The Myth of Job Creation

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This is an old article but a relevant one.

The headlines from the last presidential debate focused on President Obama challenging Mitt Romney on issue after issue. There was a less noticed, but no less remarkable, moment when Mr. Obama agreed with Mr. Romney on something — and both were entirely wrong.

The exchange began with a question about the offshoring of American jobs. Part of Mr. Obama’s answer was that federal investments in education, science and research would help to ensure that companies invest and hire in the United States. Mr. Romney interrupted. “Government does not create jobs,” he said. “Government does not create jobs.”

It was a decidedly crabbed response to a seemingly uncontroversial observation, and yet Mr. Obama took the bait. He said his political opponents had long harped on “this notion that I think government creates jobs, that that somehow is the answer. That’s not what I believe.” He went on to praise free enterprise and to say that government’s role is to create the conditions for everyone to have a fair shot at success.

So, they agree. Government does not create jobs.

Except that it does, millions of them — including teachers, police officers, firefighters, soldiers, sailors, astronauts, epidemiologists, antiterrorism agents, park rangers, diplomats, governors (Mr. Romney’s old job) and congressmen (like Paul Ryan).

First, the basics. At last count, government at all levels — federal, state and local — employed 22 million Americans, with the largest segment working in public education. Is that too many? No. Since the late 1980s, the number of public-sector workers has averaged about 7.3 for every 100 people. With the loss of 569,000 government jobs since June 2009, that ratio now stands at about 7 per 100.

Public-sector job loss means trouble for everyone. Government jobs are crucial to education, public health and safety, environmental protection, defense, homeland security and myriad other functions that the private sector cannot fulfill. They are also critical for private-sector job growth in two fundamental ways. First, the government gets its supplies from private-sector companies, which is why Republican senators like John McCain have been frantically warning about the dire effects on job creation if Congress moves ahead with planned military spending cuts. (Republicans insisted upon the cuts as part of their ill-advised showdown over the debt ceiling.) Second, government spending on supplies and salaries reverberates strongly through the economy, increasing demand and with it, employment.

That means the economy suffers when government cuts back. A report by the Economic Policy Institute examined the effect of recent cutbacks at the state and local level — including direct loss of government jobs and indirect loss of suppliers’ jobs; the jobs that should have been added to keep up with population growth; and the reduction in purchasing power from other cutbacks. If not for state and local budget austerity, the report found, the economy would have 2.3 million more jobs today, half of which would be in the private sector.

The government does not create jobs? It most certainly does. And at this time of state budgetary hardship, a dose of federal fiscal aid to states and localities could create more jobs, in both the public and private sectors.

From NYT Opinion

Posted by The NON-Conformist

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The War on Tipping Activists want to “protect” restaurant workers right out of their jobs.

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Union protestors and celebrity advocates have decided that waiters’ tips aren’t big enough.

They are upset that in 43 states, tipped workers can be paid a lower minimum wage, as low as $2.13 an hour.

Not fair! say celebrities like Jane Fonda, who recorded commercials saying, “That’s barely enough to buy a large cup of coffee!”

As usual, those who want the government to decide that workers must be paid more insist that “women and minorities” are hurt by the market.

But waitress Alcieli Felipe is a minority and a woman. She says the celebrities and politicians should butt out.

Thanks to tips, Felipe says in my new internet video, she makes “$25 an hour. By the end of the year, $48,000 to $50,000.”

She understands that if government raises the minimum, “It’ll be harder for restaurants to keep the same amount of employees… (T)he busboy will be cut.”

She’s right.

Minimum wage laws don’t just raise salaries without cost. If they did, why not set the minimum at $100 an hour?

Every time a minimum is raised, somebody loses something. “In the (San Francisco) Bay Area, you’ve got a 14 percent increase in restaurant closures for each dollar increase in the minimum wage,” says Michael Saltsman of the Employment Policy Institute.

Activists are unmoved. “The problem with tips is that they’re very inconsistent,” University of Buffalo law professor Nicole Hallett told me. Hallett is one of those activist professors who gets students to join her in “social justice” protests.

“I simply don’t believe that increasing the minimum wage for tipped workers will lead to a reduction in the restaurant workforce,” she said. “Studies have shown that restaurants have been able to bear those costs.”

I pointed out that last time New York raised its minimum, the city lost 270 restaurants.

“Restaurants always close,” she replied.

