In this Let People Prosper episode, I discuss last Friday's strong U.S. jobs report. With tomorrow's election on many people's mind, this will be a key indicator that things are going well, and in many respects that's correct. But there's much more for government to do to provide an institutional framework that's conducive to economic prosperity by restraining government spending, lowering tax burdens, liberating markets in healthcare, allowing education freedom, and more.
My hope is that classical liberalism with a good dose of fiscal conservatism will be the winner after tomorrow's election. Regardless, let's discuss the jobs report that highlighted how many people are flourishing.
Don’t miss my discussion with @AmRenConsulting on Friday's strong U.S. jobs report. Another indication that pro-growth measures of tax & reg reforms by the Trump administration continue to benefit Americans. More to do though to control govt spending by Congress and Texas Legislature.
Here are details of the strong U.S. jobs report reported by the Bureau of Labor Statistics: 1) Lowest unemployment rate at 3.7% in half of a century, 2) avg 211K jobs added last 12 mos, 3) 79.7% 25-54 yr old emp-pop rate highest since March 2008–almost back to 80% before Great Recession, and 4) Private hourly earnings 3.1% best since 2009.
Interesting data tweeted by Heather Long: "New stat from data guru @hsilverb: Big businesses are paying lowest taxes in 25 years. US business in the S&P 500 paid the lowest tax rates in Q1 2018 and Q2 2018 since at least 1993 (with the exception of Q4 2008, the only negative income quarter in S&P 500 history)."
This is good news considering U.S. long had highest corporate tax rate in developed world which was simply passed along to people as businesses submit taxes but people pay them through higher prices, lower wages, and fewer jobs available. The lower rate from 35% to 21% after the Tax Cuts and Jobs Act contributes to a more pro-growth economic environment so people prosper.
Below tells the story of the net job gains in each industry, highlighting how this is an across the board gain in jobs.
Overall, a solid jobs report that indicates how we must build on the stronger institutions of the last two years by really focusing next on reining in government spending so families and civil society can flourish.
This presentation provides information about Texas’ economy, labor market, and fiscal situation and key public policies that would strengthen the Texas model to foster more individual liberty and economic prosperity.
Watch my explanation of this state-level labor report and other videos at my YouTube channel: Vance Ginn Economics.
In this #LetPeopleProsper episode, I discuss the good, bad, and my take on the August jobs report by the U.S. Bureau of Labor Statistics. Overall, a good report but weaknesses remain.
Here are the key points of the report:
In general, the increased strength of the labor market has been a product of the regulatory and tax relief last year. A good sign as the Trump administration has started to follow more of hte prosperous Texas model.
Let's hope that continues to #LetPeopleProsper.
In this Let People Prosper episode, I discuss the issue of occupational licensing how burdensome it is for many workers while many of the licenses provide little consumer protection from health, safety, and welfare concerns. This issue was in TPPF's daily newsletter "The Cannon," which I recommend that you subscribe.
In fact, licenses often result in being a barrier to entry for many people wanting to join a licensed occupation, creating a situation where there are costs to consumers, workers, and society at large. This makes licenses the most burdensome labor market regulation in spite of the reasoning for them being from a market failure of asymmetric information.
Often, market failures aren't failures at all but rather the resulting costs are from government failures, which another case for this is with occupational licensing. The case of Bastiat's teh seen versus the unssen.
Instead, more information to consumers and lower barriers to entry for workers would provide an efficient market that doesn't misallocate workers and cost consumers and society in the process.
I discuss recommended solutions that I mentioned in my recent testimony before the Texas Senate Business and Commerce Committee (watch my testimony here starting at 37:45 and read my written testimony here). There was a great discussion among the panelists and legislators about occupational licensing and what you should be done about them.
In this #LetPeopleProsper episode, I discuss my last two very busy days.
