Tag Archives: Jobs

Which policies have caused our low labor force participation rate?

Labor Force Participation Rate from 2007 (Pelosi/Reid) to 2013
Labor Force Participation Rate from 2007 (Pelosi/Reid) to 2013

Jay Richards tweeted this article from the Wall Street Journal. The article is an interview with a business owner named Bob Funk whose job it is to match job seekers to job creators.

Hiring is down because of increased regulation of employers and fear of interventionism:

Here’s something you don’t often see in Washington: a businessman trying to repeal a law that helps his company. That’s Bob Funk’s latest mission in life. He’s the president and founder of Express Employment Services, the fifth-largest employment agency in America, with annual sales of $2.5 billion and more than 600 franchises across the country. This year he will place nearly half a million workers in jobs.

“ObamaCare has been an absolute boon for my business,” he says as we sit in his new office headquarters near downtown Oklahoma City. “I’m making a lot of money thanks to that law. We’re up 8% this year. But it’s just terrible for the country. I see that firsthand every day.”

Why is the health-care law good for Express but bad for the country? “Firms are just very reluctant to hire full-time workers,” Mr. Funk says. “So they are taking on more temporary help, which is what we do.” ObamaCare imposes new mandates and penalties on companies with more than 50 full-time employees—and even those working 30 hours a week are considered full-time.

He quickly adds: “The problem isn’t just ObamaCare, though. It’s the entire regulatory assault on employers coming out of Washington—everything from the EEOC”—the Equal Employment Opportunity Commission hits companies hard when employees claim age, race or sex discrimination—”to the Dodd-Frank monstrosity. Employers are living in a state of fear.”

So let’s take a look at what is causing a record low labor force participation rate.

The younger generation does not have a good work ethic:

The primary jobs problem today, Mr. Funk says, is that too many workers are functionally unemployable because of attitude, behavior or lack of the most basic work skills. One discouraging statistic is that only about one of six workers who comes to Express seeking employment makes the cut. He recites a company statistic that about one in four applicants can’t even pass a drug test.

“In my 40-some years in this business, the biggest change I’ve witnessed is the erosion of the American work ethic. It just isn’t there today like it used to be,” Mr. Funk says. Asked to define “work ethic,” he replies that it’s fairly simple but vital on-the-job behavior, such as showing up on time, being conscientious and productive in every task, showing a willingness to get your hands dirty and at times working extra hours. These attributes are essential, he says, because if low-level employees show a willingness to work hard, “most employers will gladly train them with the skills to fill higher-paying jobs.”

He fears that too many of the young millennials who come knocking on his door view a paycheck as a kind of entitlement, not something to be earned. He is also concerned that the trendy concept of “life-balancing” is putting work second behind leisure.

Welfare spending discourages people from working:

When pressed to explain what Washington can do to get Americans back on the job, Mr. Funk says the first step would be to start shrinking the “vast social welfare state programs that have become a substitute for work. There’s a prevalent attitude of a lot of this generation of workers that the government will always be there to take care of them. It’s hard to get people to take entry-level jobs when they can get unemployment benefits, health care, food stamps and the rest.”

This week during the food-stamp debate in Congress, Democrats voted unanimously against work requirements and ridiculed Republicans who suggested that the expansion of food stamps to 47 million Americans has discouraged working. The Democrats are living in a fantasy world, according to Mr. Funk. He points to Congress’s decision in 2009 to increase unemployment-insurance benefits to 90 weeks or more as “a policy that held a lot of people out of the workforce until the checks stopped coming. We saw that here very clearly.”

Disability makes people less inclined to get a job:

The most abused government program, he says, is disability insurance and the 14 million Americans who now collect these benefits. Express has found that over half of the disability claims brought by its workers have turned out to be fraudulent. “We win 90% of the disability cases that we challenge in court,” Mr. Funk says.

