The substantially weaker than expected U.S. jobs report was unfortunate for struggling Americans, but it should have been expected given the disastrous policy out of D.C. Fortunately, states can fix it.
Milton Friedman said that if the federal government oversaw the Sahara Desert, within five years there would be a shortage of sand. So inefficient and feckless is D.C. that we should never underestimate its ability to ruin good times and make bad times worse.
The 2020 recession and the current anemic recovery are a prime example.
State government-imposed shutdowns destroyed the greatest American economy in recent memory. Sure, the novel coronavirus played a role, but it was primarily imprudent policies which annihilated the best labor market in over half a century. On top of wounding that labor market so severely, the federal government then proceeded to poison the patient, ensuring a languid recovery.
The poison of choice? “Bonuses” for the unemployed.
At first glance, this hardly seems like an economic sedative. Why would it be harmful to help the unemployed? If anything, it sounds humane. The unemployed need assistance until they can find another job, and unemployment insurance (UI) payments partially or completely fills that temporary need, especially for those with little or no savings.
While that is true, new UI bonuses by the federal government haven’t been humane.
UI payments normally provide about half of what you earned while employed. However, in 2020—amid all the other decisions in D.C.—the federal government initiated a weekly bonus of $600 to everyone on unemployment. There were numerous reasons given for this enhancement, but they were all rather nebulous.
The actual effect was more people became unemployed and stayed unemployed.
Adding a weekly bonus to UI payments on top of what the unemployed already receive from the state frequently created the bizarre scenario wherein a person received more on unemployment than while working. Between April and July of 2020, 69% of those who lost their jobs had higher after-tax income on unemployment. (UI payments are not subject to Social Security tax, Medicare tax, nor income tax in some states.) Half of the unemployed were receiving at least 134% of what they earned while working.
If you are receiving more on unemployment than you did while working, why would you go back to your job? It’s one thing to expect people to be rational, but another to expect them to be saints.
Even after the $600 weekly bonus expired, D.C. instituted a $400 bonus, and now a $300 bonus. While the deleterious effects of the bonus have diminished with its size, the negative effect on unemployment is still potent. Some 6 million people are staying on unemployment because of all the government handouts they receive.
And although the businesses that didn’t fold during the lockdowns are finally able to reopen their doors with the lifting of government lockdowns in some states, those businesses are struggling to find people willing to work.
Unlike before the government shutdowns when the economy was roaring and businesses could not find enough workers because commerce was so busy, now businesses are contending with Uncle Sam’s generous handouts—an uphill battle to be sure.
There is now a chronic labor shortage of almost 7 million workers (and that number is rising) amidst massive unemployment. The incompetence of the federal government was worse than Milton Friedman predicted—in less than a year, it has produced this surreal and terrible scenario.
At least two states are telling D.C. that enough is enough. Montana Gov. Greg Gianforte will no longer accept the UI bonuses starting in June. And South Carolina Gov. Henry McMaster will do the same starting this week. However, these funds shouldn’t be used as a bonus to incentivize people to work as proposed in Montana, because nothing is free—whether it be handouts or precedence.
But regarding rejecting this federal expansion into the economic livelihood of Texas, Gov. Greg Abbott should do the same.
Texas currently has almost 1 million unemployed people—nearly twice the number from February 2020 before the pandemic—despite hundreds of thousands of unfilled job openings statewide. If the governor cancelled the federal unemployment bonuses, it would help alleviate this situation by removing the artificial incentive to remain unemployed.
This would not impact regular state-provided UI payments, so those who are truly struggling to find work will still receive those payments.
Opening the great state of Texas was the right decision, but it means little to businesses and economic prosperity if businesses are unable to find workers. Rolling back these injudicious UI bonuses will eliminate a reason for too many not to work and help Texas flourish once again while providing yet another model for the country.