“Restaurants don’t always close,” responds Saltsman. “Yeah, there’s turnover in the industry, but what we’re doing now to an industry where there’s low profit margins, jacking up restaurant closures… Something’s not right.”

The media rarely focus on those closings. We can’t interview people who are never hired; we don’t know who they are. Instead, activists lead reporters to workers who talk about struggling to pay rent.

“Forty-six percent of tipped workers nationwide rely on public benefits” like food stamps, Hallett told me.

I pointed out that many tipped workers are eligible for benefits because they don’t report tip income to the government.

She didn’t dispute that. “Many restaurants and restaurant workers don’t report 100 percent of their income,” she acknowledged.

Hallett and other higher-minimum activists also claim that tipping should be discouraged because it causes sexual harassment. Sarah Jessica Parker, Reese Witherspoon, Natalie Portman, Jane Fonda, and 12 other actresses wrote a letter urging New York’s governor to increase the minimum wage, claiming that “relying on tips creates a more permissive work environment where customers feel entitled to abuse women in exchange for ‘service.'”

Tipping causes customers to abuse women?

Saltsman says research using federal data doesn’t support that. “Data shows some of the states that have gone down this path that the activists want, changing their tipping system, actually have a higher rate of sexual harassment.”

When I pointed that out to Hallett, she replied, “Sexual harassment is complicated; no single policy is going to eliminate that problem.”

So raising the minimum won’t reduce sexual harassment but will raise prices, will force some restaurants to either fire workers or close, and will reduce tip income.

This is supposed to help restaurant workers?

Many object to being “helped.” When Maine voters increased the minimum, so many restaurant workers protested that the politicians reversed the decision.

Alcieli Felipe doesn’t want the government “helping” her either: “We are fine. Who are those people? Have they worked in the restaurant industry?”

Most haven’t.

I’m a free market guy. I wonder, “Why should there be any minimum? Why can’t the employer and employee make whatever deal they want?”

“That policy has been rejected,” Hallett told me, “rejected for the last hundred years. We’re not in that world.”

Unfortunately, we aren’t. We live in a world where activists and government “protect” workers right out of their jobs.

By John Stossel/Reason

Posted by The NON-Conformist

Man behind Janus case says public unions will have to sell themselves better after Supreme Court ruling

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The Illinois state worker behind a landmark U.S. Supreme Court ruling that public workers cannot be forced to pay union dues said Thursday morning that the unions will be forced to do a better job selling themselves.

Man behind Janus case says public unions will have to sell themselves better after Supreme Court ruling

Image: (Carolyn Kaster, AP)

“A lot of these unions have asked for, and received, the ability to inclusively, collectively bargain for everybody,” Mark Janus said during an interview with Albany radio. “Now that this decision has come down, they’re going to have to come out and sell a product, if you will, and they will have to prove to the individuals that there is a definite benefit for being part of the union.”

Janus — who said the decision will save him about $50 a month — said it was more about the issue than the money. He called it “mainly a matter of choice.”

More from NY Daily News

Posted by Libergirl

Louisiana warns 37,000 Medicaid recipients they may face loss of care over budget cuts

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Louisiana lawmakers made deep cuts to the proposed budget to make up for a $650 million shortfall, which could end a temporary tax funding Medicaid benefits. The governor also warned that both of the state’s medical schools might have to close and that several big hospitals may have to lay off staffers.

For Jamie Duplechine, a quadriplegic who has spent more than half of her 38 years in a wheelchair, it’s an endless source of amusement that three of the caregivers who watch her around the clock in her Louisiana apartment just happen to be named Shonda, Shamanda and Sherry.

Image: Shonta Faulk uses a harness to get Jamie Duplechine into bed

Image: NBC News

Karen Scallan is also on a first name basis with the caregivers who come to her suburban New Orleans home to help her take care of her 17-year-old son, who has Down syndrome — and free her up so she can work and take care of her 63-year-old husband, who suffers from diabetes and Alzheimer’s disease.

So when the letter arrived this week warning them that they were at risk of losing their health care services starting on July 1 because of their state’s budget crisis, they reacted the same way — with dread.

“I have staff with me throughout the day and night,” Duplechine, who was paralyzed at age 15 in a car accident, told NBC News. “They do my hygiene, my catheter care, my bowel care. They cook my meals, they bathe me, they drive me everywhere. Without them, I’m in a devastating state.”

