About Me

In writing the "About Me" portion of this blog I thought about the purpose of the blog - namely, preventing the growth of Socialism & stopping the Death Of Democracy in the American Republic & returning her to the "liberty to abundance" stage of our history. One word descriptions of people's philosophies or purposes are quite often inadequate. I feel that I am "liberal" meaning that I am broad minded, independent, generous, hospitable, & magnanimous. Under these terms "liberal" is a perfectly good word that has been corrupted over the years to mean the person is a left-winger or as Mark Levin more accurately wrote in his book "Liberty & Tyranny" a "statist" - someone looking for government or state control of society. I am certainly not that & have dedicated the blog to fighting this. I believe that I find what I am when I consider whether or not I am a "conservative" & specifically when I ask what is it that I am trying to conserve? It is the libertarian principles that America was founded upon & originally followed. That is the Return To Excellence that this blog is named for & is all about.

Sunday, January 15, 2017

Trump - The Jobs President

  Click on image to enlarge
The December 2016 unemployment report released on January 6 by the Department of Labor - Bureau of Labor Statistics (BLS) – is the last such full month report of BO's presidency.
RTE did more analysis of the monthly BLS unemployment reports the past eight years than any other single topic – none of the unemployment reports were good including this last one mostly because of BO's attitude displayed in the above cartoon caricature that showed his dislike & contempt for the job creators of this country.  Under BO's administration the average annual growth of the economy has been 2.1% since June 2009 when the recession ended – the weakest expansion of the post World War II period.  More jobs will be created under strong economic growth than BO's deliberately contrived weakest on record.
This post presents the problems Trump must solve to become the jobs president he wants (& needs) to be. 
In summary, massive regulations, higher taxes, & the certainty that both would increase under BO has forced entrepreneurs to wait for another administration before moving forward with investments that would increase economic growth, jobs, productivity, & accordingly everyone's standard of living.  With Trump being one of the world's most successful businessmen we have a real chance to reverse the Death Of Democracy spiral & return to the liberty to abundance stage of our republic.
Over the past eight years we have learned to not pay much attention to the government's official unemployment rate – U3 - the proportion of the civilian labor force that is unemployed & actively seeking employment as defined by the BLS.  The unreliability of this measure has always been true but in normal economic times U3 would suffice to give an accurate portrayal of the health of the job market.  It breaks down in severe economic conditions like BO purposely induced on America his entire time in office. 
U3 increased in December to a 4.7% unemployment rate from 4.6% in November but to understand the dynamics of the job market you have to look to the U6 unemployment rate that is still elevated @ 9.2% – the pre BO low for U6 was 7.9% so there still is a way to go. 
U6 is the most comprehensive measure of unemployment & currently totals 14.8 million people.  It includes the total unemployed (7.5 million), plus all persons marginally attached to the labor force (1.7 million), plus the total employed part time for economic reasons (5.6 million). 
The 1.7 million people in U6 listed as marginally attached to the labor force wanted & were available for work, had looked for a job sometime in the prior 12 months, but were not counted by the BLS as being part of the labor force because they had not searched for work in the 4 weeks preceding the December unemployment report.  As the discouraged workers in this group start to look for work again they are counted as part of the labor force which in turn affects the U3 unemployment rate calculation.  When people drop out of the labor force U3 can go down as was the case in the early years of BO's presidency & when people return to the labor force as they did last month U3 can go up like it did. 
Of course the most important questions pertain to the quality of the jobs people hold & the wages they pay.  For instance some part-time workers counted as employed by U3 could be working as little as an hour a week which would not be a quality job by any measure.
To present the clearest employment picture a U7 category is necessary.  U7 would take U6, the current most comprehensive measure of labor resource unemployment & underemployment, & add those employed full time who make a fraction of their former pay.  For instance if you used to make $50,000 to $75,000 per year & now make $25,000 per year you are counted as employed by U3 & U6 for that matter – but U7 would provide the detail to show the unhealthiness & misery of the economy.  It would reveal the number of people relying on wealth spend down to maintain their standard of living commensurate with a $50,000 to $75,000 per year income – the opposite of wealth creation - that would  continue "until they were reduced to hunger & rags" in the words of Isabel Paterson.
A subset of the U6 category is new college graduates who haven't found a job in their field of study & very possibly never will.  A 25 year old unemployed or underemployed college graduate who graduated three years ago is not only in competition for a job in their field of study with more experienced people but also with new 22 year old graduates – a losing proposition that means these older graduates, many with tens of thousands of dollars of student loan debt, may never work in their chosen field of study.
But even worse off are the nearly 20% of males between 21 & 30 (up from 9% in 2000) who haven't completed college, aren't working today, & aren't in school.  Many of these young men, who live with their parents, are satisfied with their lot in life because there is no foreseeable employment in the manufacturing sector for them & even more pitifully they have become complacent with their situation spending their days playing video games – I personally know such a person.  Source Erik Hurst – University of Chicago.
Trump pledges to bring back jobs that left America for other countries – but many of these are low skilled jobs that can be done by people making pennies a day in their country.  In fact part of the employment problem in the U.S. is that many low-skilled, but previously high paid, American job seekers are unqualified for manufacturing sector positions that have become more high-tech every year as automation increasingly becomes common place.
The number of manufacturing sector job openings is @ a 15 year high, yet we have over six million people who think there is no suitable employment for their skills [i.e., combination of discouraged workers who left the labor force (426,000) & those involuntarily working part time (5.6 million)]
There currently are 145.3 million people working in America – 22.2 million of which work for government with 12,000 added in December.  Trump, as a businessman, realizes that the 123.1 million people working in the private sector are the ones who pay for the government workers – whether federal, state, or local - & that it is important to minimize the claims on the earned incomes of the private sector workers in order for the country to prosper again.
We need a return to the mindset where everyone in the country understands what a job really is under a free enterprise system – namely, an opportunity to create more present or future value for an employer than it costs to maintain the worker in the job.  This is why in the private sector employed people hustle.  If the employee's value drops below the cost of maintaining the employee the job disappears. 
The removal of the business cost of regulatory compliance [$2.028 trillion (that's $2,028 billion) in 2012 (measured in 2014 dollars)], the lowering of both the corporate income tax rate & individual income tax rates, the elimination of both the 3.8% ObamaCare surtax on capital gains & dividends as well as the 0.9% additional Medicare payroll tax are all important steps to ensure the growth of the GDP increases from the anemic 2.1% annual growth rate over the past seven years.  The annual compliance cost burden for an average U.S. firm is 21% of its payroll thereby leaving little or no room for investment of any kind.
Today there are 95,102,000 people in America who do not have jobs & are not looking for one – when BO took office in January 2009 that number was 80,529,000 people. Some of the 95.1 million people are too young to work & some are too old but it still is a record number & these people need a growing economy to sustain them in their youth & their old age.
There are boom periods & recessions but over a person's working lifetime (say 22 to 62) people's incomes typically take about 40 years to double in real inflation adjusted terms.  The higher your starting salary the higher your final salary & standard of living by this measure. 
Say you started work in 1975 @ a salary of $8,000 per year when you were 22 years old.  If you retired in 2015, @ age 62, you would have been making $70,400 if you doubled your starting salary in real inflation adjusted terms. 
Stop & think of the purchasing power & standard of living in 1975 of a $16,000 annual income – they were very good.
The point is the people I described above - 25 year old unemployed or underemployed college graduates, the nearly 20% of males between 21 & 30 who are satisfied playing video games, the 1.7 million people marginally attached to the labor force, the 5.6 million involuntarily working part time, & the untold millions who were once fully employed with good paying jobs but now work for a fraction of their former pay – will either begin this doubling process @ a lower starting salary & a period less than 40 years or have had the process interrupted to their financial detriment.
Trump can't get started soon enough to suit them - or me.


