09.06.2010 0

Paychecks, Not Unemployment Insurance

The unemployment numbers are in, and no matter the hopeful spin, they contain more bad news than good for the Obama Administration and the Democrats.

For the sixteenth straight month, unemployment has been at or above 9.4 percent with many economists forecasting between 9.5 and 10 percent unemployment for many more months to come. This marks only the second time since the Great Depression that the unemployment rate has remained this high for such a sustained period of time. Eerily, Labor Secretary Hilda Solis’ Labor Day message seems out of touch as she refers to the rate as being “just above 9 percent,” giving short shrift to the gravity of the situation.

Overall, 54,000 more people were out of work in August than in July, with only 67,000 jobs created in the private sector, a number that falls far short of the 100,000 new jobs that economists estimate must be created to just meet the monthly demands of a normally expanding job market. The explanation for how the overall economy can lose 54,000 jobs, while the private sector can create 67,000 new jobs is largely a result of the Census Bureau shedding another 114,000 temporary government workers due to the labor intensive decennial census coming to a close.

Given that Obama Administration officials clucked excitedly when the unemployment numbers counted these 114,000 government workers as jobs created, it is fair to emphasize the top line job loss number and state that 54,000 more people are out of work in August than in July bringing the total number of people who want a new job to 20,832,000. To put that number of people into perspective, it is the equivalent of every man, woman and child who live in the combined states of New York and Maine.

A bit of good news for the nation’s economy is that more than 300,000 fewer people indicated that they had been unemployed for more than 27 months, however, the number of people who are classified as “discouraged workers” is still up more than 300,000 from a year ago.

Ultimately, the employment bubble created by the once in a decade hiring of temporary census workers has worked its way through the employment system, and contrary to Obama Administration hopes, the increased spending by these temporary hires did not fuel additional private sector job creation. This same theory pervaded Speaker Pelosi’s argument for extended unemployment insurance benefits, which she characterized as a “jobs creator.”

Demand side economics has failed because people have behaved rationally, reducing their personal debt, increasing personal savings, and avoiding the temptation of spending their money on a bigger screen television.

On the business side, the job creators have been stifled by incalculable increased costs due to the Reid/Pelosi health care law, uncertainty over whether the economically stimulating “Bush tax cuts” will be allowed to expire on December 31, 2010, and a new debilitating increase in taxes on U.S. based corporations.

While Obama now claims to be focused upon job creation, his own White House staff is quoted in Time Magazine admitting that the real goal of the almost $800 billion stimulus package was not job creation, but to transform America’s economy by propping up green energy initiatives until they found their own legs.

Now, the President is saying to trust him that this time he really means it. Jobs are job one, and he is advocating providing limited tax credits and a payroll tax holiday gimmick as the way to get people to work. Perhaps, someday he will figure out that temporary fixes don’t work.

Only permanent, dependable lower taxes on the private sector combined with dramatic cuts in the cost of government, and a reduction in mind-numbing regulations designed to protect special interests rather than American interests, are the only viable long term solution to the economic dilemma our nation faces.

Obama, Pelosi and Reid have already tried short term political fixes like the “cash for clunkers” program that created heavy demand for new cars when it was in effect, only to be offset by dramatic drops in sales in subsequent months since all the new car sales demand was pushed into a few months, resulting in little real economic growth.

Quite simply, our nation cannot afford to have 20 million people who want a job to not be able to find work. And the private sector relying on the free market system’s profit motive is the hope these people have for the future.

Let’s keep our fingers crossed that the next leaders on Capitol Hill work as hard to get Big Government out of the way of this jobs engine as the current occupants have worked to interject it. If they do, next Labor Day, Americans will once again be earning paychecks rather than depending upon unemployment insurance.

Rick Manning is the Director of Communications for Americans for Limited Government and the former Public Affairs Chief of Staff for the U.S. Department of Labor.

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