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!)
7 comments:
You must be playing this for laughs. Lets compare the magnitude of uncertainty:
1) Euro Crisis.
2) Possible changes in regulation.
Right, I forgot that the market dropped 20% because of #2.
What's in the water up there? Or are you working for Bachmann?
Dean Hansen,
Thanks for writing back. It is very exciting to get your insights. I hope you will blog more about current news.
I was impressed by your honest admission that you were wrong about the financial crisis. I hope you won’t mind if I ask you another question. I was surprised to see that you are both a fan of the Tea Party and an admirer of George W. Bush. They seem very different to me. What are the policies that you support?
Anonymous,
Am I a fan of the Tea Party? Where did you get that from? I think they have some good ideas, and G.W. Bush had some good policies. To put me as a fan, well that might be going a bit far. Bush also did very little to control spending and did nothing to fix our tax code, and I don't appreciate that. So an "admirer" of GW Bush, that might not be accurate either (although I did have a vive Bush bumper sticker for a long time, partly just to irritate the neighbors).
As I say in my blog, I tend to the Libertarian side of things. That seems to me to be the only philosophically consistent political party -- certainly the Republicans and Democrats are full of inconsistencies.
As I say in my
And as for the other anonymous,
Yes the Euro crisis right now is certainly adding a lot of uncertainty as to what the level of demand is going to be -- maybe in some other areas too, such as the availability of credit.
But the changes in health care laws directly change the profitability of hiring workers, and even the conflict of interest law that I mentioned directly increases the costs of running a university. Ditto for the ozone law.
And I wasn't claiming that these were the biggest or only factors that are reducing the demand for labor. There are indeed many. Which ones are in the control of the US administration -- that might be the real question.
Dean Hansen,
I’m sorry for my impertinence. I didn’t intend to anger you. I will leave you alone.
Professor Hansen,
Is this what $54K is buying? ANONYMOUS wants to know your thoughts on policy. She asks a reasonable question. Why blow her off with a denial?
Seems to me she has you dead to rights on Bush and the Tea Party. I’ve looked through your postings. You posted signs in your yard for Bush, had a “Viva Bush” bumper sticker and sent Bush valentines in your blog. Sure sounds like an “admirer”. As for the Tea Party, you are a fan of Sarah Palin and have made favorable references to the Tea Party.
ANONYMOUS is right. Bush and the Tea Party propose very different policies. She asked to be educated. I would have thought you would see it as an opportunity to teach.
Thanks so much for this article, quite useful piece of writing.
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