Skills deficit makes people less employable:

Another big hurdle is the widening skills deficit. At any given time, Mr. Funk says, Express has as many as 20,000 jobs the company can’t fill because workers don’t have the skills required. His advice to young people who are looking for a solid career is to get training in accounting (thanks to Dodd-Frank’s huge expansion of paperwork), information technology, manufacturing-robotics programming, welding and engineering. He’s mystified why Express has so much trouble filling thousands of information-technology jobs when so many young, working-age adults are computer literate.

Public schools and universities don’t prepare people for work:

He blames public schools and universities for the skills mismatch. Young people looking for a financially secure future might want to heed one of his favorite pieces of cautionary advice: “If you’ve got a college degree in psych, poly-sci or sociology, sorry, I can’t help you find a job.” He urges greater emphasis on vocational and practical skills training in schools, universities and junior colleges.

With so many ideas about how to help get the country on track, Mr. Funk might seem ripe to enter politics, but he already made one electoral foray—he was a local school-board member for 11 years—and found it an exercise in pure frustration. Bringing his pay-for-performance values to the board, he spent years futilely trying to get rid of bad teachers and to reward “the 30% that are really good.”

He says “teacher tenure is by far the most corrupt social institution in our time, because it doesn’t reward excellence or weed out bad teachers.” The teachers union had operational control of the school board, and Mr. Funk couldn’t get them to budge. He says the union celebrated when he left the board.

I think that this shows the important of having private sector experience in a President. When you are looking to hire a President, you want to hire someone who has already done what he claims he wants to do, at a smaller level. If you want someone to fix health care, pick someone like Bobby Jindal who has already done it in his state. If you want someone to make schools accountable, pick Scott Walker. If you want someone to cut spending, pick Rick Scott. If you want someone to create jobs, pick Rick Perry. If you want someone to balance the budget, pick John Kasich. Pick a candidate who can do the work. Not someone who passionately speaks about how he wants to do the work. Pick someone who has been fabulously successful at actually doing what he says he wants to do.

Our current President knew nothing about running a business or how jobs are created when he was elected. He was just a community organizer. Never did a thing in the private sector. Maybe he could get lucky at making policies that would create jobs, but “lucky” our best option? Next time, let’s not take chances. Pick someone who has proved that he can do the work based on past performance. Not speeches.

Obama administration effectively bans construction of future coal plants

CNBC explains. (H/T Bad Blue)

Excerpt:

The proposal would help reshape where Americans get electricity, away from a coal-dependent past into a future fired by cleaner sources of energy. It’s also a key step in President Barack Obama’s global warming plans, because it would help end what he called “the limitless dumping of carbon pollution” from power plants.

Although the proposed rule won’t immediately affect plants already operating, it eventually would force the government to limit emissions from the existing power plant fleet, which accounts for a third of all U.S. greenhouse gas emissions.

[…]Despite some tweaks, the rule packs the same punch as one announced last year, which was widely criticized by industry and Republicans as effectively banning any new coal projects in the U.S.

That’s because to meet the standard, new coal-fired power plants would need to install expensive technology to capture carbon dioxide and bury it underground. No coal-fired power plant has done that yet, in large part because of the cost.

[…]”EPA has set a dangerous and far-reaching precedent for the broader economy by failing to base environmental standards on reliable technology,” said Hall Quinn, president and CEO of the National Mining Association. The EPA regulation “effectively bans coal from America’s power portfolio,” he said.

The first effect of this decision will be to put a lot of Americans out of work.

The second effect will be to cause electricity costs to skyrocket, exactly as Obama promised.

Excerpt:

Wind and solar energy are dilute, intermittent, and more costly than traditional hydrocarbon energy sources. After atmospheric absorption and system losses, only a single 100-watt bulb can be powered from a square meter of solar cells, and this only at midday on a cloudless day.  Wind towers must be spaced about 140 meters apart to capture energy from the wind.  As a result, solar requires 75 to 100 times the land and wind requires 150 to 250 times the land of traditional power sources.

