This is a re-print from a story by political columnist Charlie Cook. I'm sure some will yell and scream that Mr. Cook is a communist Democrat, but I think he's right on the money with this story. Most news accounts of last Friday's dismal Labor Department jobs report missed the most revealing finding. While the headlines emphasized that our entire economy created only 21,000 net new jobs in February -- far below the 150,000 or so needed to keep up with population growth -- the fine print indicated that the private sector actually lost jobs. The entire net gain was due to an increase of 17,800 jobs by state governments and 4,300 by local governments. The federal government lost a net of 3,000 jobs. For more than a year we have been told by economists that "next month," we'd begin seeing major increases in hiring as the economy continued to turn around, with employment being a lagging indicator. I am beginning to think that it is the economists who are lagging -- lagging behind in recognizing that this downturn is different from previous ones. This was also true for the 1991-92 economic downturn, which for a long time didn't fit into their cookie-cutter definition of a recession. Every truck driver in America knew we were in an economic recession before the first economist seemed to figure it out. For almost a year, I have been on a tirade about the political importance of the jobs issue in this election, even before I saw an eye-popping August report by the Federal Reserve Bank of New York on the subject. The New York Fed study showed that during the twin economic downturns of the mid-1970s, 49 percent of the job losses were cyclical -- or temporary job losses -- such as letting a shift go at the plant. Meanwhile, 51 percent of the job losses were structural, permanent job losses. The study went on to show that during the next downturn -- in 1981 and 1982 -- the percentages were exactly the same, 49 percent were cyclical, 51 percent were structural. The 1991-92 downturn was somewhat different, with only 43 percent of the job losses cyclical, and 57 percent structural. What about this downturn? A measly 21 percent of the job losses are cyclical ones, while a whopping 79 percent are structural, permanent job losses. Why is this bad? It's bad because we know that it always takes longer to create a brand new job than it takes to call a shift back at the plant. In December, the CEO of a California-based high tech firm told me that "there is no amount of overtime that we will not pay, there is no level of temporary services that we will not use, there is no level of outsourcing or offshoring that we will not do, in order to prevent us from having to hire one new, permanent worker in the U.S." As I travel around the country, meeting with business leaders, I hear similar, though less succinct thoughts in almost every sector and every part of the country. U.S. wages, health care, and other benefit costs have gotten so high -- and the press by investors for high stock prices is so great -- that the premium is on wringing every last bit of work out of as few employees as possible, to do anything but incur the costs of adding permanent employees. But the 8.171 million people unemployed in February are only part of the story. There were another 4.931 million who were working part-time but wanting to work full time. And there were 484,000 "discouraged workers," who had given up looking for work, totaling 13.585 million people. I have always been a free trader, and I still believe that protectionism isn't the answer. I wish it were, because we all know how to build trade barriers. But having said that, I have no idea what the solution is. We obviously can't lower wages or our standard of living. One interesting proposal that went largely unnoticed was a central part of the health care plan by Rep. Richard Gephardt, D-Mo., which was to repeal President Bush's tax cuts and replace them with, among other things, a 100 percent tax credit to businesses for health insurance premiums. I have yet to find a business leader who didn't salivate at the thought of lifting the burden of employer-paid health coverage from their shoulders, allowing them to compete in the world market with other countries where the burden is carried by government. This is probably the one thing above anything else that would make U.S. products and services more competitive. The enormous savings would certainly stimulate business spending and reduce the resistance to hiring new workers, in addition to increasing the number of Americans covered by health insurance. Americans have never associated tax cuts with job creation, which is one reason why voters have been unimpressed with Bush's efforts to address the jobless problem, as demonstrated in the March 1-3 Associated Press/Ipsos Public Affairs poll that showed that 53 percent of the 771 registered voters sampled disapproved of his handling of the economy, while 45 percent approved. The poll had a 3.5 percent error margin. Without a significant improvement in the jobs picture between now and November, Bush's re-election hopes will be considerably darker than they are today.
I'm not sure I see what's supposed to be so commie about that. My reading basically says that the government caused the current jobs situation by overregulation and taxation of business. People on the right have been saying that for a long time. I guess the author's point is that we need nationalized health care, but that's a long leap from the basic problem of job creation. I'll certainly never argue with anyone who wants to reduce regulation and taxation on businesses.
