Friday, September 02, 2011

Shut Out

The August 2011 employment report shows that nonfarm employment in August was exactly what it was in July, for a net increase of zero jobs: "Nonfarm payroll employment was unchanged (0) in August, and the unemployment rate held at 9.1 percent, the U.S. Bureau of Labor Statistics reported today."

That is tough, especially with Obama giving a jobs talk next Thursday. There is something about that number zero that stands out.

Why is employment growth so slow? Nobody really knows of course. Animal spirits, as Keynes might have said, are not very aggressive right now.

I would point out some of the regulatory issues, however. The health reform act, whatever we think of its merits, was passed right when we were emerging from the recession. I wonder how many people actually know its major taxes and penalties? A few colleagues of mine just the other day discovered that the Medicare tax will be increasing for them. And for employers, do they really understand what the employer mandate does? If they don't provide insurance, there is a $2,000 fine for every employee they have, if even one employee buys subsidized insurance on an exchange. And if an employer provides insurance but it is not "affordable" then there is also a fine. The details are excruciatingly difficult to understand.

Obama's reversal today on ozone rules reflects at least a recognition of the political aspects of new regulations.

In my own world of academia, there is a new set of conflict of interest rules issued by National Institute of Health. Whereas before, researchers had to report their investments only when they believed a conflict existed, the new rules require researchers to report investments that are related to any of their institutional responsibilities, instead of only ones that are related to research activity. It will be up to the university to figure out if the investment is related to the research and if a conflict exits. This will require significant work. Again, whatever we think of the merits, let's be sure to understand the costs. (And let's not think of this as employment-increasing!)