Bad Economic Policies are Causing Sustained Unemployment
Temp jobs are up 20% year over year, while permanent private sector jobs are down 1%. Trevor Frankel argues that this is caused by public policies:
The part that most clearly indicates policy is the problem is the temp hiring. If businesses are hiring temps off the bottom of a recession, it means that they’re seeing demand pick up but they’re too uncertain to actually hire someone full time. This is usually followed by permanent hiring, but in this recovery, it has not been. The only obvious culprits here are (a) higher required wages and healthcare costs (minimum wage, housing interventions and Obamacare are prime candidates here) and (b) general lack of confidence in the economy and policy (the political climate in general is the prime candidate here).
HT to Marginal Revolution.
Gary Becker weighs in below the fold.
Aside from repeated attacks on American business, especially banks-some of them deserved- they not only passed various stimulus packages (that did not stimulate much), but also tried to promote a vast legislative program that had nothing to do with fighting the recession. This program was aimed at reengineering the American economy. It included radical changes in the health care system, proposed taxes on carbon emissions by companies, much larger subsidies to alternative sources of energy, such as wind power, proposals to raise taxes on higher income individuals and on corporate profits, and to raise the taxes on capital gains and corporate dividends. It also includes a movement to make anti-trust laws less pro-consumer and more protective of competitors from aggressive and innovative companies. It has as its centerpiece a financial reform bill that was a complicated and a politically driven mixture of sensible reforms, and senseless changes that had little to do with stabilizing the financial architecture, or correcting what was defective in prior regulations.
Full Becker analysis at his blog.
I think that this is definitely what is going on. Just think about the uncertainty in health care reform alone. More that 1,000 places in the Affordable Care Act have the phrase “the Secretary shall,” meaning that she has enormous discretionary power and nobody knows how she will use it, or how the next Secretary will use it.
Add to that all the other cosly labor regulations favored by the administration, and there is no way any employer could predict what his labor costs are going to be if he hires full time employees.
I agree with Neil. And with Becker. And with Frankel.
Every employer has a perverse incentive to hire contract labor or temporary labor or farm out anything that is labor intensive rather than make (what effectively become) long term commitments to employees that have unpredictable costs.
Just about everything this administration has proposed from day one will increase the cost of hiring employees. I can’t think of a single exception.
Hmmm. If there were a vast supply of available temps, and you could then avoid paying benefits and you werent sure if a double dip was coming, what would you do?
Steve
I think the thesis here is basically correct.
All the more reason to work for smaller, organizations with long histories. Big business (aka Hospitals) care about nothing and I mean nothing but $. They expect loyalty with no intention to return the favor.