Tag Archives: Supply-side

Wages of low-income workers have risen faster than middle and high income workers

In Trump's America, low-wage workers see the highest wage increases
In Trump’s America, low-wage workers see the highest wage increases

By now, everyone has heard about how the unemployment rate is at a record low. Not only that, but the unemployment rates for women, blacks and hispanics are also at record lows. But did you know that wages have been increasing at the highest rate for low-income workers? That’s right. It’s low-wage workers who are seeing their incomes go up the most.

Here’s an analysis done by an economist at Indeed.com, one of the largest online job boards:

The US economy added 130,000 jobs in August, and the unemployment rate was flat at 3.7%.

After this report, we can all take a breath, but not a big one. While we are still seeing many of the disconcerting trends of the past few months, the labor market continues to grow at a healthy rate.

Before assuming that the total job growth number in August is skewed because of Census hiring, remember that these are real jobs taken by real workers. Even if you remove government hiring, which accounts for around 34,000 jobs, this is still a number that is high enough to keep up with population growth. This month’s report reflects a slowing labor market but not necessarily one heading straight for a recession.

Wage growth strongest for low-wage industries

At this point in the expansion, we’d expect wage growth to pick up, but it is continuing to stall. In fact, wage growth continues to be strongest for workers in lower-wage industries. Labor force participation grew in the month, signaling a labor market still drawing workers off the sidelines. Job seekers are still benefiting from this job market, but let’s not count on this lasting forever.

That analysis was done in August of this year, and as you may have heard, the numbers since then have been even better.

CNBC explained:

The jobs market turned in a stellar performance in November, with nonfarm payrolls surging by 266,000 and the unemployment rate falling to 3.5%, according to Labor Department numbers released Friday.

Those totals easily beat the Wall Street consensus. Economists surveyed by Dow Jones had been looking for solid job growth of 187,000 and saw the unemployment rate holding steady from October’s 3.6%.

[…]In addition to the robust November gains, revisions brought up totals from the two previous months. September’s estimate went up 13,000 to 193,000 and the initial October count increased by 28,000 to 156,000. Those changes added 41,000 to the previous tallies and brought the 2019 monthly average to 180,000, compared with 223,000 in 2018.

So my point here is simple. Democrats are mad because they lost the election, and they really aren’t interested in whether president Trump is doing a good job or a bad job. The thing is, president Trump is doing a terrific job if all you care about is numbers. I understand that Democrats love their New York infanticide, their Seattle mayor pedophilia, their Democrat FBI agent adultery, their black face Virginia governor, their Clinton-funded Steele dossier, etc. But for the rest of us who just want to have a job, keep what we earn, and spend it how we want, this has been a great presidency.

It’s not just low unemployment and increased wages. Conservatives are happy about a never-ending stream of conservative judges filling up vacancies on federal courts.

Far-left Politico is not too happy about this:

The Senate confirmation of Lawrence VanDyke and Patrick Bumatay to the 9th U.S. Circuit Court of Appeals this month brought to nine the number of appointments President Donald Trump has made to the 29-member bench that serves as the last stop for nearly all legal complaints lodged in nine Western states. Democratic-appointed judges now hold a three-seat majority, compared with 11 at the start of Trump’s presidency.

If the trend continues, it represents a major shift in the liberal wing of the judiciary, meaning lawsuits for progressive causes won’t find a friendly ear as easily as they have. The circuit has been the go-to venue for activist state attorneys eager to freeze Trump policies on health care, immigration and other social issues. It ruled against Trump’s weakening of Obamacare’s contraceptive mandate, as well as multiple versions of his travel ban.

It’s now weighing the administration’s overhaul of the federal family planning program, the “public charge” rule that denies green cards for individuals who participate in programs like Medicaid — and it could take up the “conscience rule” allowing health providers to opt out of providing care on religious or moral grounds.

[…]The 9th Circuit isn’t the only court whose makeup has changed through Trump’s conservative nominees and McConnell’s singular focus on confirming judges. The 1st Circuit in Boston and 3rd Circuit in Philadelphia now have Republican-appointed majorities.

