Tag Archives: jobs

Obama’s War

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…on women and on minorities in general continues apace.

The Congressional Budget Office estimates that raising the federal minimum wage to $10.10 an hour would kill off 500,000 jobs…57% of those jobs are held by women.

Women would be disproportionately harmed: those 57% work out to a loss of 285,000 jobs for women.  I suppose, though, that given this administration’s current buzz, President Barack Obama and his coterie view this as a general good.

Obama’s war is just as devastating on other groups of Americans whom his mouth holds in high favor, but his actions plainly disdain.  The Employment Policies Institute has some of the sordid details.

  • For every 10% increase in the minimum wage, teen employment at small businesses is estimated to decrease by 4.6%-9.0%
  • For every 10% increase in the minimum wage, young black and Hispanic teen employment, in particular, looks to fall 4.9%-8.4%

Hmm….

Standards and Government Mendacity

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Some of you are familiar with EEOC v Kaplan, a case in which the EEOC sued Kaplan Higher Education Corporation for the crime of using background checks to screen job applicants prior to hiring them.  EEOC’s case centered on the nonsense of disparate impact: in the present case, since blacks have more bad debts than whites—for reasons wholly unrelated to the questions at issue in Kaplan—they were more often disqualified from hiring by Kaplan than were whites.

The EEOC’s case was further centered on something called multicultural, multiracial, treatment outcome research.  I can’t tell you what this thing is; it exists solely within the mind of EEOC’s “expert” witness, a person who has constructed this thing, whatever it is, out of the æther.  Interestingly, the EEOC was unable to tell the district judge what that was, either; they elided a definition altogether.

The 6th Circuit, in upholding the district court’s dismissal of the EEOC’s case, had this to say, among other things:

The EEOC brought this case on the basis of a homemade methodology, crafted by a witness with no particular expertise to craft it, administered by persons with no particular expertise to administer it, tested by no one, and accepted only by the witness himself.  The district court did not abuse its discretion in excluding Murphy’s [the “expert’s”] testimony.

This is the pseudoscience that our Progressive administration routinely brings to bear in its many wars—on religion, on women, on climate, on….

Demonstrating, perhaps accidentally, another aspect of this administration’s level of integrity, the 6th Circuit opened its opinion with this statement:

In this case the EEOC sued the defendants for using the same type of background check that the EEOC itself uses.

Going on,

The EEOC’s personnel handbook recites that “[o]verdue just debts increase temptation to commit illegal or unethical acts as a means of gaining funds to meet financial obligations.”  Because of that concern, the EEOC runs credit checks on applicants for 84 of the agency’s 97 positions.  The defendants (collectively, “Kaplan”) have the same concern; and thus Kaplan runs credit checks on applicants for positions that provide access to students’ financial-loan information, among other positions.  For that practice, the EEOC sued Kaplan.

The Circuit ruling can be read here.

Helping the Low Wage Worker

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There are lots of sources for this help; I’m only going to talk about how government can help (yes, we can and should help the least among us, and yes, Conservatives, government does have a role, if limited: there are things government can do, even here, better than the private sector).  The trick here is to prevent government mission creep and an ever-increasing government role—a difficulty that in itself makes a powerful, and not entirely illegitimate, argument against any government role at all.

Who are the low-wage workers in America?  They’re our younger teenagers, just starting out; our college students looking for part-time work while trying to remain full-time students for their longer term benefit; the parent looking for part-time work to flesh out the family income, while also needing to take care of children still at home; the high school graduate, or drop-out, trapped by that level of education in a dead-end job.  In short, they’re far and away low-skilled workers, and they’re workers with jobs whose output has very little value to the employer, even if the employer needs that work done to some degree.

So how do we—how does government—help these folks?  One solution proffered lately is the Earned Income Tax Credit as a supplement to those low wages.  The EITC even is “enjoying” a push to expand its reach.  Glenn Hubbard, writing in The Wall Street Journal, is one of those pushing this idea:

The Earned Income Tax Credit, which supplements the income of low-wage workers as they earn more, is supported by many conservatives and liberals alike.  Expanding this program’s payments for single workers (that is, beyond workers with families)—or using an alternative low-wage subsidy—would create more powerful work incentives.

He also favors means testing this aid, but on a shallower slope in order to “reduc[e] the marginal tax rate on work as the support phases out.”  The problem with this last—means testing—is that it still leaves in place that added tax on work.  I’ve written elsewhere of the doom that means testing spells for any welfare program.

Means testing welfare generally actively discourages, if not work itself, then looking for higher-paying jobs, even when the individual is qualified for that better job and it’s available—that’s the outcome of the welfare cliffs that the Pennsylvania Secretary of Public Welfare was describing in my earlier post.  We can’t means test.  Either the individual is eligible for welfare, or he is not.  Full stop.

The larger problem, though, with an EITC form of aid is that, while it might indeed encourage more folks to look for work rather than welfare, it won’t encourage employers to offer that work, and a wage subsidy actively encourages employers to suppress the wages offered for the work they do have—after all, government will make up the difference with its EITC.  Thus, there’s no help for getting out of the bottom levels.

Rather than means testing or open-endedly subsidizing, we should be applying an upper bound on the amount of subsidy offered.  A couple of examples will illustrate.

