Is Washington Killing Employment? - Even in a Recovery, Some Jobs Won't Return - WSJ.com

Even in a Recovery, Some Jobs Won't Return - WSJ.com

We might also focus on the big picture re: employment.

Ask some questions:

1) What is employment?

Ans. It's the part of the production equation:
Production = raw materials + labor + capital

2) What might the US do to improve its demand for labor?

Ans. The obvious first answer is if nothing else changed, the cost of labor has to come down. This could mean the actual wage paid or it could mean the total cost to the employer of hiring an employee (i.e. all the mandated other costs, including social security through healthcare, etc. - sometimes suggested to be at 300-400% of the actual gross wage).

3) What is the impact of this anti-bank, let's tax capital approach currently being discussed by populists and the administration and congress?

As in the above equation, if the production sale price is to be held constant, if the cost of labor is high and the cost of capital goes up, then something else has to give. It appears unlikely that raw materials are going to get cheaper, so the answer can be that the business closes down because it's no longer profitable or sustainable (as with GM and its bankruptcy).

SUMMARY: Solutions to unemployment should involve the basics, but they don't. Rather we are hitting business with every negative impact we can: the dollar is declining (in part because the US wants to see it go down and in part because of high government borrowing, etc.) so raw materials will cost more to import (think of fuel as a start); labor costs are going up even if workers don't see it in the paycheck, they are just being asked to support additional government sponsored benefits (are they really a benefit if you don't have a job); and, by raising the cost of capital, it makes it harder to compete and can put American-based companies at a global disadvantage.

But, you take your choice; and, while there are laments at the employment picture coming from Washington, it's Washington policies that are driving away jobs!