With the proposed U.S.-Mexico trade deal yesterday, I was on multiple radio stations today across the nation talking about the costs and benefits of the deal and the implications for Americans. I'm still waiting to see all of the details and am lukewarm about it at this point because of the trade barriers imposed on the auto sector that will lead to higher auto prices for consumers and higher transportation prices for many businesses. However, I'm optimistic that much of NAFTA remained intact, e-commerce provisions were included to modernize the agreement, and the contract is for 16 years instead of the 5 years the Trump administration suggested. Here's my recent commentary at The Hill on this issue.
I testified today before the Texas Senate Business & Commerce on deregulating occupational licensing, which is the most onerous form of labor market regulation (here's my testimony). I discussed the high costs of these and made recommendations on taking a broad look at eliminating many of them or reducing their requirements along with moving towards having employers complete a registration or certification with the state government or a private association to signal that they are able to do the job, which signaling is about all many of these licenses are good for. I'll have a paper published on this soon with Dr. Ed Timmons of St. Francis University.
I also testified today before the Texas Senate Administration on the benefits of program-based budgeting and the need for zero-based budgeting. I explain this in detail in the episode, but basically our state budget today is organized by strategy that lacks transparency and makes it difficult to find granular data in the budget, especially to weed out unnecessary programs. By moving to a program-based budget that's been used in Texas before, this granular data would be available to add transparency for taxpayers and legislators while making it easier to start each program at zero and make decisions whether it should be included--otherwise known as zero-based budgeting.
Please watch the video for more. Don't forget to subscribe to my YouTube channel at "Vance Ginn Economics" and continue to share this with your friends and family. Thank you!
In this Let People Prosper episode, I discuss the latest state-level jobs report for July 2018 issued by the U.S. Bureau of Labor Statistics while highlighting how economic freedom and the recent federal changes to the State and Local Tax Deduction (SALT) matter to our prosperity.
As noted in my previous blog post (see presentation), Texas continues to be America's jobs creation engine as the Lone Star State has created 23% of all new civilian jobs added nationwide and created the most nonfarm jobs of 377,100 in the last 12 months.
In general, states with more economic freedom and lower taxes have performed better in terms of economic growth and job creation over time than states with less economic freedom and higher taxes. Hundreds of papers have found this connection when considering the Economic Freedom of North America report by the Fraser Institute.
Watch the episode to find out more. Have a blessed day and let people prosper.
(Tip: Get checked by a dermatologist periodically, especially if you have fair skin like I do. That's the reason for the band-aid on my left cheek--praying for no issues!)
State of the U.S. Economy Including Strong Growth & Rising Compensation and Costly Tariffs & Budget Deficits: LPP EP 24
In this episode, I discuss the state of the U.S. economy, including the markets, rising compensation for Americans, Federal Reserve leaves target federal funds rate unchanged in the range of 1.75-2%, and costly federal budget deficits of nearly $1 trillion that will be a drag on economic growth unless government spending is reined in along with the cost of tax hikes from tariffs.
There is a clear path to more economic growth, job creation, and resulting prosperity: capitalism without government barriers to opportunity.
In other words, the federal government should uphold contracts through a justice system, provide a national defense, and deal with international commerce, but really not much more than that.
Let people prosper by letting them satisfy their desires within institutions of civil society that are the backbone of America's strength. Unfortunately, too many of those institutions are hindered because of excessive government intervention at every level.
Let's learn more about what we can do together.
In this episode of the Let People Prosper series, I discuss the economic freedom associated with the Texas Model, which is based on relatively less government spending and taxation along with sensible regulations.
I examine data for more than a decade along with the latest state-level jobs report to highlight how the Texas Model has supported abundant prosperity. Of course, Texas has room for improvement, such as limiting government spending and eliminating property taxes, but there's much Texas gets correct.
Please watch and share this episode.
In today’s episode, I discuss the financial markets and the big news about the release of the state-level jobs report, which Texas continues to be America’s jobs creation engine. I’ll have more on the jobs report soon with graphs but I wanted to give you a quick overview.