The Texas economy has continued to recover since the steep downturn due to the COVID-19 pandemic and shutdowns by state and local governments in March. The partial reopening of most non-essential businesses has been a key part of that recovery, but the rise in COVID-19 hospitalizations has contributed to increased capacity restrictions that have slowed economic activity.
More on the data and how Texans can get back to work as quickly and safely as possible
Today, the Texas Workforce Commission released the state jobs report for Dec. 2020 in which the Texas unemployment rate fell from 8.1% in Nov. 2020 to 7.2%.
“Today’s jobs report for Texas shows some good news for workers and employers in December as employment increased for the eighth straight month and as the unemployment rate dropped to 7.2%,” said TPPF’s Chief Economist Vance Ginn, Ph.D. “While these gains are welcome, Texas’ labor market remains much weaker than a year ago when there were 384,700 more people employed in the private sector and the unemployment rate was 3.5%. Despite the potential policy challenges for the state’s recovery imposed by the Biden administration, the Texas Legislature looks poised to help with the recovery in their latest budget proposals as soon as the economy opens.”
Americans’ lives and livelihoods took a hit in spring 2020 when the COVID-19 pandemic disrupted their routines and how they earn a living as lockdowns by governments in response to the pandemic exacerbated the situation.
Congress has since authorized about $4.5 trillion in aid, which has swelled an unsustainable national debt. Combined with the redistribution of resources from the private sector, the result is a crowding out effect that harms America’s future economic potential and disproportionately hurts those who cannot afford this government overreach.
There is a need for sound policy by governments at every level to support a safe, expedited, and fiscally responsible rebound so Americans have more opportunities to thrive.
The U.S. Bureau of Labor Statistics recently released the U.S. jobs report for August 2020. The labor market has been improving but families continue to struggle compared with the robust situation at the peak in February 2020, which was before the COVID-19 pandemic and subsequent lockdowns of society by state and local governments.
Overview: The Texas Workforce Commission recently released the Texas jobs report for July 2020. The report highlights improvements in the state’s labor market but there are challenges to get back to its peak in February 2020, which was before the COVID-19 pandemic and subsequent lockdowns of society by state and local governments. Texas’s private employment in July during the government-induced recession due to COVID-19 is at the lowest level since December 2016.
Top Stat: U.S. private employment in July remains down 11.9 million compared with peak in February but is up 7.8 million since April.
The latest BLS state-level jobs report for February shows that Texas continues to lead the way in job creation for the last 12 months and keeps the state's near record low unemployment rate of 3.8%. Here's the statement by the Texas Workforce Commission.
The presentation below provides an overview of Texas’ economic, labor market, and fiscal situation while also comparing Texas with other large states. There are also policy recommendations to strengthen the Texas Model of limited government so that it can foster more individual liberty and economic prosperity.
My prior research on how institutions matter takes a deeper dive into these figures. I recommend reading it along with watching my vlog on the subject. To summarize, Texas should increase economic freedom by eliminating unnecessary government barriers to competition to let people prosper.
Watch my explanation of previous state-level labor reports and other videos at my YouTube channel: Vance Ginn Economics.
In this Let People Prosper episode, we discuss issues related to responsible governing, like passing budgets that remain within the average taxpayer's ability to pay, local debt transparency, and criminal justice reforms where the time matches the offense. This is all essential to improving the Texas Model based on limited government that has long supported economic prosperity, as noted by today's state-level jobs report discuss.
In this Let People Prosper episode, James Quintero, Dr. Derek Cohen, and I discuss today's release of reports on the U.S. and Texas jobs picture, movement on annexation reform (HB 347), and various issues related to criminal justice reforms (HB 63). Find more of TPPF's work at www.txlegehub.com.
Be Fruitful & Multiply--Work Matters But Government Should Give Nothing A Chance: Let People Prosper Episode 54
In this Let People Prosper episode, let's discuss the news circling social media about the meaning of work and how government should influence it.
