Category Archives: employment

The Forced Choice Fallacy: Employment and Education

NV Employment by Industry 2015 The Background: There are 1,418,000 Nevada residents in the state’s civilian labor force, and 7% of them are looking for work. The state has 1,254,300 individuals in the non-farm wage and salary category, up 3.4% since last year.  28.11% are employed in a single sector – Leisure and Hospitality. 5.41% are employed in construction related jobs.

Category  % of employment  change YOY
Leisure Hospitality 28.11% +5.1%
Trade, Trans, Utility 18.97% +3.8%
Prof Bus. Services 12.68% +2.8%
Government 12.13% 0%
Education/Health 9.68% +5.2%
Construction 5.41% +8%
Financial Activities 4.59% +0.7%
Manufacturing 3.33% +0.7%
Other Services 2.89% +3.7%
Information 1.12% -5.4%
Mining & Logging 1.08% -5.6%

(Source: Department of Labor, BLS)

The first table shows the situation at the present. Projections from NDETR estimate what employment will look like as of 2022.

Category Number of openings from Growth to 2022
Construction 24,580
Food Preparation/Service 23,100
Office & Admin Support 16,990
Transportation 12,640
Sales Related Occupations 12,120
Personal Care & Service 11,700
Management 8,660
Healthcare Practitioners  & Assts. 7,780 (+3,680 Support positions)
Business Financial Occupations 6,850
Production Occupations 6,530

*There are projected to be another 6,500 jobs in the Installation, Maintenance, and Repair occupations category; and, about 4,840 jobs related to Education, Training, and Library personnel positions. Of the 24,580 jobs in “Construction and Extraction” only 80 openings are projected to be in the “extraction” category related to “growth.”  In short, the Nevada economy of 2022 is projected to be much like the Nevada economy of 2015.

False and Forced Choices

Now that we have some hard data, and some rationally projected data about employment opportunities in Nevada extending to 2022, it’s time to take a gander at some of the policy decisions which need to be made about how to create expansion in the economy.

Here’s a classic example of how NOT to approach the issue:

“The left claims they’re for American workers, and they’ve got lame ideas, things like minimum wage. We need to talk about how we get people skills and qualifications they need to get jobs that go beyond minimum wage.”

Scott Walker, yesterday  [h/t Angry Bear]

First, the most recent entry into the GOP Candidate Bus separates “skills and qualifications” from issues about raising the minimum wage.  This seems to be an artificial forced choice – either one supports the minimum wage increases or one supports more education and training to become qualified for better paying jobs.  (Not that Governor Walker’s slashing of the higher  education budget makes his position comprehensible?)   It is humanly possible to support both increasing the minimum wage AND support additional resources for our post secondary educational institutions.  And, there are some practical reasons this would make sense for Nevada.

Secondly, let’s look at the minimum wage issue as a practical matter in Nevada.   Retail sales worker positions account for 7,450 of the 12,120 projected job openings due to growth in the NDETR estimations for 2022. Food and beverage service positions account for 13,260 of the total 23,100 food preparation and serving jobs estimated to be available by 2022.  What would punch up the economy of Nevada faster? Leaving the minimum wage at current levels for the expected positions in retail and hospitality sectors of the Nevada economy? Or, increasing the minimum wage for those 20,710 jobs?

A person earning $7.25 per hour working 40 hours per week for 50 weeks per year would earn $14,500.  A person earning $10.00 per hour working a 40 hour work week for 50 weeks would earn $20,000 annually.  If you are keeping score with your calculator – that’s a difference of some $113,905,000 available to be pumped into the local economy from those 20,710 jobs.  Since we know from the research that lower income workers spend more on basic household expenses, that’s an additional $114 million for groceries and supermarkets, clothing stores, housing and furnishings, and for transportation.  One more time – The GDP formula:

Gross Domestic Product Formula Remember, that “C” in the formula is Consumer Spending.  And, I can keep hauling out this graphic until it hits home that increasing consumer spending is an essential feature of what drives growth.

Now, about those “qualifications and skills..”

Where does one get additional training for higher paying jobs?  If a person did not intend to stay in a minimally paying food service job, or a low paying construction job, or a low pay office job, then where are the training programs for advancement?