Here’s my statement in a TPPF press release: https://mailchi.mp/texaspolicy/texas-....
Thanks for watching! Please subscribe to this YouTube channel and share with friends and family.
New economic reports suggest an increasingly thriving economy thanks to changes in regulatory and tax policy and the Bernie Sanders promise of the government providing a job, an education, and health care is just a fantasy that ultimately ends in misery, according to Texas Public Policy Foundation Chief Economist Dr. Vance Ginn.
Numbers released Thursday from the Labor Department show, that in the final week of April, just 211,000 Americans filed first-time unemployment claims. That’s the lowest number since 1969. The monthly average for April was 221,500 new claims, the lowest since 1973, when the U.S. workforce was half the size it is now.
Ginn says there are pretty simple reasons for the low numbers.
“A big part of it has to do with the regulatory reform. The rollbacks by the Trump administration last year gave some more consumer and business confidence out there, that are near record highs. Along with the Tax Cuts and Jobs Act that was passed in December, these things have (people) saying, ‘Let’s go ahead and invest. Let’s go ahead and hire more workers.
“People are spending more at the same time. That’s the way you really get more job creation and more economic growth over time,” said Ginn.
But the historically low unemployment claims don’t tell the whole story. Ginn says there is definitely room for improvement in the labor participation rate and the unemployment rate, known as U-6, that includes part-time workers and people who have given up looking for work.
“They are improving but there is still a ways to go. The unemployment rate – the reported number – is at 4.1 percent. But the U-6, which includes under-employed and discouraged workers, is still above eight percent. That’s above where we’re usually at at this time in an economic expansion. As of this month, this is the second-longest economic expansion in U.S. history,” said Ginn.
He’s also not satisfied from what he’s seeing from an economic indicator known as the employment to population ratio.
While the economy grows, the political left has a very different vision for America’s economic future. Sen. Bernie Sanders, I-Vermont, who narrowly lost the 2016 Democratic Party nomination to Hillary Clinton, is now pushing a plan to provide a government job to every American, along with taxpayer-funded health care and college tuition.
While conservatives recoil at such an agenda, a new Rasmussen poll shows 46 percent of Americans like the Sanders plan.
Ginn is not surprised.
“What it tells us is that people like to get things for free or what they perceive to be free. But it also tells me that 54 percent of people understand the opportunity cost and what direct cost this will have,” he said.
“So even with it being “free,” they still oppose it because they understand this is going to come with some sort of cost. Somebody’s got to pay for it and all the details aren’t out yet,” said Ginn.
He says a majority of Americans still realize this cannot be done.
“Making sure that the jobs pay $15 an hour or making sure that there’s health care benefits, maybe even having “free college,” all these things come with a huge cost,” said Ginn, who says that money would have to come from tax hikes on businesses and individuals.
“If you’re raising the cost of doing business, that means fewer jobs available in the private sector. So are we going to have more federal government jobs. How exactly will these people be employed?” asked Ginn, who also notes that many people may not like the jobs the federal government would assign them.
But conservatives like Ginn face an uphill climb. While firmly believing data and experience are on the side of limited government and free markets, Ginn says it’s a lot easier to promise “free” stuff than to articulate the beauty of markets.
“Often times that can be difficult. When you say you’re cutting taxes and then you show that the corporate income tax rate went from 35 percent to 21 percent, how is that not for the “rich?” (We know) businesses simply submit taxes. They don’t actually pay for them. People pay for them through the form of higher prices, lower wages, and fewer jobs available.
“Often times that’s a difficult message to sell but that’s the economic reality and I think we’ve got to stick to those core principles throughout each and every one of these policy initiatives,” said Ginn.
AUSTIN – Today, the U.S. Bureau of Labor Statistics released state-level labor market data for January 2018. Texas employers created 16,000 net nonfarm jobs in January, bringing the total to 240,500 jobs created in the last twelve months. The Texas Public Policy Foundation’s director of the Center for Economic Prosperity and senior economist Dr. Vance Ginn issued the following statement:
“Texans continue to prosper from a model of limited government in the Lone Star State that supports more job creation,” said Dr. Ginn. “With a focus on preserving liberty, government can help Texans enjoy more opportunity both economically and personally."
