Why Our Job Market Is Dying Before Our Eyes
The world doesn't end with a bang, as T.S. Eliot wrote, but with a whimper, and thus it is with the U.S. job market.
The brutally disappointing employment report released by the Labor Department Friday showed that just 74,000 new jobs were created in December, far below the 196,000 predicted by economists. The unemployment rate fell to 6.7 percent, from 7 percent, but that was less about job creation than about people, fed up or unsuccessful in their job searches, dropping out of the labor force. Following the trend through most of the past year, that rate fell for the wrong reasons.
This number should be a wake-up call because of what it represents: the slow, steady erosion of our job market. It is time to face facts: Neither the ailment nor the cure has worked and this patient, our job market, is dying before our eyes. The ailment was the Great Recession, which brought our economy to near collapse and put millions out of work. But the cure hasn't been effective either. The heavy spending on social programs succeeded in providing a safety net to keep many people out of poverty, but it has done nothing to spur job creation. In fact, it may well have hurt, since the higher taxes needed to pay for those programs have placed an unnecessary and punitive burden on small and medium-sized businesses, which, in turn, have stifled their ability to hire workers.
What has been the result? People who want to work have become dependent on government assistance -- as evidenced by the huge battle over the decision to not extend benefits to the long-term unemployed. Putting government social policy over the interests and needs of businesses has been a disaster for the American worker. That argument should be flipped. Using the savings from those benefits to reinvest in American business -- of all sizes -- through reduction in taxes (and, since we're making the argument, reducing some of the regulatory burden to boot) would help business owners to grow their operations, increase sales and, yes, hire workers.
Is there short-term pain in this approach? Absolutely. But avoidance of pain is not causing recovery, but rather a slow death for our workers and our country. Given December's number from Labor, the U.S. economy averaged job growth of 183,000 per month in 2013. It averaged the same number in 2012. We are not in a recession, so you can't blame the economy for this stagnation in growth (which, not incidentally, doesn't keep up with immigration and new entries in the workforce, so it essentially means job erosion). You have to, then, blame policy, and the fundamental policy approach over the past five years has been to spend more on social programs and government assistance, all at the cost of America's businesses, the small business owners and our most successful earners. The villains have not been the policymakers who have bungled this economy, but rather the Wal-Marts, the Burger Kings and the Ubers of the world.
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In crisis, it is difficult to look at issues philosophically, but this is an economic no-brainer, known well by entrepreneurs and business leaders. The path to success in this country lies in seizing opportunity. There are jobs to be found. If those are found wanting in pay and benefits, they can be used as a ladder to rise up to something better. This is the only country in the world where individual freedom, ingenuity, drive and ambition can allow someone to pave her own way in life. That is the beauty of American capitalism, that, with all its faults, it still offers the opportunity for the best outcomes. But it takes work, it takes drive, it takes innovation. For the past several years, those traits have been devalued, and, instead, we have seen a steady stream of people simply fade away from the workforce, thus making their needs and lives the burden of others.
Policy and politics has failed, and defenders of more government intervention or safety-net expansion cannot look to the job market for data to support their case. The path to success is a reinvigoration of entrepreneurial drive. That means people starting their own businesses, or applying their skills and knowledge in the companies for which they work to better both that enterprise and their own situation. The freedom to choose to apply our labor in the best possible way, within the framework of a free market, can only lead to success. If more people changed their economic philosophy to embrace that, we would yield a bumper crop of jobs. If America's job market and economy are to be saved, it will be by the choices of the free man and individual, not the stumbling bureaucracy of government.
Ray Hennessey is the former editorial director of Entrepreneur.