U.S. Labor Secretary Perez provided a happy note on employment figures in the latest BLS release:
The economy in May continued its steady recovery from the Great Recession, and we have now added 9.4 million new private-sector jobs over 51 consecutive months. The economy generated 217,000 new jobs in May — the fourth consecutive month exceeding 200,000 new jobs — and the unemployment rate held steady at 6.3 percent.
Music to the ears of Nevadans still struggling to find jobs or full time employment. The next portion of Perez’s remarks might also find empathic ears in the Silver State — there are still 3.4 million Americans experiencing long term unemployment. Current estimates have approximately 20,000 Nevadans in the LTU category. [DB]
Flies in the Ointment
Long term unemployment: Efforts by Nevada’s Senators have yet to yield any positive legislative results for those having that unfortunate long term unemployment experience. [LVRJ] The previous attempt to address the problem expired on May 31st, and Senators Heller (R-NV) and Reed (D-RI) are trying to create an acceptable bill to alleviate the problem. [NatJ]
The fate of these efforts, of course, hangs in the House of Representatives in which Speaker John Boehner has said he will not bring a bill forward unless it speaks to “job creation.” [NatJ] In Boehner parlance this has nothing to do with spending for infrastructure related employment or job training funds, the Speaker clearly means more tax cuts. For example, House Republicans considered the research and development tax credits to be Job Creators — at the cost of $156 billion over the next decade with no offset to cover the expense. And, of course, the House GOP would like to make these and other tax extenders permanent. The reasons should be clear when we look at what the tax extenders actually do.
“The largest tax extenders include the general research and experimentation (R&E) tax credit and a provision that allows financial services firms to defer corporate taxation indefinitely on some foreign earnings. Other extenders allow select industries such as retail, restaurants, and movie and television production to claim greater up-front tax deductions. In addition to these corporate provisions, there are a number of individual tax extenders, the largest of which is the deduction for state and local sales taxes, as well as a group of energy tax extenders.” [CBPP] (emphasis added)
If this begins to appear as though there are some very specific corporations and sectors lining up for some very helpful tax benefits — all of which would add to the federal deficit, and some of which aren’t all that useful to the overall economy — you’ve got the picture.
Not to be entirely too blunt about it, but the 1.3-3.4 million long term unemployed Americans including the 20,000 Nevadans, may not see any relief unless the House Republicans can get indefinitely deferred corporate taxation on foreign earnings.
Exactly how indefinitely deferring corporate taxes on foreign earnings translates into American jobs is one of those Mysteries of the Trickle Down Cult. We are to accept on faith that when the sacrificial offering is made — education, Medicare, job training, SNAP, etc. — the smoke and incense rising from the Capital Dome will please the megalomaniacs such that they will stop using assets to fund stock buybacks and stashing money in off shore accounts, and will, instead, expand their enterprises. The fact that we’ve not actually seen this happen in the last 40 years only means, according to the Cultists, that we’ve not clapped our hands hard enough.
So long as the Trickle Down Cult maintains its altars in the offices of various members of Congress, and appeases the demi-gods of K Street Lobby Shops, the prospect of any assistance for the long term unemployed remains dim.
Differentiated Rates: The unemployment rate varies by ethnicity and gender — adult males have a 5.9% unemployment rate, adult females a 5.7% rate. African Americans have an 11.5% unemployment rate, Hispanic workers a 7.7%, and Asian’s a rate of 5.3%. Whites have a 5.4% overall unemployment rate. African Americans constitute about 8.9% of Nevada’s population, Hispanics about 27.3% and whites some 77.1%. [Census]
It would be ever so much more helpful if the bigot brigades would lay down their epithetic weaponry and stop calling the unemployed “lazy takers,” who would rather sit on the stoop and drink beer than seek gainful employment. If 88.5% of African Americans, for example, ARE employed, and 92.3% of Hispanic Americans ARE working then that says far more than their critics may be wont to admit. If we want to address the variations in unemployment rates then business & manufacturing locations, educational and job training opportunities, and transportation need to be included in the discussion.
Unnatural natural unemployment rate: An unpleasant feature of the unemployment discussion, whether discussing rates for long term unemployment or rates for diverse sub-communities, is that we may be looking at a “new normal” as that pertains to the natural unemployment rate. Heretofore, we’ve assumed a natural unemployment level of about 4.5%. When the professional forecasters from the Federal Reserve discussed the Recession and employment in 2011 the natural unemployment rate was up to 6.7%. The rate is now reported (Q2 2014) at 5.5%. [FRED] The fact that the natural rate is dropping is good, and 5.5% certainly looks better than the 6.7% of three years ago. However, unless steps are taken which directly meet the needs of the unemployed (funding infrastructure related employment, funding public services, funding job training), we could be looking at an increase of perhaps 1.5% to 1.7% in the natural rate. In other words, in our new normal — more people are going to be unemployed.
Three flies in our happy ointment are sufficient for one day, although we do need to talk about wage stagnation, and the increase in employment which pays lower wages than what a person had previously been making. Let’s leave that for another day, and be pleased for the moment that the private sector is adding jobs, and has been doing so for the last 51 consecutive months.