[…]A 9th Circuit panel of four Democratic appointees and seven Republican appointees in July allowed the administration’s overhaul of the Title X federal family planning program to take effect. The policy bars clinics that provide or refer patients for abortions from receiving program funds for reproductive health services like STD screenings and contraception and prompted Planned Parenthood to quit over the change. Another 9th Circuit panel this year ruled in favor of letting Trump’s Justice Department distribute grants to cities that use the money to crack down on illegal immigration.

[…]The Trump administration will likely seek a reversal of two separate lower court injunctions against the health provider conscience rule and has been asked by DOJ to freeze a recent nationwide hold on Trump’s order to deny legal immigrants entry to the U.S. if they can’t cover their health care costs.

If you have some time, and you want to really understand why the Democrats are so angry, I really recommend this recent show featuring Andrew Klavan:

And I also wanted to reflect on what the booming Trump economy has meant to me personally. I made more money from my mutual funds this year than I earned as a senior software engineer! I understand that “orange man bad” and “impeach the m*th*rf#$%&r. But I cannot deny that I am doing well financially, and it’s very clear from economists that this is directly the result of massive tax cuts, deregulation, and smart trade policies.

Politics isn’t about how you feel, and how you look to your friends. It’s more important than that. We need to have policies that solve problems for people who are struggling to get their American dream. Donald Trump has delivered those policies, and the results are not subject to debate. We have the numbers, and the numbers are very, very good.

Why should an independent voter vote Republican in the mid-terms?

After Trump tax cuts, real GDP growth far exceeds Obama years
After Trump tax cuts, real GDP growth far exceeds Obama years

I have a friend in Canada who asks me about American politics. For some reason, the first things out of my mouth are always the latest scandals about Democrats. I am just getting started when she says “no, no, no… don’t tell me why I shouldn’t vote Democrat. Tell me why I should vote Republican.” Well, there are three good reasons to vote Republican. Job creation, law and order, national security.

Let’s look at the first one. The latest economic numbers came in last week, and they were very good for the country, and for the Republicans.

The Washington Post reported on the numbers:

Hiring surged and wages grew more than they have in almost a decade, the government said Friday in a report seized on by Republicans just before the midterm elections as evidence their policies are delivering for American workers.

In a key economic snapshot before Tuesday’s vote, the Labor Department’s monthly jobs report showed that the typical worker’s earnings rose by 3.1 percent in the past year — the biggest such leap since 2009.

Federal economists reported 250,000 new jobs in October, the 97th straight month of gains, and the unemployment rate remained at a nearly half-century low of 3.7 percent, underlining the strong fundamentals of the economy, despite stock market jitters.

[…]The strong jobs creation last month defied expectations, even by Trump’s top economist, Kevin Hassett, who said he had been bracing for a dip in hiring after Hurricane Michael pummeled the Florida panhandle and Georgia.

“We were expecting a number way below this, so it was a big surprise,” Hassett said. “We’ve got extraordinary job growth even in the face of literal head winds from a hurricane.”

[…]Every major sector added employees, including manufacturing, where there has been evidence that the tariffs are starting to bite. Hispanic unemployment hit a new low of 4.4 percent.

“This is the best labor environment in over a decade,” said Joseph Brusuelas, chief economist at RSM U.S., an international consulting firm.

African American unemployment, at 6.2 percent, is close to an all-time low, although it still remains nearly double the white unemployment rate.

Investors Business Daily, a national newspaper focused on the stock market, recalls what things were like during 8 years of socialism under Barack Obama:

During the Obama years, labor force growth slowed to well below 1% a year, while productivity grew at just 1%. Wage growth was exceedingly slow. These alone explain why the economy never managed 3% growth in any year during Obama’s time in office.

