Worst. Hires Rate. Ever.Welcome to the “Help Not Wanted” economy.
By Jerry Bowyer
It’s not enough for most people to know what the unemployment rate is and whether it’s going up or down. It’s not enough for investors and entrepreneurs living during some of the strangest times in American financial history. And it’s not enough for citizens trying to decide whether the policy proposals now in Washington are worthy of their support. If you fall into any of these categories, you need to know more about the labor market than the headline numbers. In particular, you need to know the JOLT.Last week we learned that non-farm payrolls dropped by “only” 247,000 and that the unemployment rate decreased a tick from 9.5 percent to 9.4 percent — important statistics both. This week, however, a lesser-known but no-less-vital jobs indicator arrived: the Job Openings and Labor Turnover Survey (or JOLT, to its friends). This survey breaks down the ins and outs, literally, of our dynamic employment system. It tells us how fast we’re hiring, firing, quitting, and offering gainful employment. Critically, it tells us the hires rate.
The Bureau of Labor Statistics defines the hires rate as the “number of hires during the month divided by the number of employees who worked during or received pay for the pay period that includes the 12th of the month.” And the latest hires rate — the worst in the history of this measure — confirms what BuzzCharts has been reporting for months (see “Obama’s Magical Misery Tour” and “The Jobless Recovery”): Entrepreneurs and business managers are frozen. They’ve stopped posting want ads and they’ve stopped adding staff. When I look at the chart above, I see a giant sign hanging in the window of America. It reads: “Help Not Wanted.” Economic minds on the political left might reflexively counter that the blame should fall on the greedy businesspeople who are not hiring. But even if we concede that business owners are greedy (which we do not), was there ever a point, across the hundreds of months during which the hiring rate has been reported, when they weren’t greedy? Weren’t they greedy when they went on a hiring spree following passage of the Bush-Cheney (or is it the other way around?) tax cuts of 2003? Did Obama make them greedy?No, but Obama has made them scared. Everywhere I go I hear the same story. Business owners know the little details that academics and pundits don’t, and they know what not to do. They know, for example, that payroll taxes are not only scheduled to rise, but already have risen. And they know all too well that government-mandated unemployment compensation is funded by employers through an unemployment-compensation payroll tax. As a result, they know not to hire.As a business owner, your unemployment-compensation level rises as you are forced to cut your workforce. And when job-market conditions are strained, as they are now, each new employee you hire becomes a potentially larger cost center than he used to be for each hour worked. If you let him go, you will end up paying him anyway every time you cut a check to your remaining employees. My friend Art Laffer calls this a “wedge” between employee and employer. It’s a job killer and a wealth killer.BuzzCharts offers its sincerest prayers and condolences to the roughly 15 million Americans — including one in four teenagers and one in three African-American teenagers — who want work but can’t find it. We’ve been there too.But if the job statistics don’t miraculously recover, you’ll need to proceed as follows: Next year, get out there and elect for yourself, and the rest of us, a new Congress. One that understands the way the world really works.Two years after that, vote in a new president.— Jerry Bowyer is an economist, CNBC contributor, and author of the upcoming Free Market Capitalist’s Survival Guide.
Friday, August 14, 2009
Sunday, August 9, 2009
The Truth About Obama's Health Care Plan
What is the difference between waste and the health care you want? Answer: a government bureaucrat.
Posted on Friday at Heartland.org is a new comprehensive study: The Obama Health Plan: Rationing, Higher Taxes, and Lower Quality Care. The study explains in full detail, based on the pending Congressional legislation, exactly how the Obama health plan would impose government rationing that will deny you health care, severely restrict your freedom of choice and control over your health care, raise, not lower, health costs, impose sharp tax increases that would leave America uncompetitive in the world economy, and increase federal spending, deficits and debt.
The rationing begins with the dominant public option government health insurance plan, which is authorized in the legislation to follow the practices of Medicare and Medicaid in sharply underpaying doctors and hospitals. Medicare pays doctors 20% below market rates, and hospitals 30% below market. Medicaid pays 30% to 40% less than Medicare.
This power to underpay medical bills is the most important reason the government public option health insurance plan will eventually drive out the private competitors, leaving you without the choice of keeping your current insurance plan. Any private plans that do manage to survive will be able to do so only by adopting the practice of paying only what the government plan pays. So the government will end up dictating all payments to health providers in any event.
Doctors and hospitals will consequently begin to restrict their care to fit what the government will pay. Their practices will shrink to avoid the more expensive medical services and treatments that the government payments will not sufficiently cover.
These underpayment practices in turn will have dramatic, powerful effects on investment in the health care industry. Investors are not going to finance acquisition of the latest, most advanced equipment and technologies with the government slashing compensation for the services such technologies provide. Investors are also not going to finance expanded or new hospital facilities or clinics, or even the full maintenance of existing ones.
The supply of doctors, surgeons and specialists will also decline, just when demand for their services is soaring under the Obama health plan giveaways. Obama repeatedly says that under his health reform plan if you like your doctor you will be able to keep him or her. But the real question is whether under his reform plan your doctor will be willing to keep you, when the government refuses to pay adequately for the health care services you want and need.
This is how the long waiting lines for diagnostics, surgery, and other referrals begin to develop. This is why in other countries with national health plans or socialized medicine, facilities seem old, aged, and deteriorated.