Let’s assume for the first argument that an individual wants to advance in the same field as his or her entry level position.  Nevada has both public and proprietary post secondary educational programs available. [NVps pdf] On the public side, a person wanting to move up in the office might want to consider an associate’s degree in bookkeeping? Management?  The community colleges offer these programs throughout the state.  And, yes, a person earning more than a minimum wage might be better able to take advantage of the post secondary training available from the Nevada system.

How about a move from one occupation category to another?  What if our hypothetical prospective employee wants to move from a retail job into the field of medical or health information technology? There’s a program for that at Southern Nevada College.

In short, the most efficient and cost effective way to provide career pathways for economic improvement is to invest in our community colleges and technical education institutions.  These are also the best ways to assist older workers who are moving from declining fields to those in which some growth is expected.

What did the President have to say about community colleges?

“As the largest part of the nation’s higher education system, community colleges enroll more than 6 million students and are growing rapidly. They feature affordable tuition, open admission policies, flexible course schedules, and convenient locations. Community Colleges are particularly important for students who are older, working, or need remedial classes. Community colleges work with businesses, industry and government to create tailored training programs to meet economic needs like nursing, health information technology, advanced manufacturing, and green jobs.”

So, yes, it makes sense to provide support for post secondary education in Nevada.  Those “qualifications and skills” have to come from somewhere, and what better way than to expand the capacity of our post secondary programs to enroll and instruct those who want to advance in a chosen field or become qualified for employment in a new one.

Meanwhile, we have to acknowledge that a preponderance of the growth in this state is still in occupational categories such as retail sales and food service which are relatively low paying jobs, and from which we could expect much more robust economic growth by requiring if not a living wage of $15.00 per hour then at least an increase to $10.00.

No forced or artificial false choices are required: We really can do two things at once.

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Filed under Economy, education, employment, Nevada economy, nevada education, Nevada politics

Let Them Eat Pie In The Sky

Pie in the SkySo, the Senate version of a bill to extend unemployment benefits for the long term unemployed will be on the Senate floor on Friday (maybe), if Senate Majority Leader Harry Reid (D-NV) can move through the arcane labyrinth of the Senate Rules. [Roll Call]

The arguments emanating from the GOP side of the aisles would be easier to understand IF anyone from that quarter could explain why it was perfectly acceptable to extend long term unemployment benefits FIVE TIMES during the Bush Administration — but is somehow categorically unacceptable today.

The Incredible Moving Goal Posts

The fact that the Senate Republicans continue to move the goal posts on Senate action serves to remind us why the arguments against the extension are ultimately specious.

The Senate Republicans wanted to add amendments, amendments were allowed, but not enough amendments? Not the right kind of amendments?  The Senate Republicans wanted a Pay For, they got one — on the backs of working people — who would be required to make larger contributions to unemployment insurance programs — that was insufficient, they want MORE… of something.  Whatever. And, whatever is offered by the Democratic leadership we can all bet it will be insufficient to assuage the tender sensitivities of the Ever Outraged GOP.

Right here in the Silver State we have approximately 20,000 individuals who are among the long term unemployed. [LVSun]  They join the estimated 1.3 million [CAP] to  3.8 million now still unemployed or still looking for work in this country. [Guardian]

Let Them Eat Pie In The Sky?

At this point we get to the major question — What’s wrong with extending long term unemployment benefits for people who’ve been out of work for more than 27 weeks?

(1) The incredibly flexible Deficit Argument:

The Republicans won’t vote in favor of extending unemployment insurance benefits because that would increase the federal budget deficit (except the Pay For on offer from the Democrats) unless the Democrats add a provision increasing military retirement cost of living benefits — which would ADD TO THE DEFICIT.  [Roll Call]

Be that bit of illogical thinking what it may, the notion that unemployment benefit insurance payments are swirling into the Black Hole of The Ever Flexible Budget Deficit can’t be sustained when the actual cost to the federal government isn’t increasing. The Congressional Budget Office reported last April:

“Federal spending on unemployment insurance: Annual outlays increased from an average of $33 billion from 2004 through 2007 to $119 billion in 2009 and $155 billion in 2010; they dropped to $93 billion in 2012 and we expect them to decline further over the next few years.”

