The Obama Recovery

Here are some graphs of how well President Barack Obama’s regulations and economic policies have been working since he exploded our national debt with his “Stimulus” package in 2009. The graphs come from Southern Methodist University Cox School of Business’ Maguire Energy Institute.

First, the sad classic graph of how the Obama Recovery compares with past recession recoveries. It speaks for itself.RecoveryComparison_Cox

This graph shows the total number of Americans still unemployed—the flip side of the number of Americans who actually have jobs.TotalUnemployed_Cox

Like the classic above, things are improving—hence “recovery”—but unemployment still is at historic highs when we consider the number of Americans that make up the unemployed 6.3%. This is because our population is growing faster than the number of jobs available.

This graph shows that the length of time Americans are unemployed isn’t improving very much at all. See the bit about jobs not being created fast enough, above, for a major contributor to this failure. This is a problem that tends to be self-perpetuating, too. The longer folks are out of a job, the more of their skills they lose; if they were in a high-skill, and/or information intensive job (engineering comes to mind), the more obsolete they become, too, as they aren’t as able to keep up with the new data in their field as are those still employed—or even the newly graduated.UnemploymentDuration_Cox

And one more:ProductivityGrowth_Cox

Productivity growth, output per hour by an employee, or what he produces in his hour of working, isn’t very much at all. Most of the jobs that are being created in this pseudo-recovery are service jobs. There are only so many tables a waitress can handle in an hour, only so many disgruntled customers a Customer Service Representative can handle in an hour, only so many investors a brokerage’s Investment Advisor can handle in an hour.

This…recovery…is, to use the Institute’s term, anemic. But we knew that from last week’s GDP growth number. And all of you still looking for work, or who’ve given up on that, have known this for some time.

Some Empirically Determined Pipeline Benefits

A study prepared by the SMU/Cox’ Maguire Energy Institute for the Consumer Energy Alliance has some interesting data from the Keystone XL leg that connects Cushing, OK, with Nederland, TX (built because it’s a purely domestic leg and so did not require President Barack Obama’s personal approval). The figure below presents a map of the pipeline and some proposed adjuncts to it. The Gulf Coast Project is the section of the Keystone XL pipeline project that connects the two towns, and it was open for business last January, so the empirical data are current.Keystone-System-Map

Here are some of the short-term benefits of the project’s work and a couple of longer term benefits:

  • $2.3 billion in private-sector investment
  • 11 million+ hours of labor completed by 4,844 American workers
  • 50+ contracts with US manufacturers and companies that built the pipeline and associated equipment, spread across the country: Arkansas, California, Georgia, Indiana, Kansas, Louisiana, Maryland, Michigan, Minnesota, Missouri, New York, Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, and Texas
  • manufacture of 485+ miles of high-strength, advanced oil pipeline (36-inch diameter) and associated equipment: thousands of pieces of equipment used to build transformers, meters, electric motors, cabling and electrical equipment; piping assembling and structural steel for supports; etc
  • 2.25 million barrels of new oil storage capacity at Cushing
  • 6 modern pump stations

Some broader results of the pipeline:

  • pumped $3.6 billion into the Texas economy, $2.1 billion into the Oklahoma economy
  • boosted local tax revenues by millions of dollars
  • Prague, OK: “doubled our city sales tax receipts”
  • full RV parks from the construction effort contributed as much as $8,000 a month in electricity fees alone to the municipal utility
  • tax revenue available—and used—to improve education, local infrastructure, and public services
  • Local restaurants, hotels, and businesses experience a significant boos

This table summarizes the overall economic impact of the project:

  Oklahoma Pipeline Impacts Texas Pipeline Impacts
Total Economic Activity $2,143,364,856 $3,638,561,905
Labor Income $1,041,174,418 $1,696,054,834
Employment (person years) 15,852 26,924
Total Taxes $72,384,852 $144,992,343
Indirect Business Taxes $50,339,639 $112,533,584
Direct Business Taxes $22,045,213 $32,458,759

Many will argue that most of these effects will disappear in a few years, even as soon as the pipeline builders leave. Since the results are temporary, why bother, especially given the risks of an oil pipeline? Leaving aside the fact that pipelines are safer than trains for transporting oil and natural gas, ask the folks who’ve gotten these “temporary” fiscal results whether they think any of it was “worth it.”

Seattle’s Minimum Wage

Here‘s a part (certainly not all) of the Left’s rationale for the $15/hour minimum wage just passed in Seattle. It’s from FoxNews‘ cite of David Goldstein, of whom they refer as a “Seattle blogger.”

If some jobs are lost, but we lift tens of thousands of low-wage workers out of poverty, that’s a net plus in the long run[.]

Which it would be, were this accurate. During the creative destruction that goes on all the time in a free market economy, jobs are lost and many more created—not only for low-wage workers, but for all workers. But the jobs that are lost due to government mandated minimum wage laws are exactly those of low-wage workers, who are priced out of the job market. There won’t be tens of thousands of low-wage workers lifted out of poverty by this law, these low-wage workers now will be trapped in no-wage poverty because they can no longer get jobs.

The simple fact is, the jobs are low-wage (notice that: the jobs are low-wage, not the workers in those jobs) because the value of the work—not of the worker—is so low.

And the Left adds this bit of rank cynicism:

It may very well be unfair, but unfair regulations are not illegal. The government distinguishes between different types of businesses and different types of industries all the time.

Because, you know, shut up.

Our Economic Future

James Pethokoukis, at AEIdeas, has some thoughts. Oddly, so do I.

Pethokoukis first. He paraphrases Binyamin Appelbaum in New York Times:

…economist accept slower growth is partly the result of long-term trends…. [Y]ou have (a) the demographically-driven decline in labor force participation and (b) an apparent productivity slowdown starting in the mid-2000s as the pace of technological innovation and diffusion has slowed.

But these two are easily corrected. The “demographically-driven decline in labor force participation” is largely, if not primarily, the retirement of us Baby Boomers without associated replacement from births into existing and new families, much less an increase in that rate. (The long-term departure from the labor force by those who’ve given up finding work in this economy is a separate matter that policy corrections will resolve.)

The US, though, always has relied on high immigration rates, as well as yesterday’s higher birth rates, for our supply of workers at all levels of a company from the janitor/mailroom clerk (no dating me here…) to the President/CEO/Bossman. We don’t have high immigration rates today, so we’re not getting the influx into our labor force that we need. The illegal entry rates don’t make up for much of that at all, and the illegality of their entry serves only to hold them back from full contribution. That dearth is only exacerbated by our lower birth rates; it’s not caused by it.

The productivity slowdown and tech innovation rate is a function of the lack of new ideas, new approaches to old problems, creative approaches to new problems, etc from an entrenched population that’s used to doing things in the business world in a certain way (and that staidness is a fact of human nature). Here, too, immigration has played a major role in our economic vibrancy. Immigrants bring those new ideas, new approaches, new etc. And immigrants start new businesses—become those CEOs/Presidents/Bossmen—all out of proportion to their numbers.

All of which suggests a solution to that “slower growth” bit.

Can’t Win for Losing

Economists were pleased that the economy created 217,000 jobs in May. That sent US payrolls to a record high. It was the first time since the late-1990s boom that the economy created more than 200,000 jobs a month for four consecutive months.

This despite fact that, as of the last jobs report, the US economy had—finally—”rehired” all the workers fired since the start of the Panic of 2008: “US total employment passed its previous peak of 138.4 million, set in January 2008.”  Normal recoveries regain their pre-recession levels after several months to a couple of years.

And it ignores the fact that, based on population growth, we’re still seven million jobs behind where we need to be from simple population growth since just before the Panic.