  1. Very well written report, but for average person it is too technical and you lose them as a reader. As you know average Joe wants his news condensed, not many details (they are very important) but average Joe not interested in details. That is my take, could be wrong, usually am wrong. You take a lot of time to assemble your facts, which earns you a plus. But in dealing with average Joe,they want things that can be summed up in 1-2 paragraphs, or 3.

    Again good coverage and continue to do what you consider to be important. What you do takes plenty of time to assemble the facts. Continue to do what you do well in coming year.

    I know one thing - Democrats still do not believe they lost the election and that Republicans control both Houses of Congress.

    1. I don't write for the average Joe. I pick a topic that I want to understand, research it so I have an understanding of the issue, & present it on the blog. The average Joe never enters into my considerations.

  2. And I say AMEN to your last sentence! Take care.

  3. Yes Doug - with Trump we have a real chance to catapult GDP to grow between 3-5% per year for the next 4. We must, however, be extremely cognizant of the danger our $20 trillion debt. Our adversaries such as China may make a major effort to decrease the $ role in international trade, thus enhance its RMB, weaken the dollar and make it harder for US to finance its debt. Therefore, I recommend lower taxes to perk up entrepreneurial activity and decrease regulations for same reasons. In addition, it is crucial we significantly cut Gov spending. As a businessman, Trump should invoke zero based budget planning and eliminate many duplicative Gov programs, and eliminate all Gov programs that do not render positive ROI. He may feed to bring in more staff that understands how to conduct ROI. I am thinking about volunteering.