Which Is The True Workers’ Party?

Labor Day is typically considered to be the end-of-summer holiday by many Americans, but the holiday originated in the late 1800s as a day to celebrate America’s labor movement. As such, it was closely identified with labor unions for much of its history. On this Labor Day, with elections more than a year away already heating up, it’s appropriate to consider the relationship of both parties to workers.

Democrats have traditionally tried to coopt Labor Day due to their close association with the unions. Today’s Democratic Party, with its newly popular contingent of democratic-socialists, is no different. The Democrats pay lip service to workers, but many of their policies are proven job-killers and ultimately hurt the very people that they try to help. Higher taxes, business-strangling regulations, and mandates that add to the cost of doing business all serve to slow the economy and prevent job creation.

That the Democrats have alienated their blue-collar base is apparent from the fact that Donald Trump is sitting in the White House instead of Hillary Clinton. Trump’s victory was clinched in the Rust Belt states that were traditionally assumed to be safely tucked behind a Blue Wall.

Many of the proposals from the 2020 Democrats aren’t much better – or different - than what Hillary tried in 2016. There are proposals for rolling back the 2017 tax reform, raising the minimum wage, and nationalizing healthcare. None of this bodes well for the economy or for workers.

But if Democrats have disregarded their blue-collar base so have Republicans. Although the Trump Administration got off to a good economic start with tax reform and deregulation, it went off the rails in 2018 with the trade war. Although the tariff war was pitched as strategy to help workers and strengthen US industry, the opposite has turned out to be true.

The trade war was originally launched to help the US steel and aluminum industries, but American steel companies are shutting down mills and laying off workers. Why? Because overproduction paired with declining demand from other industries led to a sharp decline in steel prices despite Trump’s attempt at protectionism.

It isn’t only steelworkers who are suffering from the trade war. The agricultural and manufacturing sectors have both been hard hit as well. Despite the president’s farm subsidies, US farm income has fallen precipitously, leading to higher rates of farm bankruptcies and suicides by frustrated farmers. A boom in manufacturing jobs in Trump’s first two years has already turned flat as manufacturing declined for two straight quarters in the first half of 2019, putting the industry in a recession even before the most recent rounds of tariff increases.

The month of September ushered in one of those rounds of tax increases. President Trump’s new 15 percent tax on 40 percent of consumer products imported from China will be borne heavily by blue-collar workers and their families. JP Morgan Chase notes that the new tax will cost the typical American household more than $1,000 annually. Previous rounds of tariffs had almost totally erased the benefits of tax reform per Accounting Today so the September tariffs will put taxpayers firmly in the red. And there is yet another round of US tariffs scheduled to go into effect just in time for Christmas.

The new tariffs on Chinese goods will have an outsize effect on lower and middle-class consumers because lower-income Americans are more dependent on cheap imports from China. The poor are also least able to afford the 15 percent tax on everyday items such as clothes, shoes, electronics, plastic items, computers, and furniture.

At this point, it probably seems to most voters that both parties are bad for workers. The Democrats are intent on milking businesses for every cent that they can get while Republicans are oblivious to the collateral damage of their Quixotic trade war. Both are too focused on their own priorities to pay attention to the fact that neither party is popular with average Americans.

Rather than telling workers what is best for them and informing taxpayers that they should be grateful for the chance to “invest” more of their hard-earned money in the priorities of the party base, maybe politicians of both parties should listen to the concerns of the workers they are supposed to serve.

Originally published on The Resurgent

July jobs report not rosy in spite of unemployment decline

The July Jobs report from the Bureau of Labor Statistics unveiled a headline unemployment number that edged down slightly to 7.4 percent as the economy added 162,000 jobs. In spite of the decrease in the overall unemployment estimate, the report does not paint a bright picture for the jobs market. A forecast of economists by Bloomberg had predicted an increase of 185,000 new jobs.

Buried in the report, the Civilian Labor Force Participation Rate actually fell from 63.5 to 63.4 percent as job creation did not keep pace with population growth. According to BLS historical statistics, the rate reached a recent high in January 2007 at 66.4 percent before the onset of the recession. The rate has continued to decline during Barack Obama’s presidency from 65.7 percent in January 2009.