“Under President Obama, the growth in the labor force … slowed dramatically to less than half the rate of the previous four presidencies,” as Real Clear Markets described the Obama record in early 2017, as his second term ended. “The labor-force participation rate has dropped to its lowest level in decades, 62.8% compared to a peak of 67.1% in the late 1990s.”

Why did this happen? High taxes, excessive regulation, ObamaCare, Dodd-Frank, wasteful “stimulus,” and a host of other misbegotten policies that sped up departures from the labor force and curbed business investment.

The declining labor participation rate, in particular, hurt. Labor force growth during the Obama era was a meager 0.4% a year. At the same time, productivity grew less than 1% a year. Meanwhile, as the New York Times recently admitted, an “invisible” recession in business investment hit the economy in 2014 and lasted until 2016.

But what changed? What did Trump do differently?

[…][A]t the same time the wage data came out, another equally telling report emerged: Productivity. It showed that productivity grew 2.2% in the third quarter, after jumping 3% in the second quarter. That was the fastest burst of productivity growth in four years.

By comparison, since World War II, productivity has grown by an average of about 2% a year. It was why the American economy performed so well during that time. But since the end of the Internet boom in 2000, productivity has slowed to about 1% or so.

[…]Productivity typically begins rising when businesses invest in new equipment and training for their workers, in pursuit of new products, new markets, new innovations. Productivity, as the cliche goes, is the secret sauce of all successful economies.

And productivity is the real reason why workers are getting wage hikes. Trained workers are worth more in our new, fast-growth economy.

But beyond even that, as economists will tell you, the rate of growth of productivity, the rate of growth of business investment and the rate of growth of your labor force essentially define the speed limit of your economy. All three are rising right now.

Trump’s plan was to cut the corporate tax rate, cut individual tax rates, cut small business tax rates, and de-regulate the economy.  That worked. Workers learned more, earned more, and kept more of what they earned. Trump bet everything on America’s risk-taking entrepreneurs, and he won. Bigly.

What would Democrats do if they win the House on Tuesday (which is likely)? They want to make workers more expensive to hire, by raising the minimum wage. Their plan is to take money away from job creators, in order to bribe young, low-information voters to vote Democrat.

Investors Business Daily explains:

In California, New York, and other states where the $15 minimum wage has been adopted, we’ve seen dozens of businesses — many of them small businesses — close because a wage hike is simply unaffordable. Others have raised their prices or laid off employees to cope with the higher wage floor. Take Reaching Beyond Care, a child-care provider in Oakland, which was converted to a part-time after-school program. Or consider Long Island’s Tropical Smoothie Cafe, which “now schedules one less person per hour and expects employees to work faster.”

We’re talking jobs, jobs, and more lost jobs. In California, a $15 minimum wage is expected to cost the state as many as 400,000 jobs. It’s a similar story in cities like Seattle, and Flagstaff, Ariz. Are unemployed workers truly better off when hourly wages increase?

Independent voters tend to be more practical and numbers-driven than members of either party. Their demand? Show us the money. Well, we had lots of time to observe how the policies of Democrats worked under Obama, and where the Democrats in Democrat-run cities want to take us. And we also know what works, because Trump has done it for all to see. If you want to have job security, more productivity, higher wages, and keep more of what you earn, then vote Republican. Vote for what works. Not for what feels good.

If socialism is so great, why are people moving from blue California to red Texas?

Migration from California to other states
Migration from California to other states – top 3 states are conservative states

A lot of young people seem to be really excited about socialism, and they want the United States to give it a try. They don’t know where socialism has been tried, and they don’t know what happens with it is tried. It just sounds nice to them.

Well, if you were going to pick one of the most socialist states in the United States, no one would fault you for picking California, where Democrats are running everything, and have been for a long time.

The Washington Free Beacon explains what happened next:

The number of Californians leaving the state and moving to Texas is at its highest level in nearly a decade, according to data from the Internal Revenue Service.

According to IRS migration data, which uses individual income tax returns to record year-to-year address changes, over 250,000 California residents moved out of the state between 2013 and 2014, the latest period for which data was available. The tax returns reported more than $21 billion in adjusted gross income to the IRS.