All you have to do in order to accept the GOP argument that the cost of extending unemployment insurance benefits for 1.3 million long term unemployed people is too much to sustain is simply to ignore the fact that unemployment benefit costs have been declining since 2010.  For those not connected to the Fact Based Universe this should be relatively simple.

(2) Lazy People Argument:  Here they go again!  Somewhere, out there in the Shadow Land of Make Believe there are thousands of lazy shiftless do-nothings who are perfectly happy to be the beneficiaries of public largess — who aren’t members of Congress.  First, this is a Dog Whistle argument, as if receiving unemployment insurance benefits is a form of welfare.  It isn’t, of course, workers have paid into those employment insurance programs.  However, the economic or statutory reality of a program has never stopped the anti-government crowd from splattering the ‘welfare’ label on something, anything, that might remotely help someone.

Secondly, there’s that conception amongst the uninformed that people can make more money not working than by working.  “They” can earn more on ‘welfare,” or “They” can get by not working by simply taking unemployment checks.  The people making these claims have obviously never seriously checked into the eligibility requirements of the Nevada program.

No, in this state, as in most every where else, the Shiftless One cannot refuse employment at a lower rate just because unemployment benefits might be higher — they aren’t and they don’t.   But, we know what the GOP’s thinking?  “They” are those “inner city….. people…..who sit on porch steps….” And, now we’re back at the Dog Whistle.

(3) We’re Just Here To Help You – Have Some Pie From Our Sky.  The problem with pie in the sky is that it is intrinsically  inedible.

In the theoretical world of the Club For Growth and other ultra-conservative outlets, unemployment insurance benefits constitute a drag on employment by being a dis-incentive to work.  Anything which supports a person who is not currently working is automatically classified as a dis-incentive because were the support not available the person would have to work to eat, or something like that.

This also requires the corollary concept that there is work for everyone.  Except that’s not the case, there are now three job seekers for every job opening in the country. [politifact] Thus, the Pie in the Sky model of economic theory falls flat because in the real world of real numbers, two of the job seekers (with or without support) are still going to be looking for work whether there’s an incentive or not.

The second problem with this Pie in the Sky argument is that most people are working, seeking work, or getting discouraged in the process.  Consider, Nevada has an unemployment rate of 8.7%, which means that 91.3% of employment aged people ARE working.  The unemployment rate in the Reno area is 9.1%, meaning that 90.9% are working — [DETR] if the mere existence of unemployment insurance benefits, or any other safety net program,  is such a dis-incentive for working people, why are so many people doing it?

Most of the time the arguments from the ultra-right require the acceptance of a negative view of humanity, a perspective which demands acknowledgment of such furtive claims as “They” are undeserving because “They” are lazy, shiftless, bums who want to watch television and drink beer… without having to specify who “They” might be.  It’s also handy to buy into the well debunked Trickle Down Hoax, in which every tax avoided by a corporate employer, every source of funds left untaxed, and every loophole created in the tax code is magically translated into imaginary jobs.  We tried 30+ years of this and all we got was a Mortgage Meltdown compliments of the Wall Street Casino.

If there are no procedural problems other than those manufactured by the obstructionist GOP leadership in the Senate, and there are not statistical reasons not to extend unemployment insurance benefits for those who have already paid into the systems, and there are no rational economic reasons for not continuing to utilize automatic stabilizers such as the unemployment benefit insurance programs … then why not pass the bill?

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Filed under Economy, employment, Politics, Reid, Republicans, unemployment

Some Good News and Some Cautions

Hard HatInitial jobless claims are down in Nevada! “Initial claims for unemployment in Nevada fell 5 percent in July from the same month last year, marking the eighth straight month that the claims dropped year-over-year.”  [RGJ]

Nationally, the numbers aren’t too bad either:

“The advance number of actual initial claims under state programs, unadjusted, totaled 280,502 in the week ending August 10, a decrease of 8,142 from the previous week. There were 317,680 initial claims in the comparable week in 2012.