The state’s unemployment rate of 4 percent has now been at or below 5 percent for 43 straight months.
New Texas Jobs Report Shows Unemployment Rate At or Below the U.S. Average for 116 Consecutive Months
Today, the Bureau of Labor Statistics released state-level labor market information for August 2016. The Texas Public Policy Foundation’s Economist Dr. Vance Ginn issued the following statement:
“Texans continue to have reason to cheer as employers increased net nonfarm jobs by 21,400 last month, bringing the remarkable streak to 69 of the last 71 months. Critics have tried to discount the vitality of the state’s economy that’s based on a diverse economy and pro-growth policies, but time and again those critics have been proven wrong,” said Dr. Ginn. “The 190,600 jobs created during the last twelve months contributed to a 4.7 percent unemployment rate that’s now been at or below the national average for 116 straight months; no other state comes close to this feat. There’s been slower job creation, so there’s room for improvement, but the results are clear: the Texas model sparks more voluntary exchange, which in turn creates more prosperity for Texans. Legislators should take note and double-down on last session’s efforts in the upcoming session.”
Vance Ginn, Ph.D. is an Economist in the Center for Fiscal Policy at the Texas Public Policy Foundation.
Registration for the 2017 Policy Orientation for the Texas Legislature is now open to media and the public!
The Texas Public Policy Foundation is a non-profit, free-market research institute based in Austin, Texas.
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This commentary originally appeared in The Federalist on June 9, 2016
“So what you need to know is that the Texas miracle is a myth, and more broadly that Texan experience offers no useful lessons on how to restore national full employment. It’s true that Texas entered recession a bit later than the rest of America, mainly because the state’s still energy-heavy economy was buoyed by high oil prices.” — Paul Krugman, New York Times, August 14, 2011. Oil price: $87 per barrel
Recent oil price peak on June 20, 2014: $108 per barrel
“But everything is bigger in Texas, including inflated expectations, so the slowdown has come as something of a shock. Now, there’s no mystery about what is happening: It’s all about the hydrocarbons.” — Paul Krugman, New York Times, June 5, 2015. Oil price: $60 per barrel
Oil price on May 25, 2016: $50 per barrel
The Texas miracle has included robust economic growth and job creation during at least the last decade. Liberal economist Paul Krugman and others have argued the Texas miracle would end after the steep drop in oil prices. However, the still-growing Texas economy shows us they were wrong. Since the Texas economy didn’t fall off a cliff, other states and DC can learn a lot from Texas’ free-market governing approach.
Krugman wrote last year, and has repeatedly made this case about Texas, that “there’s no mystery about what is happening: It’s all about the hydrocarbons.” So what about oil?
Krugman’s argument is that the Texas miracle was only about oil prices and not the Texas model of low taxes overall, no personal income tax, relatively restrained government spending, and predictable regulations. Again, given that oil prices remain less than half of what they were at their peak, Krugman and all those arguing that the Texas model will fail are just wrong.
Texas: A Jobs Powerhouse
First, let’s identify the Texas miracle. Since the last national recession started in December 2007, Texas has created 36 percent of all civilian jobs added nationwide in a state with less than 10 percent of the country’s population. Employment in the rest of the United States didn’t turn positive until January 2015 and didn’t surpass Texas’ job creation until November 2015.
The best way out of poverty is a job, so this miraculous job creation has been a boon for Texas families and families that have arrived from other states.