Of the returns, 33,626 reported address changes from California to Texas, which has been the top destination for individuals leaving California since 2007. Californians who moved to Texas between 2013 and 2014 reported $2.19 billion in adjusted gross income.

[…]“California’s taxes and regulations are crushing businesses, and there are more opportunities in Texas for people to start new companies, get good jobs, and create better lives for their families,” said Nathan Nascimento, the director of state initiatives at Freedom Partners. “When tax and regulatory climates are bad, people will move to better economic environments—this phenomenon isn’t a mystery, it’s how marketplaces work. Not only should other state governments take note of this, but so should the federal government.”

According to Tom Gray of the Manhattan Institute, people may be leaving California for the employment opportunities, tax breaks, or less crowded living arrangements that other states offer.

“States with low unemployment rates, such as Texas, are drawing people from California, whose rate is above the national average,” Gray wrote. “Taxation also appears to be a factor, especially as it contributes to the business climate and, in turn, jobs.”

“Most of the destination states favored by Californians have lower taxes,” Gray wrote. “States that have gained the most at California’s expense are rated as having better business climates. The data suggest that may cost drivers—taxes, regulations, the high price of housing and commercial real estate, costly electricity, union power, and high labor costs—are prompting businesses to locate outside California, thus helping to drive the exodus.”

Just recently, I heard some of my Democrat co-workers laughing to each other about “trickle-down economics”, which is the “ridiculous” idea that if you allow businesses and workers to keep what they earn, then you’ll get more economic growth than if the government takes the money to study the drug use patterns of sex workers in the far East. Actually, we’ve been trying socialism-lite in this country for the past 7 years. How has it worked? Well, Obama has averaged 1.2% GDP growth through his presidency, far below average. And in order to get even that little growth, Obama will double the debt from 10 to 20 trillion in just 8 years.

Debt increase under Barack Obama
Debt increase under Barack Obama

But what about tax cuts? Do tax cuts create economic growth?

The conservative Heritage Foundation think tank describes the effects of the Bush tax cuts.

Excerpt:

President Bush signed the first wave of tax cuts in 2001, cutting rates and providing tax relief for families by, for example, doubling of the child tax credit to $1,000.

At Congress’ insistence, the tax relief was initially phased in over many years, so the economy continued to lose jobs. In 2003, realizing its error, Congress made the earlier tax relief effective immediately. Congress also lowered tax rates on capital gains and dividends to encourage business investment, which had been lagging.

It was the then that the economy turned around. Within months of enactment, job growth shot up, eventually creating 8.1 million jobs through 2007. Tax revenues also increased after the Bush tax cuts, due to economic growth.

[…]The CBO incorrectly calculated that the post-March 2003 tax cuts would lower 2006 revenues by $75 billion. Revenues for 2006 came in $47 billion above the pre-tax cut baseline.

Here’s what else happened after the 2003 tax cuts lowered the rates on income, capital gains and dividend taxes:

  • GDP grew at an annual rate of just 1.7% in the six quarters before the 2003 tax cuts. In the six quarters following the tax cuts, the growth rate was 4.1%.
  • The S&P 500 dropped 18% in the six quarters before the 2003 tax cuts but increased by 32% over the next six quarters.
  • The economy lost 267,000 jobs in the six quarters before the 2003 tax cuts. In the next six quarters, it added 307,000 jobs, followed by 5 million jobs in the next seven quarters.

The timing of the lower tax rates coincides almost exactly with the stark acceleration in the economy. Nor was this experience unique. The famous Clinton economic boom began when Congress passed legislation cutting spending and cutting the capital gains tax rate.

Regarding the “Clinton economic boom”, that was caused by supply-sider Newt Gingrich passing tax cuts through the House and Senate. Bill Clinton merely signed the bills into law.

Very important to compare times and places where socialism has been tried to times and places where free enterprise and limited government have been tried. We know what works. It may not be what makes us feel smug, but we know what works.