Jobs?

We ain’t got no jobs.  We don’t have to give you any stinkin’ jobs.  Never mind that a feckless, if not outright dishonest, administration keeps claiming that there’s a strong, robust recovery in place.  For four years, now.

I wrote here about our new (and hopefully relatively temporary) national work force structure.  Mortimor Zuckerman, Chairman and Editor-in-Chief of US News & World Report, has some more information.

  • since the start of the year, the number of people with jobs increased by 753,000
    • 557,000 of these positions were only part-time
    • in June full-time jobs declined by 240,000
    • part-time jobs soared by 360,000
  • [there are] three million more part-time positions than when the recession began
  • [part-time workers are at] an all-time high of 28,059,000
  • the civilian workforce-participation rate is currently 63.5%—a drop of 2.2% since the recession ended.  [emphasis added]
  • the number of people leaving the workforce during this economic recovery has actually outpaced the number of people finding a new job by a factor of nearly three

Keep this in mind during the 2014 and 2016 elections.

An Outcome of Free Trade

Since NAFTA was ratified, here are some of the results, as outlined by George Schultz, former Secretary of Labor, Treasury, and State; former OMB Director; currently Distinguished Fellow at Stanford University’s Hoover Institution—a guy who might know little about his subject matter.  As of 2010,

  • the three countries [the US, Canada, and Mexico] constitute around one-fourth of global GDP
  • they have become each other’s largest trading partners.

Moreover, the trade is tightly integrated:

  • 24.7% of imports from Canada were US value-added
  • 39.8% of US imports from Mexico were US value-added

The (legal) movement of people among the three of us has burgeoned, also, together with the economic benefits of such mobility.  Tourism:

  • Canadians made 21.3 million trips to the US in 2011 and spent $23.9 billion
  • US visitors made 11.6 million trips to Canada and spent $7.7 billion
  • Mexican visitors made 13.5 million trips to the US and spent $9.2 billion
  • US visitors made 20.1 million trips to Mexico and spent $9.3 billion.

Border-crossing truck shipping:

  • 10.7 million [border crossings] between the US and Canada
  • 9.5 million between the US and Mexico.

And so on.  There’s more concerning energy and energy independence both for NAFTA and for the three of us individually.

Of course some object to the loss of jobs.  But outside the results of the Panic of 2008*, the job losses were temporary for those truly interested in working.  They simply rotated into new jobs generated by the new opportunities flowing from the burgeoning (free) trade.  The increased trade, over all, led to a net increase in employment in each of the three of us.

 

*The results of the Panic, including the loss of job mobility, have naught to do with free trade or specific free trade agreements.  These outcomes stem directly from subsequent Federal policies aimed explicitly at the Panic and not at anything systemic in our economy.

One Aspect of the New Employment Numbers

It’s temporary work, whether under contract or not.  It’s also part-time, whether under contract or not (OK, that’s two aspects.  Sue me.)

The nation’s unemployment rate still stands at 7.6%, but there is one area showing significant improvement: temporary and contracting work.

An estimated 17 million people are employed in these areas of the labor force, making up 12% of all employed people in the US.

Here’s a clue of why that is:

Full-time workers come with benefits packages that tend to include health care and retirement plans, which come with a hefty price tag for companies still unsure of the economic recovery.

Health care and pensions—for those employers still using these instead of 401(k)-like retirement plans—are horribly expensive.  And no, this isn’t another anti-Obama screed.  Even before Obamacare and public service union pension-caused city bankruptcies, health and pension benefits were horribly expensive.  The Panic of 2008 just brought those to light, and Obamacare only made a terrible health side worse.

And there’s that uncertainty about this failed recovery and when it will start in earnest.  Here’s James Sherk, senior policy analyst in Labor Economics at The Heritage Foundation:

In many cases, employers are not confident to bring in regular, full-time employees because it may hurt the entire firm.  This is the most disturbing trend, due to the weak economy.  It’s an economy and situation where employers aren’t seeing their shelves pick up, so they won’t commit to hiring a full-time employee.

“Hurt the entire firm.”  This is an area where Obamacare exacerbates an already bad situation.  A full-time employee costs the employer a minimum $2,000 in health benefits—that’s the fine the employer pays for not providing benefits that suit the Federal government’s definition of adequacy.  If the business isn’t there to cover that added cost, the employer would be stupid to hire that employee, at least full-time.