The advance unadjusted insured unemployment rate was 2.2 percent during the week ending August 3, a decrease of 0.1 percentage point from the prior week’s unrevised rate. The advance unadjusted number for persons claiming UI benefits in state programs totaled 2,858,818, a decrease of 100,830 from the preceding week’s revised level of 2,959,648. A year earlier, the rate was 2.5 percent and the volume was 3,180,011.”  [BLS]

As always, looking at seasonally adjusted initial unemployment applications is rather like looking at the economic world via the rear view mirror.  That said, it is comforting to note that the numbers of long term unemployed persons is edging down: “Officials say the number of unemployment benefit recipients who exhaust their regular benefits is also down, from 53 percent in July 2012 to 47 percent this July.” [RGJ]  It does appear it’s getting a bit easier to find work in the Silver State, as opined by DETR’s Bill Anderson.

Ball and ChainThere are some obvious weights attached to Nevada’s employment recovery.

#1. The Bubble Factor — There’s no way to avoid the fact that the Nevada housing market, pre-crash and burn, was “overheated.” “Nevada’s construction industry shed about 66 percent of its workforce in six years, down from 147,700 jobs in May 2006 to 49,200 in May 2012. The sector has a labor force of 52,100 workers as of April this year.” [RGJ June 2013]

#2. Declining public sector employment — While it might be popular in some circles to grouse about public employees as Pigs At The Public Trough, unless one is satisfied with over-crowded classrooms, slower response times to fires and medical emergencies,  less police presence in the community, fewer and less extensive health inspections of medical clinics or restaurants,  and wider, bigger, and more spectacular pot holes, public employees provide essential community services.

And, the local governments which provide these services have faced the largest cuts.

Public Sector Employment NevadaAs continually repeated on this site —  Public employees do not soak up “sacred tax payer dollars” into large sink-holes — the wages and salaries are SPENT in local grocery stores, drug stores, garages and auto dealerships, furniture outlets, clothing and other retail establishments, cafes and restaurants, barber shops and beauty salons, home improvement stores, medical offices, hardware stores, sporting goods stores, and other businesses which need customers to survive and thrive.  Consider the profit margins for a moment.

It is common for a restaurant, for example, to experience a 0% profit during its first year of operation.  An established high end restaurant can expect returns of about 8% annually, a less expensive (in terms of profit to operation cost ratio) cafe might make as much as 35%.  [Restaurant.Com]  More generally, “The type of retail establishment you operate may dictate your ability to raise margins. Specialty retailers and general merchandisers — department stores — were the most profitable sector of the retail economy in 2009, according to “Fortune”magazine, with a 3.2 percent average profit margin. Food and drug stores operated on a 1.5 percent margin.” [HChron]  8%, 3.2% margins? 1.5% margins?  How many job losses in the public sector does it take to carve into these profit to operating cost ratios at the local level?

#3. The Spiral Effect — declining employment combined with declining property values have ramifications for local governments.  We can look to the Debt Limit calculations for local governments to see how spending gets squeezed.

As of June 30, 2007 when the Housing Bubble bloomed the Nevada debt limit for local school districts was $17,174,852; in 2009 it was $21,631861,623; as of June 30, 2012 it had dropped to $12,935,539,045.  Think of the Debt Limit as if it were a ‘line of credit’ available to a local government entity — and note that as the credit limit declines there can be fewer capital expenditures.  Capital expenditures for building, renovation, and major maintenance directly affect the construction sector.

Another form of the spiral more directly relates to retail spending for consumer products and home related expenditures.  Retailing is struggling back:  “After two years of decline in 2008 and 2009, retail ended each year on a positive note through 2012. The sector, however, is still down by about 10,000 jobs from 2007, when it closed the year with a labor force of 147,000 workers.” [RGJ]   One way to measure the relative health of our consumer based economy is to look at the amount of debt American families are willing to take on.  The New York Fed’s report for the second quarter of 2013 tells us:

“The latest Household Debt and Credit Report shows outstanding household debt declined by $78 billion from the previous quarter, due in large part to a decline in housing-related debt. Total auto loan balances increased $20 billion from the previous quarter, the ninth consecutive quarterly increase and the largest quarter over quarter increase since 2006.”