I make the case that work is essential, as God commanded us to "be fruitful and multiply," but that doesn't mean the government should get involved. In fact, we satisfy our desires to have leisure and consume by working, so we should find something we are great at and develop a passion for it over time. If the government picks winners and losers, those opportunities will be fewer and we will all be poor in the process.
Per the valuable discussions about loneliness, tribalism, and work by U.S. Senator Ben Sasse in his book Them, Jonah Golberg in his book Suicide of the West, Oren Cass in his recent book Once and Future Worker, Arthur Brooks in his recent NYT op-ed, and Brad Wilcox in his recent WSJ op-ed (recommend reading them all), my recent commentary at the Institute for Family Studies builds on my recent research paper on how we can help heal our fractured society by limiting govt, not by expanding it. Texas has provided a relatively consistent model of limited government that has long-supported prosperity, which is supported by the most recent latest state-level jobs report.
While there are attempts to increase the size and scope of government to reduce or eliminate social ills and encourage work, a major problem is a decline of strong inclusive institutions of the family and capitalism as extractive institutions of bureaucrats & socialism cut deep into the flesh. By strengthening inclusive institutions, civil society can heal and government can return to preserving liberty.
A suggested policy recommendation by others, like Cass, is to impose wage subsidies to increase worker pay while not decreasing the incentive for workers to not hire as many people at a higher wage. However, if the government incentivizes work that artificially distorts the marketplace, then there will be worse outcomes along the way.
Government should try a new approach: Give Nothing A Chance.
Too often government tries to do something when that action creates worse situations, such as with occupational licensing (see my latest paper on how occupational licensing keeps people poor here). In general, what we are dealing with is a battle between socialism (redistribution through government is a recipe for poverty) and capitalism (efficient allocation through voluntary exchange is a recipe for prosperity).
We would be wise to remember that there is "NO SUCH THING AS FREE STUFF," including: wage subsidies, earned income tax credits, welfare, college, health care, public schooling, printing money, government spending, debt, occupational licensing, govt pensions, vehicle safety inspections, zoning laws, forced annexation, regulations, minimum wage, etc.
By fundamentally reforming the failed policies of the past and today that has contributed to the poor situation for many people, we can begin to prosper again. This happens not by increasing the size and scope of government through more extractive institutions, but by properly upholding private property rights and limiting government to preserving liberty as inclusive institutions become the norm instead of the exception.
We can do this so that there are more opportunities to #LetPeopleProsper
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!)
In today's Let People Prosper episode, I first give an overview on the U.S. markets: General overview was that stocks were down primarily from increased trade tensions with Turkey, dollar appreciated, oil fell to $65 per barrel, and the 10-yr Treasury note rate declined to 2.86%.
Americans' wages are up around 3 percent over the last twelve months. But the cost of living, measured by the consumer price index (CPI), is up by almost that rate. In other words, you can purchase the same basket of goods you did last year but probably not much more. A recent Wall Street Journal article says that "Rising U.S. Consumer Prices Are Eroding Wage Gains."
However, is this really true? Which prices are going up and why?
Let's discuss! #LetPeopleProsper
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.
Good jobs report: Nonfarm payroll employment up 213,000 in June, unemployment rate at 4.0%, jobs created in professional and business services, manufacturing, & health care, while retail trade lost jobs. Average hourly earnings up 2.7% over last year.
Job creation of 213K beat expectations of 195K. Unemployment rate up as 601K joined labor force—normal turnover, better job prospects, or grads from high school/college. Still many on sidelines as 25-54 yr old emp-pop ratio creeps up.
Payrolls for May were revised to 244,000 from 223,000 and April numbers revised to 175,000 from 159,000. That added a net of 37,000 new jobs in the prior two months.
Manufacturing sectot.co/tBi7ehT844r added 36K jobs in June, up from 19K jobs added in sector in May. Most of June's hiring was in the durable goods sector. Over the past year, manufacturing sector has added 285,000 jobs. Production drives growth.
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.
Vance Ginn, Ph.D.