by Dick Baynton
A new national JOBS report came out recently from the US Department of Labor. According to the report, unemployment fell to 8.1%, slightly less than it had been for the past few months and the lowest rate since January 2009. Good news, the President exclaimed! Looking deeper, however, the number of jobs added amounted to just 115,000, the lowest increase since October of last year according to the Labor Department.
This new lower unemployment rate sounded good but another problem appeared in the minds of skeptical politicians and analysts. The main reason for the percentage of improvement of unemployment was that 342,000 people left the labor force. Some retired from their jobs while many other men and women simply gave up looking for work.
This means that at this time there are about 12.5 million men and women US citizens looking for work. Causes of the current employment situation vary by geographic area and industry. However, many observers agree that the main impediments of the unpredictable jobs market are uncertainty of tax burdens, new and emerging government regulations and existing healthcare commitments in addition to new government entitlement mandates.
Consider that the Federal government has more than 70,000 pages of complex tax code that grows at a rate of about 2,000 pages per year. Special federal, state and local regulations are growing at about 15% per year, adding huge overhead expenses to businesses in all industries to assure compliance. The construction sector, especially residential housing, has been suffering for several years largely as a result of pressures by government agencies to lower (mortgage) credit standards by banks and other lending institutions.
President Obama is urging Congress to take actions that will accelerate job growth, but has not offered any specifics. Many of the President’s past ideas have produced no substantial job increases. The $800 Billion stimulus package of 2009 aimed in part to fund ‘shovel-ready’ public works projects provided a dismally small amount of additional work. Subsidies to ‘green’ industry developments have uncovered poor management, poor planning or lack of efficient employment of capital, or all of the above.
Here is an added problem when the government steps in with special incentives: the Federal government is picking winners and losers with capital that is borrowed from China and other countries. The operating record of Federal government running businesses is beyond mediocre when considering losses at Amtrak, the US Postal Service and Fannie Mae and Freddie Mac.
Link these problems with current restrictions on coastal drilling, the delay on approving the Keystone Pipeline from Canada to the US Gulf and restricted drilling on federal lands that drive up fuel costs which hinders almost all segments of the job market.
While some of Romney’s critics accuse him of ‘getting rid’ of employees at some of the companies Bain Capital acquired, it is to his credit that he and his colleagues were improving the efficiency of companies that were at risk. In addition to improving productivity and profitability of acquired enterprises, Romney points out that Bain Capital also created thousands of jobs as companies turned around and became profitable.
A point to remember: Mitt Romney risked his own and borrowed capital and became wealthy using business skills without the benefit of politics. Many wealthy politicians get it backwards by becoming wealthy because of their political connections. By way of promoting his concepts for solving the enigma of jobs creation if elected President, Mitt Romney has said, “This is a time when America wants to have someone who knows what it takes to create jobs and get people working again.”