Another downside is that part-time workers or contract workers who know their contract expires in a few months (another version of part-time work) have their own uncertainty about the future—their future.  This makes them less willing to spend the money they do earn until they have to.  That reduced demand lowers the ability of employers to sell their product.  Those reduced sales lower the employers’ interest and ability to hire.  That reduced hiring incentive….

Good for the Latvians

Mostly.  They are, after all, joining the Euro Zone next January, to their long-term detriment.  However, other than that, they clearly have the right idea, much to the chagrin of Euro Zone officialdom (given that chagrin, they’re still drawing Latvia into the fold.  What does that say about the consistency of officialdom’s judgment?).

Here’s why I like the Latvians, so far.

Latvia’s corporate tax rate is just 15%, far lower than the EU average of 23.5%.  Within the euro zone, only Ireland and Cyprus, each at 12.5%, have lower rates.

The problem here isn’t that Latvia’s tax rate is too low, as Euro Zone officialdom insists, it’s that the EU average is too high (never mind conflating the EU with the Euro Zone).  Moreover, officialdom—both Euro Zone’s and EU’s—arrogantly refuse to justify their claimed need for all that money, refuse to explain how all that money is better handled by them and not by the ordinary citizen of the EU/Euro Zone, refuse to justify the things on which they spend all that OPM beyond insulting generalities like “it’s good for everybody.”

Here’s more of why I like the Latvians:

Holding companies—firms that hold stock of other companies—enjoy further benefits in Latvia.  Since the beginning of 2013, their foreign profits earned via dividends and stock sales have been tax free.  Transferring such profits out of country is also not taxed.  Furthermore, as of 2014 Latvian holding companies will no longer have to pay taxes on interest and licensing fees they pay to foreign companies.

Business friendly is the same as jobs friendly, and jobs mean income and opportunity for the common man.  Oh, and revenue for government, whether that revenue is justified or not.

And

Markus Meinzer, an analyst with the Tax Justice Network, has already begun calling Latvia a “Luxembourg for the poor.”

What’s the downside of that, exactly?

Of course, officialdom objects to these things.

[T]he banking systems in both [Ireland and Cyprus] have collapsed—and both have been forced to seek emergency aid money from EU bailout funds.

Never mind that it was the knowledge of the existence of bailouts—at taxpayer expense, to boot—and too much regulation that led to the collapses.  Businesses that can be sure of bailout face no consequence from their decisions, and so no risk—and so make dumb, over-extensive moves.  Over-regulation compounds the problem by artificially constraining the range of moves allowed—constraints that the market can apply much more efficiently, much more broadly, much more flexibly, and much more promptly.

And

…money with shady origins keeps appearing.  In April 2012, the United Nations Security Council determined that Latvia’s Parex Bank (which has since changed its name to Reverta) assisted military officers from the Ivory Coast in circumventing international sanctions.

Of course, this has nothing to do with tax law or being business friendly.  Enforcing existing law against money laundering would handle this nicely.  To the extent the specific charge is true (if the UN says it, it’s automatically open to question), that’s a violation of such existing law; Latvia’s tax treatments are wholly irrelevant.

The Euro Zone needs a whole lot more tax havens within it—perhaps as many as 17 more.  It’s not the governments’ money, after all, and the governments for the most part don’t need it as much as the people do.

Government Favoritism

…city government style.

The Washington, DC, Council of the District of Columbia has voted to impose a minimum wage of $12.50 on all retailers in the District that do $1 billion or more in annual corporate sales.  That’s corporate sales, not just the sales that occur within the District.

Oh, and unionized corporations are excused from the minimum wage hike; they still get to pay the original minimum wage of $8.25.

The law was sold as filling a need to pay a livable wage to the good citizens of DC.  But union shops are specifically excused from having to pay a livable wage?

How does any of that work, exactly?

Wal-Mart Stores, Inc, the target of this law, has three Walmart stores under construction in DC, with plans for building three more.  They’ve said the new wage requirement throws into a cocked hat their economic analysis of their expansion, and they’ve canceled the three new stores and are exploring how to stop construction on the other three.  In the face of such a blatantly uneven law, they’ve had no choice.

And DC won’t get the 1,800 jobs those six stores were going to bring to six blighted neighborhoods.