Sure, economic growth and job creation in Texas have slowed compared with growth rates before the oil price crash. Economic growth in the second and third quarters of 2015 was less than 1 percent, and the annual nonfarm job creation rate is less than half of what it was at the recent peak of oil prices. Although places more dependent on oil and gas activity have slowed substantially, Houston’s unemployment rate remains relatively low at 4.9 percent and Midland’s even lower at 4.3 percent.But the drop in oil prices was not an isolated economic event that contributed to slower growth in Texas. Other challenges since 2014 include a slower global economy and a stronger U.S. dollar. Really, the oil market is dependent on these global factors, so by definition the oil price can’t be the sole cause of slower growth.
Free-Market Economies Are Resilient
Moreover, things are much different in Texas than they were back in the 1980s. This is what Krugman and others really get wrong about the Texas miracle.
The state had its last major recession from 1986 to 1987, after oil prices collapsed and the real estate and financial sectors crashed. Back then, the mining sector, dominated by oil and gas activity, was directly related to about 21 percent of the real private economy and roughly 5 percent of the labor force. Today, mining is 15 percent of the real private economy and less than half of the labor force share. As a result, the combination of more economic diversification and pro-growth policies has produced a much more resilient economy. Texas in 2016 looks a lot different than Texas in 1987.
Economic diversification also means Texas is more dependent on the rest of the U.S. and international trade. The current U.S. economic expansion of only 2.1 percent average annual growth is set to be the weakest recovery since World War II, with no relief in sight. With the Federal Reserve having held interest rates too low for too long and rightly beginning to tighten credit last December, slower economic growth and lower oil prices are likely to continue as highly distorted markets correct.Suffocating regulations by the Obama administration, including Dodd-Frank and ObamaCare, also factor into the equation. Overregulation has pushed the American dream further out of reach for too many Americans. Without growth in exports and the oil and gas sector, which fueled much of the U.S. economic expansion since 2009, the national economy stands on a shaky foundation that may have a costlier effect on Texas than low oil prices.
Behold the Strength of the Texan Economy
But no matter what’s slowing Texas’ economy, the sky isn’t falling, as critics love to argue when grasping for an economic narrative that repudiates free markets and fiscal conservatism. Such a narrative can’t withstand scrutiny. The latest state-level jobs report by the Bureau of Labor Statistics shows that Texas added to its payrolls in a remarkable 65 of the last 67 months. This job creation has led to an unemployment rate of 4.4 percent that’s been at or below the national average for 112 straight months.
States that are not as well diversified haven’t fared as well. During the last 12 months, nonfarm job creation declined by 17,600 (-3.8 percent) in North Dakota, 10,800 (-3.7 percent) in Wyoming, 3,500 (-1 percent) in Alaska, 12,300 (-0.6 percent) in Louisiana, and 2,100 (-0.1 percent) in Oklahoma. Texas, on the other hand, created a positive 189,600 jobs (1.6 percent) with 154,200 new private-sector jobs in all but the mining and manufacturing sectors, which were hardest hit by the economic headwinds.
These haven’t all been low-wage jobs, either. The Federal Reserve Bank of Dallas findsthat job creation in Texas from 2005 to 2014 has increased by about 25 percent in both the upper-middle and highest income quartiles while the lowest income quartile has increased by slightly more than 30 percent. Job creation in the rest of the United States has increased by less than 5 percent in the upper two quartiles and by 25 percent in the lowest quartile.
Clearly, Texas has been the place where both high- and low-wage jobs have been created, which is necessary to meet the skills of a diversified workforce so everyone has an opportunity to succeed.
Texas faces real, and potentially major, economic challenges. However, state lawmakers could strengthen the Texas model’s proven recipe of a diversified economy and limited government philosophy. The sooner other states adopt and adapt that model, the better they will be able to meet economic challenges and propel America towards greater prosperity.
By continuing to reduce the size and scope of government, families will prosper and refute the false claims by Krugman and others. The truth is, it’s not all about oil in Texas.
