Saturday, July 22, 2017

Unemployment

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Flood Gates
What are you doing, Trump Administration?! Stop!

The DHS believes that there is a gap between the demands of businesses and the number of “qualified and willing U.S. workers,” and announced on Monday that they are looking into increasing the number of seasonal workers granted access into the United States.

Businesses have been actively pushing for an increase in H-2B program, arguing that there are not enough Americans that are willing to fulfill their temporary employment need. However, this move could adversely impact the unemployed of America, as noted by Roy Beck, President of NumbersUSA, an advocate for reduced immigration.

Beck argued, “Sec. Kelly’s decision to increase H-2B foreign workers threatens to reverse the trend of reports emerging around the country of employers working harder and raising pay to successfully recruit more unemployed Americans for lower-skilled jobs.”

“This is yet another example of the administration and Congress failing to keep the Trump campaign promise of putting American workers first,” He added. ‘

However, Secretary of Homeland Security, John Kelly disagrees. “Congress gave me the discretionary authority to provide temporary relief to American businesses in danger of suffering irreparable harm due to a lack of available temporary workers,” said Secretary John Kelly. “As a demonstration of the administration’s commitment to supporting American businesses, DHS is providing this one-time increase to the congressionally set annual cap.”

The number of H-2B visas had been capped for this year at 66,000. With Mar-a-Lago President Trump’s Florida resort looking to hire sixty-four workers under this program.

The decision faced further criticism as Iowa Republican Sen. Chuck Grassley and Illinois Democratic Sen. Dick Durbin issued a statement, “A growing body of evidence shows that our increasing reliance on the H-2B visa program hurts wages for American workers.”

Since, the DHS’s announcement came during the government’s as “Made in America Week,” the DHS’s announcement is garnering a lot of attention – and criticism. However, one DHS official noted “We’re talking about American businesses that are at risk of suffering irreparable harm if they don’t get additional H-2B workers,” he said. “This does help with American businesses continuing to prosper.”

Jessica Vaughan, director of policy studies at the Center for Immigration Studies on the other hand argued, that instead of “propping up unsustainable businesses by allowing them to become so dependent on foreign workers,” the Trump administration should consider providing incentives that promote employers to hire the “hundreds of thousands” of Americans that are looking for entry-level work.

Interestingly enough, opposition to the DHS’s announcement has taken a bipartisan turn. Sen. Charles E. Grassley (R-Iowa) and Sen. Dianne Feinstein (D-Calif.), the ranking Democrat on the committee released a statement in opposition.  “This move by leadership and appropriators cedes portions of this authority to the executive branch without a public debate,” Grassley and Feinstein said. “We understand the needs of employers who rely on seasonal H-2B workers if the American workforce can’t meet the demand, but we are also aware of the potential side effects of flooding the labor force with more temporary foreign workers, including depressed wages for all workers in seasonal jobs.”

The DHS had limited the number of immigrant workers entering the United States to 15,000 while providing the DHS complete authority to raise this number if need be. “The increase represents a 45 percent bump from the number of H-2B visas normally issued for the second half of the fiscal year, said senior Homeland Security officials in a call with reporters” notes the Washington Post.

The DHS blamed Congress for delaying the decision being made about the hiring of seasonal workers and pushing it into summer and announced that they are “committed to protecting US workers and strengthening the integrity of the US immigration system.”

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Jobless Seattle
After looking at what happened in Seattle, there are people that still believe we should pursue the same policy at a national level...

While, Seattle Mayor Ed Murray continues to favor the $15 minimum wage law, as he stated, “Raising the minimum wage helps ensure more people who live and work in Seattle can share in our city’s success, and helps fight income inequality.”

A study conducted by the University of Washington on the other hand, argues: “Using a variety of methods to analyze employment in all sectors paying below a specified real hourly rate, we conclude that the second wage increase to $13 reduced hours worked in low-wage jobs by around 9 percent, while hourly wages in such jobs increased by around 3 percent. Consequently, total payroll fell for such jobs, implying that the minimum wage ordinance lowered low-wage employees’ earnings by an average of $125 per month in 2016. Evidence attributes more modest effects to the first wage increase. We estimate an effect of zero when analyzing employment in the restaurant industry at all wage levels, comparable to many prior studies.”

