Savage Contributor
    George Savage
    @GeorgeSavage

    Vance Richards:

    Misthiocracy:Increase the cost of labour. That’ll get companies hiring again.

    Well, doesn’t everyone just “deserve” more stuff?

    deserves

    Okay, I’ll reformulate the question: Supply and Demand versus what people deserve, as determined by masterminds like Barack Obama or Hillary Clinton? I certainly can’t think of any other societies organized along those lines.

    • #12
  13. Z in MT Member
    Z in MT
    @ZinMT

    I agree here that Obama’s and the progressive’s regulatory preferences are likely to make everything worse. However, sort of like the subtitle to Dr. Strangelove, I have made my peace with the dramatically falling labor participation rate. I am starting to view it as a good thing – a sign of our nation’s wealth and prosperity. That doesn’t mean there are not huge problems with our labor and regulatory policies. The most dramatic problem I see with our economy today is the sluggishness with which things are done. Projects take years instead of months.

    • #13
  14. Misthiocracy Member
    Misthiocracy
    @Misthiocracy

    George Savage:

    Vance Richards:

    Misthiocracy:Increase the cost of labour. That’ll get companies hiring again.

    Well, doesn’t everyone just “deserve” more stuff?

    deserves

    Okay, I’ll reformulate the question: Supply and Demand versus what people deserve, as determined by masterminds like Barack Obama or Hillary Clinton? I certainly can’t think of any other societies organized along those lines.

    France.

    • #14
  15. Man With the Axe Member
    Man With the Axe
    @ManWiththeAxe

    Z in MT: I have made my peace with the dramatically falling labor participation rate. I am starting to view it as a good thing – a sign of our nation’s wealth and prosperity.

    Maybe, but someone needs to drill down into those numbers.

    If it’s baby boomers retiring, then fine. But if it’s young people who can’t find jobs, then they are eroding their human capital, and may not ever become as productive as they might have been.

    If it is people working in an underground economy we are on our way to becoming Greece.

    • #15
  16. Kozak Member
    Kozak
    @Kozak

    Yeah, we need to import more foreign labor….

    domestic vs foreign August 2015 domestic vs foreign cumulative chart

    • #16
  17. Chris Johnson Member
    Chris Johnson
    @user_83937

    My suspicion is that the Left is now content to throw body blows against the capitalist economy, grand gestures being out absent congressional majorities.  The body blows will be reversible in the future, surficially, but the deeper damage will be lasting.  How can  a business operate and plan for the future, now that whimsical regulation is known to be lurking around every political corner?

    Business in the future can expect nothing but the governance it pays for, except in the very near term.  Businesses that pay for governance will have a labor glut to draw from and be subject to the regulations they pay to have implemented.  Competitors and innovators will shrivel then be bought out.

    • #17

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