There’s been a lot of hand-wringing about the most recent joblessness report, which provided unemployment statistics for December. The report indicated that business cut 85,000 jobs in December, whereas many economists had forecast there would be no jobs loss. Even worse, hundreds of thousands of frustrated, unsuccessful job seekers — 661,000 of them — apparently quit looking for work, which is the only reason the unemployment rate stayed steady at 10 percent. These facts, and the presence of many workers who are working at less than full capacity due to furlough days and reduced hours, indicate that it likely will take a while for the unemployment rate to improve dramatically. Even as the economy picks up, businesses will first fully engage their current underemployed workers, and then as job growth begins the disaffected workers who have stopped looking for work will come back to the labor market and begin to be counted as unemployed again.
I’ve written before about whether the overwhelming focus in Washington, D.C. on “health care reform,” rather than the economy and reform of our financial sector, may ultimately have a political cost. The theory is that even voters who might otherwise support efforts to reform our health care system may conclude that our elected officials have misplaced their priorities and have failed to address jobs, which is the most fundamental, bread-and-butter issue for many American households. Reelection campaigns based on claims of as-yet-unrealized improvements in our health care system may not have much appeal to people who have been out of a job for months and are frantic about feeding their families.
I also wonder, however, whether the legislative agenda has actually hindered the normal creation of jobs in the economy. As the Washington Post article linked above indicates, businesses obviously are being cautious in their hiring practices, apparently due to uncertainty about what the future may bring. Most attribute the guarded actions of employers to uncertainty about the future course of the economy generally, but I think it may well be that some of the tentativeness is due to uncertainty about what the current legislative agenda in Washington, D.C. might produce. If businesses are unsure about whether “health care reform” legislation will saddle them with increased monetary contributions and regulatory compliance requirements for each employee, whether “cap and trade” legislation will substantially increase and complicate the cost of heating and powering their businesses, and whether new taxes will be imposed to finance other initatives, they logically might decide to hold off on hiring new employees until the additional costs and regulatory burdens become known. Which raises a question: why is our Congress considering legislation that would impose new costs on businesses during a time of economic struggle and thereby discourage job creation?