There’s a graph for this:

Total debt balanceNote that both trends are downward — for housing and non-housing indebtedness.  It isn’t outside the realm of common sense to observe that American consumers, once burned are twice shy.  One question which remains unanswered is whether the reduction in mortgage interest rates will give families enough slack in the budget to increase their optimism about their capacity to make purchases on credit.

The spiral effect related to consumer credit becomes a problem when consumers decline to make both major and minor purchases because (a) they are functioning on lower or stagnating wages and salaries, (b) are insecure about their future employment, and/or (c) while they may feel better about housing payments, the reduction thereof is insufficient to justify using more credit.  This has a profound effect for automobile dealers and commercial enterprises related to housing.

#4. The wage and salary wheel.  This sounds good: “Health care was the only sector to gain jobs in the recession. The industry had about 100,000 workers, up 20 percent from 2006. It also posted employment gains for each year during this period.”  [RGJ]  However, does this increase indicate a major spur for the Nevada economy.  Perhaps not.

One of the more disturbing charts in the June report from DETR shows what’s been happening with respect to personal income in Nevada.

Nevada Person Income GrowthThe trend since 2011 indicates that what we may have been doing is increasing the number of lower paying jobs while losing ground in higher paying employment.

If the trend in personal income growth declines, then how are we to expect the overall economy to increase?

Ball and ChainCutting the Chains  If the state of Nevada intends to secure higher growth rates, then it would be better to concentrate on those elements which are directly related to that growth.  Once more, let’s divest ourselves of the pleasant myth that by getting businesses to move to or to open in Nevada because we have a “pro-business” (read: Low Tax) environment we will boost the overall state of our economy.  National businesses will move here IF, and ONLY IF we have the infrastructure to support their operations (education, transportation, research..)  New commercial enterprises will open their doors here IF and ONLY IF there are customers for their products and services.

Once free of that continually trickling down ideology we can focus on rebuilding the public sector, which includes many of those professional occupations considered Middle Class (police, fire, teachers) and which provide support for those pillars (headquarters, back office, manufacturing and distribution, and research and development) which entice business enterprises to open in our region.

We should also be attending to the issues related to how we can escape the spiral effect and wage and salary wheels, which keep rotating, but require more than ideologic wish lists in order to alleviate the disinclination to take on consumer purchases or to be inclined to find room in the family expense accounting to increase what our friends across the Pond are wont to call the “custom.”

Until then, we’re weighted and freighted — and spinning our wheels.

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Filed under Economy, employment, Nevada economy

The Post Which Should Not Have To Be Written: Labor Participation Rate in the U.S.

Presidential candidate Willard Mitt Romney:

“So it looks like unemployment is getting better, but the truth is, if the same share of people were participating in the workforce today as on the day the president got elected, our unemployment rate would be around 11 percent,” said Romney. “That’s the real reality of what’s happening out there.” [ABC]

First the birthers, and now the jobbers.  After campaigning vigorously on the theme the President’s economic policies are failures because the unemployment rate was 8% or above, when the BLS reported a downtick to 7.8% the GOP found it incredible.

Candidate Romney may be referring to the labor participation rate, also calculated by the Bureau of Labor Statistics — which some of his surrogates are now disparaging.   The labor participation rate in November 2008 was 65.8%, admittedly higher than 63.6% in the latest report.  However, it was 66% during the month before the 2008 election.  In fact, as the chart indicates, the labor participation rate has been steadily declining since January 2007.

There is also the “Alternative Measures of Labor Underutilization” report, otherwise known as Table A-15.  U1 refers to those who have been unemployed for 15 weeks or longer as a percentage of the civilian labor force; in September 2011 the number was 5.3%, in September 2012 the number dropped to 4.3%.  How about the U2’s — those who have completed temporary jobs and are now looking for work?  In September 2011 the number was 5.2%, in September 2012 the number reported was 4.2%.

