Obama's Job Cremation

Why the Jobs Situation Is Worse Than It Looks - We now have more idle men and women than at any time since the Great Depression


In the face of the most stimulative fiscal and monetary policies in our history, we have experienced the loss of over 7 million jobs, wiping out every job gained since the year 2000. From the moment the Obama administration came into office, there have been no net increases in full-time jobs, only in part-time jobs. This is contrary to all previous recessions. Employers are not recalling the workers they laid off from full-time employment.

The real job losses are greater than the estimate of 7.5 million. They are closer to 10.5 million, as 3 million people have stopped looking for work. Equally troublesome is the lower labor participation rate; some 5 million jobs have vanished from manufacturing, long America's greatest strength. Just think: Total payrolls today amount to 131 million, but this figure is lower than it was at the beginning of the year 2000, even though our population has grown by nearly 30 million.

Job Cremation Council


Mr. Immelt chairs the President's Council on Jobs and Competitiveness, and Mr. Chenault is one of its 26 members. They've been at work for 90 days, developing their recommendations. Here are some of the thoughts they've come up with so far, which they enumerated in a Wall Street Journal op-ed article:
  • Send folks to community colleges and vocational schools. (If nothing else, this feels like work.)
  • Cut red tape. (We've been hearing about this pesky red tape forever and finally there's a White House-appointed committee with a magic pair of scissors.)
  • Improve visa processes so rich tourists from other countries can more easily visit. (Yes, come see the ancient ruins of the Anasazi, and the foreclosed properties surrounding them, known as America.)
  • Get loans to small businesses. (We've heard this before, too. Why can't GE and American Express just show us the money?)
  • Put construction workers back to work. (Yeah, go put up another vacant building. Or spray some foam insulation in occupied buildings, and President Obama will put out a press release touting green jobs.)
Comment: ObamaCare is a giant job killing bill!

Obama vs. ATMs: Why Technology Doesn't Destroy Jobs

The story goes that Milton Friedman was once taken to see a massive government project somewhere in Asia. Thousands of workers using shovels were building a canal. Friedman was puzzled. Why weren't there any excavators or any mechanized earth-moving equipment? A government official explained that using shovels created more jobs. Friedman's response: "Then why not use spoons instead of shovels?" That story came to mind last week when President Obama linked technology to job losses. "There are some structural issues with our economy where a lot of businesses have learned to become much more efficient with a lot fewer workers," he said. "You see it when you go to a bank and you use an ATM, you don't go to a bank teller, or you go to the airport and you're using a kiosk instead of checking in at the gate." The president calls this a structural issue—we usually call it progress. And it isn't exactly a new phenomenon. It's been going on for centuries, and its pace has accelerated over the past 50 years. Businesses relentlessly look for ways to replace workers with machines. The machines get better and smarter. We go from spoons to shovels to excavators, not the other way around. Telephone switchboard operators lose jobs to automated switching. Toll collectors get replaced by E-ZPass. Auto workers get replaced by robots. The magnitudes are stunning. As the Washington Post reported in 2007: "The textile industry has been particularly aggressive in replacing people with machines. A half-century ago, a typical North Carolina textile worker operated five machines at once, each capable of running a thread through a loom at 100 times a minute. Now machines run six times as fast, and one worker oversees 100 of them." That's a 120-fold increase in output per worker. When a worker is 120 times more productive, you usually don't need as many workers as you did before.


It's true, there are some structural issues in the labor market. New jobs are being created but not at the usual pace and not fast enough to soak up the unemployed. But President Obama is wrong to blame innovation. A bigger problem is housing, where hundreds of thousands of workers have lost their jobs. The source of that problem isn't technology but an over-reaching housing policy and distorted finance. The solution is to let the housing market clear—let interest rates rise, stop subsidizing mortgages, and clean up the foreclosure mess. That would let housing starts return to something like normal. The other challenge is simply confidence. Businesses aren't hiring because they're uneasy about the future. There's no easy way to instill confidence, but we know how to kill it—create uncertainty about taxes and regulations. Reducing that uncertainty would certainly help. In the meanwhile, enjoy the ATM machine and the kiosk at the airport with a clear conscience. Doing more with less is the road to prosperity. When confidence returns, even more Americans will share in the bounty from innovation.

Comment: The Obama adminstration is at war with the economy. Will be a one-termer (Carter 2)?

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