Jobs, Jobs, Jobs: There Are No Jobs!

Jobless numbers continue to increase, beyond the expert’s forecasts and expectations, and yet “productivity” rises.  Ah, that productivity number went up; see all is well.  The reality behind the statistic is evidenced on the ground by the Pizza parlor I occasionally frequent.  The couple who owns it was, at last visit, talking with the customers, topping off that Diet Coke, playing with their son, clearing an occasional table and generally giving their business a personality.  This visit was different, the wife was behind the counter and the husband was behind the pizza oven, the familiar faces in those jobs nowhere to be seen. 

But, fear not!  The White House is organizing a “Jobs Summit”.  The problem here is that 12 months of policy must be reversed or the answer will be that there are no jobs, no now and not in the foreseeable future! There will not be jobs for some time to come begging the logical question. Why?

Stimulus opted for political pork over productivity a lost opportunity of major proportions for the administration.  The short term result of the administration’s policies is the triple whammy of weak macro economic fundamentals, a weak dollar and no structural incentives to produce or maintain jobs. Coming soon to a job market near you is the potential for deficit motivated inflation and additional job losses as costs skyrocket based on a weakening economy and essential dollar devaluation.  Everything will cost more!     

Small business was essentially left out of the stimulus package.  The opportunity to use the SBA as an alternative vehicle for credit provision is absent.  Government guaranteed loans would have cost the government only a small percentage of the actual loan amounts.  Absent, as well, are incentives related to job creation for small business.  With a history of creating 80% of the new jobs in America this absence is glaring and must lead one to question the actual intent of the stimulus if not the wisdom of it.  OK, folks move, on nothing to see here, no jobs here. 

The stimulus package did not address the re-industrialization of America; there was certainly enough money to motivate that process.  Immediate investments and associated credits could have been structured to create the conditions whereby long term job growth could have been created in a dying sector.  Nope, no joy on industrial production, and no jobs!

Stimulus could have been utilized to motivate the return of jobs shipped off shore over the past 10 years.  Jobs such as telephone call centers could have been brought back painlessly.  While call center jobs don’t have much sex appeal they do address the sectors where unemployment is most critical.  Incentives could have also addressed the most economically challenged geographic areas.  Nope, no jobs here!

 Micro Loans for small and home start up businesses is an idea that has worked the world over.  Not present in current programs.

Infrastructure spending does not create immediate job growth.  Even key Democrats are bemoaning the percentage of stimulus targeted to infrastructure, such as Pennsylvania’s Governor.  In New Hampshire the Democratic political structure is upset over the union mandates associated with stimulus related infrastructure spending.

In the push me, pull you department wind farms are held up by law suits to prevent the construction of transmission lines.  Farm jobs in California are disappearing at a startling rate in the interest of a law suit decided to protect water for minnows over jobs for farmers.  If it really is about jobs what’s going on here?

 The absence of credit availability for small and medium size business is real. While bank balance sheets may be improving that improvement is not seeing its way to the provision of credit.  Bank regulators, insisting on balance sheet recovery and conservative lending standards have dried up credit availability.  The administration has made it clear that “risk” is not really risk, it’s a fundamental flaw in the financial system.  The absence of credit means belt tightening, lay offs, position eliminations, elimination of expansion plans and results in a significant net loss in jobs and the arc of job growth.  The unemployment numbers over the past 12 months prove the premise.

Green jobs, green jobs, green jobs; there is no significant increase in green jobs on the immediate horizon.  You simply can’t talk jobs into being.  Green energy sources represent 1.5% of total energy production.  We are a long way from that percentage taking a huge leap forward based on current technology, environmental lobby push back and expected returns on investment as they currently exist.  Contradictions at every turn; shut down 40% of electricity generation by eliminating coal but don’t invest in nuclear.  Develop electric cars that will get their electricity from …. where? 

Economic history has been ignored.  The best way to stimulate an economy is to cut taxes, especially capital gains taxes and small business taxes.  Cutting taxes results in consumption, savings, investments and risk taking.  The history is clear, each and every time significant tax cuts occurred (Kennedy, Reagan and Bush) the economy grew, jobs grew, personal income grew, investment grew and reinvestment of profits grew.  There were no significant tax cuts in any of the bills passed so far.  It is true that there was a tax cut equating to about $12.00 a week for the average person; however the argument can be well made, based on the evidence, that tax cut was not significant in an overall economic sense.  Top wage earners are on the sidelines, hunkering down waiting for the promised tax increases and establishing off shore entities.   

Pending legislation creates uncertainty; uncertainty is guaranteed to produce conservative approaches to hiring by businesses and to investments in those businesses.

Card Check, is frightening to small and medium size businesses; those businesses assume, correctly, that the costs associated with unionization will be significant.  They will be.  Card Check will not motivate job growth and a check on the recent history of unionization argues that exactly the reverse will occur.  Card Check is a job killer.

Health Care, again based on the current proposals will result in mandates, new taxes, new regulation and business is scared of the impact.  When mandated costs to business go up dramatically, hiring retreats.  Health care is a job killer   

Cap & Trade will result in massive increases in energy costs; some estimates reflect as much as a 90% increase in utility costs.  A business with shrinking margins will wonder where the money will come from.  If the increase is even half of the estimate it is not difficult to assume that what little manufacturing we have left will be rendered uncompetitive.  Cap & Trade combined with an absolute refusal to take advantage of domestic energy resources will do more than eliminate massive numbers of jobs it could eliminate entire segments of the economy.  Cap & Trade is a job killer. Regulation is moving front and center based on nothing more than changes in definitions and administrative mandates.   Based on the histories and writings of the key people who guide administration policy there much more regulation coming down the pike, it will be aggressive and stealthy.  The assumption that regulation will be regressive is supported by the logic of the folks who will be writing the regulations. 

 Taxes, especially for small business are critical as most small businesses report profits as personal income.  Reported profits for small business and what you actually put in your pocket can be two very different things.  The current tax proposals do not consider that equation and treat many small business owners as “rich folks”.      

Congress, regardless of the rhetoric actually anticipates job losses.  The evidence is in the actual legislation. The energy bills in both the House and Senate takes pains to provide money and programs related to job displacement.  Would you worry about job displacement if you really believed that Cap & Trade was good for the economy and would produce jobs in the short run?

Finally, there are economic fundamentals and the pregnant question.  Is it possible, in light of massive deficits, declining Federal tax revenues, high unemployment, no jobs related impact of the stimulus, a recessionary GDP, state and local budget deficits, a declining dollar, small business uncertainty, credit markets marginalized by government borrowing and  the specter of inflation to assume job growth?

 Will the Jobs Summit look to a diametric change in economic policy of a restructuring of unspent stimulus dollars?  Will the Summit end the political feeding frenzy and pay homage to economic history? Will that history trump ideology?

 As we stand now the “focus” on jobs has been nothing more than optimistic rhetoric long on style and short on substance.  The two sided equation of rhetoric and policy simply do not balance, and will not balance in the near term. The result; no jobs!