Well, maybe it’s in the U4 number, since they didn’t like the 7.8% in the U3 numbers?  In September 2011 the U4 percentage was 9.6%; in September 2012 the U4 the percentage dropped to 8.3%.  OK, if it’s not the U4, then how about the U5 numbers?  U5 reports the unemployed plus discouraged workers, and in September 2011 the U5 figure was 9.6%, by September 2012 the percentage dropped to 9.3.

OK, if it’s not the U1, the U2, the U4, or the U5, maybe it’s the U6? (That’s the number of people who aren’t working for any reason.)  Nope.  The U6 report for September 2011 was 14.8%, dropping to 14.7% by September 2012.

Click on the image to go to the original chart:

In short, no matter which numbers one reports the figures illustrate what we’ve known all along.  Employment is a lagging indicator.  And, those who live in a fact-free universe are often reduced to conspiracy theories to refute news they’d rather not hear.

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Filed under 2012 election, Economy, employment, labor, unemployment

Graphs, Charts in The Fact Based Universe

There must be an alternate universe somewhere in which the following trends do not apply.  However, these are what they are.  The unemployment rate is down.  It’s interesting that while the unemployment rate was at least 8% the Republicans had no problem whatsoever vouching for the accuracy of the BLS reports, but once the number fell below their threshold for advertising purposes, then the numbers were questionable?  The main point isn’t the specific percentage of unemployed but the trend — which certainly looks better than when the deregulation fueled Recession was in full bloom.

It’s also interesting to note that there must be some other rationale for Gloom and Doom from the Wall Street crowd, because the stock market indices have been going up during the Obama Administration.

If an index of 500 stocks isn’t enough, why not take a look at an index of 5000?  Here’s the Wilshire 5000 total market index.  If new regulations on banks and their derivative trading is so deleterious to our financial health, then why these rather robust numbers?

Retail sales and food service numbers are looking better too, and the banks are doing well also.

Retail sales, food service, banks doing well. The stock market is back to trending upward, and the unemployment figures aren’t climbing up as they were during the Recession — So, are we better off than we were four years ago?  And, why did the Romney Campaign stop asking that question?

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Filed under 2012 election, Economy, employment, Obama, Politics, Romney

I Knew There Was A Reason: The Big N-FIBs

I did have a reason to never join either the Chamber of Commerce or the National Federation of Independent Business, because at the moment N-FIB is a very accurate acronym.  The NFIB has a radio spot which makes three unfounded assertions, presenting them as “facts.”  The N-FIB would also like us to know that they support members of  Congress like Senator Heller and Representative Heck (R-NV3) because they support “job creators.” [NFIB]

N-FIB: We should all support the GOP because, according to N-FIB, the Stimulus (the one under the Obama Administration) was a failure and didn’t create jobs.

FACT:  The American Recovery and Reinvestment Act was successful at saving and creating jobs in the U.S. economy, and there are at least three credible estimates demonstrating the fact.

Those who prefer their information in graph form, should find this illuminating:

N-FIB:  The Affordable Care Act hurts small businesses.

FACT:  The N-FIBbers must have missed a few parts of the Affordable Care Act, like if you have up to 25 employees, pay average annual wages below $50,000, and provide health insurance, you may qualify for a small business tax credit of up to 35% (up to 25% for non-profits) to offset the cost of your insurance. This will bring down the cost of providing insurance.

And this: “Under the health care law, employer-based plans that provide health insurance to retirees ages 55-64 can now get financial help through the Early Retiree Reinsurance Program. This program is designed to lower the cost of premiums for all employees and reduce employer health costs.”

And this: “Starting in 2014, the small business tax credit goes up to 50% (up to 35% for non-profits) for qualifying businesses. This will make the cost of providing insurance even lower.”

And this: “In 2014, small businesses with generally fewer than 100 employees can shop in an Affordable Insurance Exchange, which gives you power similar to what large businesses have to get better choices and lower prices. An Exchange is a new marketplace where individuals and small businesses can buy affordable health benefit plans.”

And this: “Employers with fewer than 50 employees are exempt from new employer responsibility policies. They don’t have to pay an assessment if their employees get tax credits through an Exchange.”  [HHS]

N-FIB: The Obama Administration impedes businesses with burdensome regulations.

