Is the Outlook for Jobs Very Bleak?

An opinion piece in The Wall Street Journal this week paints a very gloomy picture for jobs in America.  According to the article, at least one third of the 162,000 new jobs created in March were temporary census jobs and the actual new jobs created were insufficient to keep up with population growth.  In addition, the American Economy has fallen behind by 11 million jobs since the start of this “Great Recession” and if job growth were to take off in the near future, it still might take up to eight years to catch up to where we were in 2007.  Finally, Americans with jobs are accepting lower pay and lower benefits just to keep their current jobs.  Is the outlook for jobs really this bleak?  More importantly, is there anything we can do to fix this situation?

While you can argue exactly how bleak the jobs picture is today, it is true that it’s a bad situation.  According to the Bureau of Labor Statistics, 9.7% of Americans were unemployed in March 2010.  In the more inclusive measure, the so-called U-6 metric that includes various categories of discouraged workers and part-time workers that settled for part-time work because they couldn’t find full-time employment, the rate is 16.9%.  Plus, these numbers are seasonally adjusted.  The non-seasonally adjusted numbers are worse.  They are 10.2% and 17.5% respectively.

Given the the expiration of the Bush tax cuts, the new Medicare Payroll Tax, and other new taxes proposed at the State levels, we can expect unemployment to increase.  I also believe the net/net impact of the new Health Care Law will be to increase unemployment further.  Consider, for example, the polling data on doctors who said they would consider leaving their practices if the Health Care Bill were passed.  Consider, also, the fact that the Health Care Law takes over the health care industry with incredibly burdensome regulations.  This is a de facto tax on the economy.

Economists know from many examples over decades of time, that taking money out of the private sector with taxes and spending it through various government programs, is less productive that allowing individuals and companies to invest it as they believe is best.  The private sector is simply more productive than the public sector.  The coming tax increases and possible new taxes such as a Value-Added Tax (VAT), Cap-and-Trade Taxes, Carbon Taxes, and even taxes on services such as health clubs, consultants, tax preparers, spas and a whole list of other services will only hurt unemployment further.

The government needs to stop spending wildly and stop taxing Americans so much.  Cutting taxes as I have said before will spur new investment, new businesses, new jobs, and even more revenue for the government.  One quick example.  The JFK taxes cuts in the 1960’s resulted in the LOWEST unemployment rate in 30 years.

The outlook for jobs might be very bleak today.  But, the probem can be fixed quickly with better tax policies.

Indeed, these battles over taxes are just another front in “America’s Economic War” between American Capitalism and socialism that is covered in my recently released book.

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