Thomas Sowell — a conservative economist — has a skill for reducing complex issues down to their essence.
Bottom line: Government mandates (e.g. added healthcare burdens) and uncertainty are and will continue to keep companies from hiring.
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Excerpted from RCP: Jobs or Snow Jobs?, December 8, 2009
What does it take to create a job? It takes wealth to pay someone who is hired, not to mention additional wealth to buy the material that person will use.
Government creates no wealth. Government takes wealth from others, whether by taxation, selling bonds or imposing mandates.
However it is done, transferring wealth is not creating wealth.
When government uses transferred wealth to hire people, it is essentially transferring jobs from the private sector, not adding to the net number of jobs in the economy.
Destroying some jobs while creating other jobs does not get you very far, except politically. But politically is what matters to politicians, even if their policies needlessly prolong a recession or depression.
In reality, many things that politicians do reduce the number of jobs.
Politicians who mandate various benefits that employers must provide for workers gain politically by seeming to give people something for nothing. But making workers more expensive means that fewer are likely to be hired.
During an economic recovery, employers can respond to an increased demand for their companies’ products by hiring more workers– creating more jobs– or they can work their existing employees overtime. Since workers have to be paid time-and-a-half for overtime, it might seem as if it would always be cheaper to hire more workers. But that was before politicians began mandating more benefits per worker.
When you get more hours of work from the existing employees, you don’t need to pay for additional mandates, as you would have to when you get more hours of work by hiring new people. For many employers, that makes it cheaper to pay for overtime.
The data show that overtime hours have been increasing in the economy while more people have been laid off.
There is another way of reducing the cost of government-imposed mandates. That is by hiring temporary workers, to whom the mandates do not apply.
The number of temporary workers hired has increased for the fourth consecutive month, even though there are millions of unemployed people who could be hired for regular jobs, if it were not for the mandates that politicians have imposed.
Constant government experiments with new bright ideas is another common feature of Obama’s “change”. The uncertainty that this unpredictable experimentation generates makes employers reluctant to hire.
Full article:
http://www.realclearpolitics.com/articles/2009/12/08/jobs_or_snow_jobs_99443.html
The Homa Files 