FACT:  “Obama’s White House approved 613 federal rules during the first 33 months of his term, 4.7 percent fewer than the 643 cleared by President George W. Bush’s administration in the same time frame, according to an Office of Management and Budget statistical database reviewed by Bloomberg.”  October 25, 2011  [Bloomberg News]  How about 2012?

So far, Obama has actually finalized fewer regulations than either Clinton or Bush at the same point in their terms. A wave of new final regulation is now slated to take effect in 2013. But some of them will be rolled out regardless of who’s in office, due to Obama-passed legislation that’s already in motion.” [WaPo]

If we drill down to specifics we find that there are two categories of rules the Republicans dislike enough to warrant attaching their “job killing” label — (a) Clean Air and Clean Water regulations, and (b) financial sector reform.

Republicans are particularly opposed to the provisions of the Sarbanes-Oxley Act (Bush Administration) enacted in the wake of the Enron Debacle to prevent further corporate frauds and shenanigans.  They are opposed to the enforcement of the Dodd-Frank Act, Senator Heller would like to see the bill restraining Casino Capitalism repealed even though only about 31% of the provisions have been implemented.

Those believing that a return to the Casino Capitalism of Enron, Lehman Brothers, the Housing Bubble, and the consequent collapse of investment banking in the United States in 2008 is desirable should definitely vote for Republicans like Representative Heck and Senator Heller.

Those who believe that some common sense restraint is in order to prevent the Wall Street Casino from re-opening to create the next artificial bubble out of “an excess of enthusiasm” — and who are mindful of what happened to the financial sector beginning in 2007 — will probably find the Democratic Party position more sustainable.

The exploiters and polluters don’t care for regulations on emissions and dumping.   It would certainly help the corporate bottom line to avoid paying for emission control devices, and to be able to dump coal ash anywhere that might be convenient.

However, those who prefer to drink clean water and breathe clean air should look carefully at what the Republicans are proposing.  Those who like hunting or fishing in unpolluted surroundings will find the Democratic Party positions more amenable to their interests.

Suggesting that mileage standards for automobiles should be clawed back makes absolutely no sense at all.  American and global vehicle manufacturers are touting their fuel-saving products.   The 2013 Dodge Dart advertises its 41 mpg capability [AutoBlog] Nissan is planning on building its Leaf in American plants,  Subaru wants to launch more STI models, Mazda plans a 2014 Mazda6 model mid-size sedan with better fuel mileage. [TCCGeneral Motors is pleased tell its customers that “Our engineers are reinventing the automobile, developing advanced technologies that lead to improved fuel economy, less emissions and a reduced dependence on petroleum.”   Among GM’s goals are the development of 12 vehicles having at least 30 mpg capability, the development of two mode hybrids, further development of fuel cell technology, and the expansion of its Opel Ampera and Chevrolet Volt models.

The ultimate irony may be that while the Republicans want to roll back fuel standards, the automobile manufacturers are hiring people to work on new models with fuel efficiency capability higher than the proposed standards.

At some point a small business owner would have to ask — What is achieved by “unburdening” the oil companies if the result is a fleet of delivery trucks  or even personal vehicles, which cost more to operate?

There are three parts to the N-FIB radio ads, and all three are demonstrably false.  Little wonder I never paid any dues into the organizations that purport to have my best interests at heart — but continue to lie to me, and others.  No amount of advertizing can buy integrity.

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Filed under 2012 election, Economy, employment, financial regulation, Heck, Heller, manufacturing, Nevada politics, pollution, Republicans

GOP Phil. E. Buster blocks pro-business bill

Senator Harry Reid (D-NV) made this comment on the Republican blockage of the Small Business Jobs and Relief Act:

“The legislation Republicans blocked was a common-sense proposal that provided small businesses with two tax cuts designed to create jobs. Under our proposal, small businesses would have received a 10 percent tax cut on the amount by which they increase their payrolls this calendar year. And to help them expand, small businesses would have been allowed to write off 100 percent of the cost of any major equipment or software they purchase.

