Despite a shrinking economy in the first quarter, and outright declines for consumer spending and manufacturing in April, the May jobs report delivered the fourth-straight monthly gain above 200,000, with nonfarm payrolls jumping 217,000. This is the best four-month increase since late 1999. And finally — after five years — total U.S. payrolls rose above the previous employment peak set in January 2008. (On the tenth anniversary of Ronald Reagan’s death, it’s worth noting that the Gipper’s supply-side policies reclaimed all the lost jobs from the 1981-82 recession in a matter of months.) As for the unemployment rate, it held steady at 6.3 percent. And the underemployment rate (U-6) dropped a tenth to 12.2 percent.
So overall, this was a positive report. And it’s good to see more Americans working. But there are still some serious warts in the jobs story.
One of those warts is a low 2.1 percent wage gain for the workforce. Wage growth for the last couple of years has been stuck around 2 percent. Even optimistic economist Mike Darda calls this “unimpressive take-home pay.” Worker wages are barely running ahead of inflation.
Another blemish in the jobs picture is the rock-bottom employment-to-population ratio. It’s sitting at only 58.9 percent, versus a pre-recession peak of 63.4 percent. And the labor-force participation rate didn’t move in May. It’s stuck at 62.8 percent.
Looking at working-age demographics, some believe there’s a jobs gap of nearly 7 million. And economist Scott Grannis notes that while private-sector jobs have been growing at roughly 2 percent for years, productivity has slumped to less than 1 percent.
So putting it all together, overall economic growth is still trapped in a sub-par growth zone. And it will remain there, Grannis says, “Unless and until policies in Washington become more growth-friendly (e.g. reduced tax and regulatory burdens).”
Aha! Growth-friendly policies.
As you know, this is an election year. So let’s see where the two political parties stack up on the subject of growth.
The Democrats want a minimum-wage hike. That may sound great on the surface, but it’s actually a big job loser for the lowest-skilled and poorest among us. President Obama and his EPA have launched a war on coal, which will cost hundreds of thousands of jobs if implemented. And then there’s Obamacare, which the CBO estimates will cost at least 2.5 million jobs.
Not a lot of growth-friendly policies coming from the Democrats.
But what of the Republicans? Where are their growth policies? Alas, with some notable individual exceptions, I fail to see a united GOP growth message.
The YG Network, founded by a former top staffer of Republican House Majority Leader Eric Cantor, has put out a white paper called “Room to Grow.” Nice title. But the chapter on tax reform actually attacks supply-side economics, and it never even mentions corporate tax reform.
Readers know that corporate tax reform is my single-favorite pro-growth policy. Actually, I’d like to abolish the corporate income tax altogether — including all the cronyist, big-government special favors, carve-outs, deductions, and exemptions. Out with all the K Street mischief.
You know who the biggest winners would be? Wage earners. That’s right. Corporations don’t pay taxes. They merely collect, and then pass on the tax cost in the form of lower wages and higher consumer prices.
Want to maximize wages? Forget the minimum wage and embrace corporate tax reform.