During the Clinton years, Temporary Assistance to Needy Families was enacted, replacing Aid to Families with Dependent Children, and this program had both a work requirement for aid eligibility and a maximum lifetime duration of that eligibility.  Under that program, folks went back to work, child poverty rates fell sharply, and income sources for the affected families shifted from a 33% from earned income/40% from AFDC split in 1991 to a split of roughly 60% from earned income/9% from TANF by 2000.

The GI Bill, used to educate our veterans—whether the very generous program under which I got two advanced degrees, or the current still-generous program that provides funding for four years of college at sound (if not very expensive) schools—and which benefit was earned by our military service, offers another example of a limited, finite training subsidy.  It’s overkill for initial training, but it demonstrates in a different venue the efficacy of limiting handouts and providing a hand up instead.

The subsidy also needs to be aimed at helping the low-wage worker—or the wholly unemployed—improve his situation so he can get a better job, or a job at all; it should not be just an unfocused handout of money.

Given the reason for those low wages—low value work and lack of training—the better way to help our low-wage workers (we’re not going to increase the value of work that is inherently low-value) is to facilitate their ability to get initial training either for an entry-level job (so as to potentiate getting that first job) or for moving up from a low value job to higher value one.  This can be done by any combination of subsidizing the worker as he seeks that initial training, or by paying the employer (prospective or current) that subsidy.  Subsequent training then can and should be provided by the employer (consistent with business needs) as he recognizes the value of that now known worker or sought by the worker as he looks to change directions in his working career.

In either event, a training subsidy can’t be open-ended, nor can it be means tested to be effective.  The subsidy must have an upper bound either on the total amount paid out—use it wisely—or on the time available for its use—don’t dither—or it must have both limits, and the clock must start on first use (rather than first eligibility).

Jobs Mandates

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Nearby is a post concerning the jobs impact of Obamacare costs being imposed on employers.  Two other labor costs being considered for imposition by our Know Better, Progressive administration are minimum wage increases, and now an increase in the “minimum” wage of salaried managers.

Never mind what such a thing would do to productive company cultures:

…making more people eligible for overtime pay could remove the inherent incentive for lower-level managers to hustle to earn a promotion.

“You work hard, develop the maturity for a salaried position, and then move up,” [Emo Pentermann, owner of Bell ATM Service Inc] says.  “It takes away that whole level of maturity and freedom of choosing to get the job done in the time allotted.  So for all practical purposes, they just might as well be on a time card.”

Or, regarding that last, especially:

…a workplace environment that de-emphasizes keeping up with a time clock.  For instance, employees can take time off work to attend a child’s performance in school.  [Jeffrey Harris, owner of Inte Q] says his employees are more productive as a result of that flexibility.

He had plans to adopt a new, more formal policy this year where he would tell his salaried employees: “You know what your job is.  You’re responsible for it.  Take off when you need to, and we’re not necessarily watching day by day what you’re doing.”

But when he heard about the proposal, he said he immediately thought it would affect the type of work culture that has yielded results for him in both profits and employee retention.

Because our employers don’t have enough barriers for job creation or for business growth—and job creation.

Obamacare Jobs Impact

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The American Health Policy Institute has some data [emphasis in the original].  Although their study concerned itself primarily with the cost impact of Obamacare to large employers—those with 10,000 or more employees—the study’s outcome has implications for our economy’s jobs picture.

  • The cost of the ACA…is estimated to be between $4,800 to $5,900 per employee.
  • These large employers will see overall ACA-related cost hikes of…4.3 percent in 2016 and 8.4 percent in 2023 over and above what they would otherwise be spending.
  • The total cost of the ACA to all large US employers over the next ten years is estimated to be from $151 billion to $186 billion.

This comes after a downward trend in employer cost increases—to no and nearly no increase just prior to Obamacare’s passage—for employee health care benefits has been completely reversed by Obamacare, as this graph from the study demonstrates:

Now for those implications:

At the US median annual wage of $51,000 in 2013 (a decrease from 2012, an added bonus of President Barack Obama’s economic policies), and just taking the lower bound of the 10-year cost range, those $151 billion in added dollar costs work out to a jobs cost of nearly 3 million jobs over that decade—300,000 jobs per year—in a static analysis that ignores the economy’s response to the loss of those jobs: a loss that would increase by some amount each succeeding year as the economy actually responded.

Alternatively, that $151 billion cost is money not being spent on R&D or product development.  To put this in perspective, US companies spent some $424 billion on R&D in 2013; at $15.1 billion/year over the decade, that works out to a 3.6% cut in R&D.  This is a very large drop in a company expense that’s already very low in an increasingly competitive global economy (if not particularly competitive anymore in the US)—Apple’s R&D spending, for instance, amounted to just 3% of net sales in 2013; IBM and GM spent just 5-6% of total revenue on R&D.  This reduction leads directly to a commensurate cut in company profitability, with its own cascade effect on jobs in the US.

Of course, the true outcome will be somewhere in between—a loss of fewer than 3 million jobs, but still a large loss, and a cut in R&D of less than 3.6%, but still a significant cut—each and both with still significant cascade effects in future job losses.