 

More sadness at NBC News

Posted by Libergirl

Seattle Passes Tax on Big Firms to Ease Housing Crisis

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amazonshutterstock 373709401

Image: OZY

They’re hitting Amazon close to home. The company, Seattle’s largest employer, had threatened to stop construction on a downtown tower if the city passed a planned $500-per-employee tax. Many point to the rise of huge international companies like Amazon and Starbucks as the cause of Seattle’s rising house prices and increased homelessness. In the end, the city council scaled back: Its new tax costs companies $275 per worker, and the anticipated $48 million a year in funding will go toward building affordable housing and battling homelessness

More@ OZY

Posted by Libergirl

U.S. Job Openings Equal Unemployed for 1st time In 2 Decades

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WASHINGTON (AP) — If you’re looking for a job right now, this may be about as good as it gets: There are roughly as many open jobs in the United States as there are unemployed people.

In March, employers advertised 6.55 million open jobs, the most on records dating to December 2000, the Labor Department said Tuesday . At the same time, there were 6.59 million unemployed people.

That’s a historical anomaly. Typically, there are far more unemployed people than advertised job openings — often twice as many. And back in July 2009, just after the Great Recession, there were 6.7 unemployed people, on average, for each open job. With that ratio now at essentially 1 to 1, the job market appears to be tilting in favor of workers and job-seekers rather than employers.

Still, the sharp jump in openings — they rose nearly 8 percent in March — does raise questions. If employers are so desperate, for instance, why aren’t they raising pay sharply enough to attract and keep employees? Though pay has risen modestly in recent months, the gains remain below historical averages.

Some economists say they still think the spike in open jobs means that employers will have to raise pay faster in coming months.

“Employers beware,” said Chris Rupkey, chief financial economist at MUFG Bank. “Wages have nowhere to go but up; it’s just a matter of time.”

Some data suggests that workers are earning more: One measure of wages and salaries rose in the first three months of the year by the most in 11 years. But a separate measure of average hourly pay increased 2.6 percent in April from a year earlier, even as the unemployment rate reached a 17-year low of 3.9 percent.

The last time the jobless rate fell below 4 percent, average wages were rising at a much healthier 4.5 percent annual rate.

So where are all the job openings? The biggest gains in March were in construction, where openings soared by roughly one-third to 248,000. Job listings also jumped in education, professional services like accounting, retail, hotels and restaurants, and shipping and warehousing.

Nick Bunker, an analyst at the Washington Center for Equitable Growth, say she thinks the record-high number of job openings in part stems from weak wage gains.

Typically, as unemployment falls, employers advertise fewer job openings because it tends to cost them more to recruit and pay new employees. But now, with wage gains sluggish, employers may be willing to post jobs because they don’t need to pay so much.

Companies may also now be quicker to post openings online than they would have been to advertise through paid newspaper want ads and other methods that were more typical in the past. Many larger firms use software that scans for keywords to initially screen resumes, which may make it easier and cheaper to post lots of jobs — even those that an employer isn’t yet prepared to fill.

Also, economic research by the Federal Reserve suggests that employers aren’t poaching as many workers who already have jobs as they did in the past, Bunker says. More Americans than in the past are staying in their jobs rather than switching to new ones for higher pay. That’s left more jobs unfilled.

Yet Tuesday’s report, known as the Job Openings and Labor Turnover survey, suggests that that could be changing. The number of people quitting their jobs has increased 6.4 percent in the past year. Workers typically quit when they have other jobs lined up, or are confident they can find one.

That is a sign that job-switching might be recovering. Over time, such a trend would likely increase average wages.

By Associated Press

Posted by The NON-Conformist

Study: South should spend on schools, train homegrown talent

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As teachers in multiple states protest for better pay, a new study warns that the fast-growing South region must invest more in public schools and higher education to ensure its homegrown talent shares in its economic prosperity.

The State of the South 2018 report, released Tuesday, found that 13 states across the region have failed to adequately invest in public schools, higher education and other resources to prepare the next generation of workers. At the same time, the region has relied heavily on an influx of newcomers with college degrees to fill higher-paying jobs.

Those discrepancies indicate that the region’s commitment to improving public schools and higher education has eroded since the Great Recession that started in 2007, the study said. Eight out of 10 southern children are educated in public schools, yet “a decade of budgetary austerity has left most states with a lower relative level of public investment in public schools and higher education than before the Great Recession,” according to the report.

More from WRAL.com

Posted by Libergirl

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