“If you’re a low-skilled worker with one of those jobs, $125 a month is a sizable amount of money,” Mark Long, a UW public-policy professor and an author of the report told the Seattle Times. “It can be the difference between being able to pay your rent and not being able to pay your rent.”

Jacob Vigdor, co-author of the study stated, “The goal of this policy was to deliver higher incomes to people who were struggling to make ends meet in the city.”

“You’ve got to watch out because at some point you run the risk of harming the people you set out to help,” Vigdor added.

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Obama_golf

The U.S. economy created 295,000 jobs in February, dropping the unemployment rate to 5.5%–the lowest its been since 2008, before the economic collapse.

But despite these numbers looking rosy on the surface, the fundamentals of our economy remain weak–largely because no one wants to work anymore.

And worse, as of February, our workforce participation has dropped even further–continuing its streak of hovering near historic lows. Based on the last few months of data, the workforce participation rate shows no sign of improving any time soon either.

As of now, workforce participation stands at a pathetic 62.8%.

That means, of the 250,000,000 Americans that could conceivably be in the workforce (Americans over the age of 16), only 147,000,000 are. More than 93,000,000 Americans of working age don’t have a job, and aren’t even bothering to look for one. They’re unemployed, but they’re not counted in the unemployment rate.

A 62.8% workforce participation rate isn’t just a bad number. It’s a historically bad number, just 0.1% off of the all-time low, a record which was set in 1978 at the height of Jimmy Carter’s “malaise” era of economic dysfunction.

As troubling as the low workforce participation rate is, it’s important to realize the economic repercussions. A 5.5% unemployment rate looks good on paper–but that low number is partially due to more Americans leaving the job force in February.

When 37.2% of Americans have given up looking for a job, or simply don’t want to work, even a 5.5% unemployment rate doesn’t signal a booming economy. Workers continue to be discouraged and demoralized by the Obama Recovery.

While the February employment numbers signal a cautiously optimistic direction overall, it’s important to remember that we’re not out of the woods: the economy has not bounced back yet.

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High Unemployment

The simple answer is: a global economy.

But a lengthier explanation is due. As long as we, as a nation, import more than we export we will have enough goods to fill the needs of all of the populace without requiring the labor of all of the populace to produce those goods.

Some say it is because too many companies outsourced jobs. But whether an American company hires workers in a foreign land or buys and imports products from a foreign company, the result is the same. It still comes down to the imbalance between what is manufactured here and what is consumed here. Imports vs. exports.

Others blame automation, but that’s not new. The industrial revolution caused the loss of some jobs, but created others. In a closed economy, where most everything was produced here, many people were needed to manufacture whatever was in demand. But in a global economy, all of our labor is not needed to satisfy all of our needs. It’s as simple as that.

What isn’t simple is a viable solution.

We didn’t get to this point overnight. Nothing can be done that will reverse the trend overnight. If you drive your car in the wrong direction and eventually turn around, it will take you about as long to get back to where you started as it took to get to the wrong place.

A good starting point – the first step in turning around – would be to lower our corporate tax rate. It is currently higher than just about every other industrialized nation. We shouldn’t be surprised by the actions of some companies to avoid those taxes. An increasingly popular process, where an American company buys a foreign company and moves their headquarters to that other nation, is called “tax inversion”,

It’s also been called unpatriotic – mostly by people who don’t understand business. A business must make a profit. Otherwise it will go out of business. Unlike the government, which can make terrible decisions but never go out of business, companies must make decisions that ensure profitability. It has nothing to do with patriotism. If the company fails, it will be unable to employ anyone. Now that might be considered unpatriotic.

But if our federal tax rate was lower than other nations, our companies would be more competitive, which is good for their bottom lines. Lowering the tax rate just might reverse the trend toward inversions. Foreign companies might want to employ that trick to lower their taxes by relocating to the US.

The more we manufacture, the more we can export and the less we need to import. More manufacturing in the US would employ more Americans.

Balanced trade is the best cure for unemployment.

Before fiat monetary systems replaced the gold standard, international trade had to balance. If it didn’t, nations that imported more than they exported had to pay the difference in gold. Once we went off the gold standard balanced trade was no longer considered necessary.

I don’t expect to see the gold standard re-instated any time soon, but that doesn’t mean we can’t at least try to balance trade. The best first step toward that goal would be to create a tax code that encourages businesses to locate in the US – and stop penalizing companies that do.

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