It might seem inconsistent that the labor participate rate declined at the same time that the unemployment rate fell. The answer can be found in the report’s measure of discouraged workers, people who are “not currently looking for work because they believe no jobs are available for them.” The number of discouraged workers rose sharply to a total of 416,000. The 136,000 increase in discouraged workers who dropped out of the workforce is almost equal to the number of workers who found jobs. The U-4 unemployment rate which adds discouraged workers to the headline unemployment rate is at 8.0 percent.

More bad news is that the number of workers who hold part-time jobs increased as well. This includes workers who work part-time for economic reasons such as the inability to find full-time work or declines in demand as well as those who work part-time because of noneconomic commitments such as family or school. These workers are considered “marginally attached” to the workforce. The U-6 unemployment rate which includes both discouraged and marginally attached workers is 14 percent.

As more part-time workers entered the work force, the average work week shortened to 34.4 hours, 0.1 hours shorter than June. The average work week for production employees was even shorter at 33.6 hours. Similarly, earnings for all employees fell by $3.09 and for production employees by $2.02.

Overall, the Yahoo News noted that 65 percent of the new jobs were part time. The industries with the largest numbers of new jobs were in low-paying sectors such as retail (47,000) and restaurants and bars (38,000). Professional and business services also added 36,000 new jobs.

One reason for the increase in the rate of part-time jobs created is the Affordable Care Act. New employment taxes in Obamacare encourage companies to avoid hiring full-time workers that will be subject to the provisions of the health care law that is scheduled to go into full effect in 2014.

Fifty-two percent of the unemployed have been out of work for more than 15 weeks. Thirty-seven percent have been unemployed for more than 27 weeks.

A final item in the report notes that employment figures for May and June were lower than previously estimated. These numbers were revised down by a total of 26,000 jobs.

Originally published on Atlanta Conservative Examiner.

Election myth: Does the GOP want to ship jobs overseas?

The third common myth being spread by Democrats this election season is that Republicans want to send American jobs to other countries. This is an obvious exaggeration. No politician of either party would want to send his or her constituents’ jobs out of their district and to another country. You don’t get re-elected that way and, above all else, most politicians want to get re-elected.

The question then becomes how best to preserve American jobs. President Obama and the Democrats believe that companies who move jobs to other countries should be punished through higher taxes or the elimination of tax breaks. A bill currently stalled in the senate purports to do just that.

However, it isn’t only Republicans that oppose this bill. At this point, Republicans don’t have the numbers to prevent passage of legislation by themselves. Some Democrats, including Max Baucus, chairman of the Senate Finance Committee, have joined the Republicans and business groups in opposing the bill on the grounds that it will make US companies less competitive.

On the other hand, conservatives believe that American companies will create jobs in the US if the government makes it cost effective for them to do so. There are many reasons that companies outsource jobs, but one of the biggest is labor costs. American workers are highly compensated, especially when non-salary benefits such as health insurance are considered. Workers in less developed nations are willing to do the same work for much less money.

Regulation is also a factor. The US has a dizzying array of complex regulations governing everything from environmental concerns to zoning. Some of these regulations are needed and some are not. Good or not, the cost of complying with government regulations can be significant. Other countries may have a regulatory environment that is easier to navigate.

Obamacare provides a good example of both employment costs and regulation. First, the mandates for increased coverage in the health care law are increasing the cost of health insurance coverage for companies. There will also be penalties if employers do not provide coverage for their employees. Second, there are new regulatory requirements in the health care law as well. One of the most well known is a requirement that companies issue 1099s to any company or individual with which they do more than $600 of business. The massive new costs associated with hiring and providing insurance for American workers may prove to be a powerful incentive for companies to move operations to other countries.

Add to this that the United States has one of the highest corporate tax rates in the world, even before state and local taxes are considered. When all these factors are considered, the US appears to have a somewhat unfriendly business climate.

The news is not all bad though. The stability of the United States and its status as a large consumer nation do help to attract foreign businesses to our shores. The Kia factory in West Point, Georgia is one example of the “insourcing” of foreign businesses to our state.

There are answers to many of these problems. A true reform of health care with an eye toward lowering costs would be a major step forward. Easing the grip of unions so that wages can be determined by the market would also help. Lowering taxes would give companies much needed capital to grow their businesses. Finally, streamlining bureaucracy and eliminating the regulations that don’t make sense would also help.