Solar systems don’t output energy at night or at low angles of incoming sunlight.  Wind systems provide rated output less than 30% of the time and this output varies chaotically. Traditional gas or coal power plants must be running as an active backup to maintain continuity of electricity supply.  Like a car driving in stop-and-go conditions, installation of a wind farm converts the power system into a stop-and-go electrical system.  In measured real world conditions, combined wind and hydrocarbon systems use more fuel, output more sulfur and nitrogen oxides, and emit more carbon dioxide than hydrocarbon-only electrical systems.

Total cost estimates show that wind and solar systems are significantly more costly than hydrocarbon energy sources.  Since wind requires an active backup hydrocarbon facility, wind can only replace some of the variable cost of a coal or gas plant.  Department of Energy 2011 estimates place the variable cost of coal at 3 cents per kW-hr and gas at 5 cents per kW-hr, compared to 9 cents for on-shore wind and 24 cents for offshore wind.  Solar costs are 20 to 30 cents per kW-hr.

We’re getting what we voted for. We’ve had no significant global warming for 15 years, but that won’t stop the Democrats from saddling private industry with regulatory costs – costs that they will pass on to consumers. I would not be surprised if consumers (who after all mostly voted for Obama) blame the energy companies and never identify the root cause of the rising costs.

Obamacare in action: 301 employers cut employee hours and/or jobs

Investors Business Daily reports on the job creator response to Obamacare mandates.

Excerpt:

More than 300 employers have cut work hours or jobs, or otherwise shifted away from full-time staff, to limit liability under ObamaCare, according to a newly updated IBD analysis.

The ObamaCare Employer Mandate: A List Of Cuts To Work Hours, Jobs now includes 62 private employers and 239 public-sector employers. The list includes 80 school districts that have cited Affordable Care Act costs as a reason for cutting work hours — or in several cases outsourcing functions — of part-time instructional aides, cafeteria workers, custodians and bus drivers.

It also includes 46 universities and colleges — in some cases college systems — that have reduced teaching loads for adjunct faculty.

The 43 entries added to the list in the past two weeks reflect numerous actions taken before the Obama administration announced a one-year delay ofObamaCare employer mandate penalties on July 2. But the list also includes actions taken more recently, such as SeaWorld Entertainment’s decision to limit part-time workers to 28 hours per week, down from 32 hours previously.

Although the mandate won’t take effect until January 2015, fines will be based on employment levels beginning in the second half of 2014 — or earlier.

[…]In addition to SeaWorld (SEAS), 10 other private employers just added to the list include a group home for disabled adults; a YMCA; two private universities; the K-VA-T Food Stores regional supermarket; the Bealls regional department store ; and four restaurant operations.

[…]Workers in low-wage industries clocked the shortest average workweek on record in July, just 27.4 hours, an IBD analysis of the latest available Bureau of Labor Statistics industry data shows.

This low-wage segment covers 29 million private-sector workers, 25% of the total, in about 40 industry groups where nonsupervisors make up to about $14.50 an hour.

While the IBD list of private-sector hour-cutters is quite small to prove otherwise, it does offer clues that can be of help in interpreting official industry data on hours worked.

For example, the workweek at general merchandise stores tumbled from 31.1 hours in December to 29.8 hours in July. The inclusion of Wal-Mart (WMT) and Bealls on IBD’s list point to ObamaCare’s employer mandate as a significant contributing factor.

The average workweek in the hotel and accommodations industry hit a record low in July — lower than in the aftermath of 9/11 or at the bottom of the Great Recession.

In July, the workweek for nonsupervisors fell to 28.8 hours, down from 30.7 hours in March 2010, when ObamaCare was signed into law.

I’m looking forward to the 2014 elections, when we will get to vote again on this after we’ve seen “what’s in the bill”. I don’t think that the media’s blatherings are going to be able to convince people who are working under 30 hours a week that Obamacare was the right way to reform health care policy.