To listen to President Obama, Americans live in a liberal paradise—a robust economy, 75 consecutive months of jobs growth and a government aggressively promoting social justice.
Unfortunately, it’s not so. Family incomes are down about $1,600 on Obama’s watch, whereas they rose by $4,800 during the Reagan years. For African-American families, income losses are greater, their children trail further in school achievement, poverty is tougher to escape, and the wealth gap with whites has widened
Friday’s Labor Department jobs report tells the sad story why.
The economy added a paltry 38,000 new positions in May. The liberal media will apologize that the Verizon strike likely cut 35,000 jobs from the report but monthly job gains have been trending down since 2014 and 2015. That’s frustrating a stronger recovery in wages, especially for minorities.
Ronald Reagan accomplished about twice the jobs and GDP growth during his recovery by cutting taxes, tearing down regulations and negotiating a deal with Asia exporters to stop pushing down values of their currencies.
Consumers are spending and second quarter GDP growth appears to be strong, but businesses have good reason to make do with the workers they have. Liberal meddling makes hiring and investing in America too tough.
During the Obama years, laxer eligibility requirements for Medicaid and food stamps, fraudulent Social Security pensions, Obamacare subsidies and the like have boosted transfer payments $560 billion. For low income families, sending a second adult to work or training for a higher paying position imposes a 50 to 80 percent penalty from additional taxes and lost benefits.
For those folks the most reasonable self-improvement strategy is to stuff envelopes for Hillary.
Businesses are burdened with an avalanche of new regulations and the highest taxes on profits in the industrialized world. In other countries, governments pay for health care, whereas tough Obamacare mandates for business are not counted in tax comparisons.
Remember, beating down business is just the flip side of social justice.
Clinton promises an even tougher tax regime—penalties on businesses that don’t make what the government deems to be “smart” investments and exit taxes for companies that move operations abroad—and to further buildout Obamacare.
Business greed can’t be blamed when Carrier or Nabisco move jobs to Mexico or when Apple puts $1 billion in a Chinese partner to help it develop driverless cars. They are behaving as rationally as immigrants streaming from Syria into Europe—getting out while the getting’s still good.
Even when businesses invest here in the U.S., workers with the right skills are scarce. Obama and friendly governors in New York, California and elsewhere have pushed as much of their budgets as possible into various forms of welfare by gutting universities and infrastructure.
Those politicians constantly urge young people to pursue degrees in social and environmental justice. When was the last time you heard the president or Governors Brown or Cuomo talk to young people about the value to America of choosing a career in science or engineering?
Granting half-baked diplomas in anti-capitalism and anti-Americanism—a.k.a. the liberal arts—are what university faculty like to do anyway. It should come as no surprise then that four in ten college graduates lack the critical thinking skills to be an entry level manager and businesses face enormous difficulties finding workers with technical skills.
The social indicators are terrible—the middle class is shrinking, suicides and drug abuse are up, fertility is falling precipitously, millions of college graduates are in low paying jobs, and home ownership is at a 48 year low.
When the president boasts each jobs report is another thrilling landmark on the road to prosperity, it’s OK. Life in America is still better than in Mali.
Peter Morici served as Chief Economist at the U.S. International Trade Commission from 1993 to 1995. He is an economist and professor at the Smith School of Business, University of Maryland, and a widely published columnist. He is the five time winner of the MarketWatch best forecaster award. Follow him on Twitter @PMorici1.