“Unfortunately, Republicans played their usual games of obstruction and opposition. There was simply no reason to oppose this bill on the merits, so Republicans manufactured reasons to kill it out of thin air. Republicans claimed they wanted amendment votes, but refused to take ‘yes’ for an answer when I offered them votes on those very amendments.”

The bill was designed to help truly small businesses, those under the $500K cap to hire employees and purchase business assets and equipment.*

And, the Republicans successfully filibustered the bill. The motion to invoke cloture on S. 2237 went down on a 53-44 vote. [roll call 177]

This is what the Senate GOP rejected:

“Small Business Jobs and Tax Relief Act – Amends the Internal Revenue Code to allow certain employers a tax credit for 10% of the excess (if any) of: (1) the wages and compensation paid to their employees in 2012; over (2) the amount of such wages paid in 2011, up to a maximum amount of $5 million. Extends for one year the 100% bonus depreciation allowance for business assets. Increases the amount of alternative minimum tax (AMT) credits that corporate taxpayers may elect to accelerate in a taxable year in lieu of claiming bonus depreciation.”  [CRS]

Thus, if a business hired more employees in 2012 than they had in 2011 they’d be eligible for a 10% tax credit for the wages and compensation paid; AND, any business asset purchased could be written off in a single year.

A person doesn’t need to be an accountant to figure out that the last part is an exceptionally good deal.  Every computer, filing cabinet, vehicle, any economic resources. Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value, [Def] can be “written off.”

The first part of the picnic basket isn’t as stimulative as this second piece.  As has been expounded repeatedly herein, staffing and employment levels aren’t tied to tax incentives — it makes absolutely no business sense to hire employees one doesn’t need just to get a tax break.   Businesses hire people when current staffing levels are insufficient to meet demand or to provide an acceptable level of customer service.

However, if a business wants to get a real break — upgrade the computers your staff has been complaining about — you can write them off in a single year.  Purchase the new back-hoe, an additional truck, a new fork lift, get your construction company a new skip loader or trencher — depreciate it in a single year.    Need new shelving, workstations, desks, storage units, or new computer hardware for the business?  Buy’em and get the 100% bonus depreciation!   What does this do?

Allowing businesses to avail themselves of the 100% depreciation bonus could very easily spur DEMAND.  Increased demand means increased orders, and increased orders may very well mean a need for increased staffing.

And the Senate Republicans filibustered the bill.  WHY?

“Reid acted as the two parties could not agree exactly how to go about using the bill to vote on whether to extend the Bush tax cuts. […] Republicans favor extending the tax cuts, first enacted in 2001, for all income levels. President Obama has proposed extending them only for income less than $250,000, and using the higher tax revenue collected from higher incomes to help close the deficit.”  [WaPo]

Translation: The Senate Republican leadership blocked the small business bill because they wanted to protect the Bush Tax Cuts for millionaires and billionaires.

So, a 100% depreciation bonus for manufacturers, construction companies, accountancy firms, restaurants, drilling companies, retailers, grocery stores, furniture outlets, bakeries, bowling alleys, beauty and barber shops, landscape enterprises, law offices, doctor’s offices, automobile repair garages, photography studios, veterinary clinics, waste disposal companies, … was lost because the Senate GOP was focused on protecting the Bush Tax Cuts for millionaires and billionaires.  In a word? SAD.

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See also: “Fact Sheet: Small Business Jobs and Tax Relief Act,” Senate Democrats, March 26, 2012. Cohn, “Tax Cut Legislation Blocked in Senate,” Accounting Today, July 13, 2012. REMI, “Study on S. 2237, Regional Economic Models, Inc.

Previous posts on small business:  H.R. 5297, Small Business Jobs and Credit Act DB July 17, 2010.   Finally someone says it — Demand in the Job Creator, DB December 2, 2011. GOP A Thousand Times No, DB July 30, 2010.   Breaking the Closed Loop, DB April 29, 2011.   Republican Mythology – Small Business Facts and Fantasies, DB May 3, 2012. What’s a Small Business, DB July 16, 2012.  *Original post did not include the $500,000 cap.

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Filed under conservatism, corporate taxes, Economy, employment, Filibusters, McConnell, Politics, Reid, Taxation