AUSTIN – Last Friday, the Texas Workforce Commission released Texas labor market information for April 2016. The Texas Public Policy Foundation’s Economist Dr. Vance Ginn issued the following statement:
“Texas created 8,300 net nonfarm jobs last month. This extends the remarkable positive jobs creation streak to 65 of the last 67 months despite economic headwinds,” said Dr. Ginn. “Fortunately, the economic tailwinds statewide supported by a diversified economy and pro-growth policies provide Texas families with robust opportunities to flourish. Texas’ 4.4 percent unemployment rate has now been at or below the U.S. average rate for a phenomenal 112 straight months. We recommend that the Texas Legislature expand on the Texas model’s limited government foundation by passing the second consecutive conservative budget and putting the business margin tax on a path to elimination.”
Vance Ginn, Ph.D. is an Economist in the Center for Fiscal Policy at the Texas Public Policy Foundation.
The Texas Public Policy Foundation is a non-profit, free-market research institute based in Austin, Texas.
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This presentation provides information about Texas’ economy, labor market, and fiscal situation and key public policies for the 2017 Legislative Session that would increase individual liberty and economic prosperity.
View presentation here: http://www.texaspolicy.com/blog/detail/texas-economic-labor-market-and-fiscal-situation
Here's my interview at the link below on these issues and more that starts at the time 14:20.
Here's my interview on KEYE TV with video here: http://keyetv.com/news/local/falling-oil-prices-could-spell-trouble-for-austin.
For the last year and a half, drivers across the nation have enjoyed paying less and less for a gallon of gasoline. "Lower gasoline prices help us to have more money to go buy food or put food on the table," said Dr. Vance Ginn, economist at the Texas Public Policy Foundation.
But Dr. Ginn notes, here in Texas, that good news is countered by bad news. "If it continues to stay low, there is going to be some larger effects moving forward," he said. "Oil and gas is the lifeblood of the Texas economy, and really, the nation."
Eighteen months after oil prices began to slump due to a global oversupply and a strong dollar, Dr. Ginn is using the R-word on Texas cities that depend more on the oil and gas industry. "In Houston or Midland-Odessa, they're really going to struggle. And we could see more regional types of recessions," he said.
Texas has diversified its industries since the oil bust of the 1980s -- more tech in Austin, financial services in Dallas-Fort Worth. And if you just look at job growth numbers, all seems well. "Over the last year, Austin job growth has increased by 4.1 percent. That's pretty fast," Dr. Ginn said. But Austin, even though it's heavy on tech, can't hold out on oil and gas trouble forever. "There is less consumption," said Dr. Ginn. "There's a slowdown in hiring, things of that nature that also has an effect on Austin itself." Already, the state is seeing a dip in revenues coming from the oil and gas industry.
So while Austinites enjoy the low gas prices, remember, if it seems too good to be true, it probably is.
"Fourteen percent of the private economy being dependent on oil and gas activity across the state of Texas, you are going to see that spread across the state including in Austin," Dr. Ginn said.
New Texas employment report shows unemployment rate has been at or below the U.S. average for 107 consecutive months
AUSTIN – Today, the Texas Workforce Commission released Texas labor market data for November 2015. The Texas Public Policy Foundation’s Center for Fiscal Policy Economist Dr. Vance Ginn issued the following statement:
“Texas continues to defy those who wish to hail the demise of the state’s model of no personal income tax, low taxes overall, limited government spending, and less regulation from the drop in oil prices with yet another month of positive job creation in November. The 16,300 net nonfarm jobs created last month brings the remarkable streak of more jobs added to 60 out of the last 62 months contributing to the state’s 4.6 percent unemployment rate being at or below the national average for 107 straight months.
“Although the mining and logging industry, which is dominated by the oil and gas sector, has lost 30,300 jobs during the last 12 months, the industry has reason for optimism as Congress looks poised to lift the arcane 40-year ban on oil exports. Considering the oil and gas sector has been a bright spot in an otherwise dismal national economic recovery with Texas creating a large share of U.S. jobs since the Great Recession, lifting the ban will likely help boost job creation in Texas and nationwide.”
Vance Ginn, Ph.D.