Vast new realms of possible, innovative, new health services and care opened up by modern science will lag unutilized. Drug companies will also cut back sharply on investment in new, cutting edge, restorative, painsaving, or lifesaving miracle drugs. Many people will suffer or die unnecessarily as a result.
A recent report from President Obama's Council of Economic Advisors (CEA)[1], which he has touted as showing how his health plan would reduce health costs, elaborates even more explicit and comprehensive government rationing of health care.
The CEA report says 30% of American health care is waste, which government bureaucracy is going to eliminate under Obama's health reforms. What is the difference between waste and the health care you want? Answer: a government bureaucrat.
The CEA says the government will reduce health costs by deciding for doctors and hospitals across the country what health care works and what doesn't. Even worse, it will decide what health care is cost effective, which means the government will decide whether your health care is worth the cost, not you and your doctor. This will be enforced through the payments to doctors and hospitals. Those who follow the government's dictates on your health care get paid, those that don't don't get paid.
These are some of the reasons why the public is now protesting so angrily against the Obama health plan in public forums all over the country, and why the polls show the public has turned in decisive opposition to the Obama health plan.
President Obama insists that if you like the health insurance you have today, you will be able to keep it. But under his health plan, if you have employer provided health insurance, that won't be your choice, it will be your employer's choice. Your employer will have every incentive to dump you into the so-called public option, government insurance plan, and pay an 8% payroll tax instead. If the employer's work force averages $50,000 a year in wages, then the employer would only have to pay $4,000 per year per worker under the payroll tax, which would likely be less than what he is paying for your current health coverage.
[1] The President's Council of Economic Advisors, The Economic Case for Health Reform, June 2, 2009
Peter Ferrara is Director of Entitlement and Budget Policy for the Institute for Policy Innovation, and General Counsel of the American Civil Rights Union. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under the first President Bush.
Posted on Friday at Heartland.org is a new comprehensive study: The Obama Health Plan: Rationing, Higher Taxes, and Lower Quality Care. The study explains in full detail, based on the pending Congressional legislation, exactly how the Obama health plan would impose government rationing that will deny you health care, severely restrict your freedom of choice and control over your health care, raise, not lower, health costs, impose sharp tax increases that would leave America uncompetitive in the world economy, and increase federal spending, deficits and debt.
The rationing begins with the dominant public option government health insurance plan, which is authorized in the legislation to follow the practices of Medicare and Medicaid in sharply underpaying doctors and hospitals. Medicare pays doctors 20% below market rates, and hospitals 30% below market. Medicaid pays 30% to 40% less than Medicare.
This power to underpay medical bills is the most important reason the government public option health insurance plan will eventually drive out the private competitors, leaving you without the choice of keeping your current insurance plan. Any private plans that do manage to survive will be able to do so only by adopting the practice of paying only what the government plan pays. So the government will end up dictating all payments to health providers in any event.
Doctors and hospitals will consequently begin to restrict their care to fit what the government will pay. Their practices will shrink to avoid the more expensive medical services and treatments that the government payments will not sufficiently cover.
These underpayment practices in turn will have dramatic, powerful effects on investment in the health care industry. Investors are not going to finance acquisition of the latest, most advanced equipment and technologies with the government slashing compensation for the services such technologies provide. Investors are also not going to finance expanded or new hospital facilities or clinics, or even the full maintenance of existing ones.
The supply of doctors, surgeons and specialists will also decline, just when demand for their services is soaring under the Obama health plan giveaways. Obama repeatedly says that under his health reform plan if you like your doctor you will be able to keep him or her. But the real question is whether under his reform plan your doctor will be willing to keep you, when the government refuses to pay adequately for the health care services you want and need.
This is how the long waiting lines for diagnostics, surgery, and other referrals begin to develop. This is why in other countries with national health plans or socialized medicine, facilities seem old, aged, and deteriorated.
Vast new realms of possible, innovative, new health services and care opened up by modern science will lag unutilized. Drug companies will also cut back sharply on investment in new, cutting edge, restorative, painsaving, or lifesaving miracle drugs. Many people will suffer or die unnecessarily as a result.
A recent report from President Obama's Council of Economic Advisors (CEA)[1], which he has touted as showing how his health plan would reduce health costs, elaborates even more explicit and comprehensive government rationing of health care.
The CEA report says 30% of American health care is waste, which government bureaucracy is going to eliminate under Obama's health reforms. What is the difference between waste and the health care you want? Answer: a government bureaucrat.
The CEA says the government will reduce health costs by deciding for doctors and hospitals across the country what health care works and what doesn't. Even worse, it will decide what health care is cost effective, which means the government will decide whether your health care is worth the cost, not you and your doctor. This will be enforced through the payments to doctors and hospitals. Those who follow the government's dictates on your health care get paid, those that don't don't get paid.
These are some of the reasons why the public is now protesting so angrily against the Obama health plan in public forums all over the country, and why the polls show the public has turned in decisive opposition to the Obama health plan.
President Obama insists that if you like the health insurance you have today, you will be able to keep it. But under his health plan, if you have employer provided health insurance, that won't be your choice, it will be your employer's choice. Your employer will have every incentive to dump you into the so-called public option, government insurance plan, and pay an 8% payroll tax instead. If the employer's work force averages $50,000 a year in wages, then the employer would only have to pay $4,000 per year per worker under the payroll tax, which would likely be less than what he is paying for your current health coverage.
[1] The President's Council of Economic Advisors, The Economic Case for Health Reform, June 2, 2009
Peter Ferrara is Director of Entitlement and Budget Policy for the Institute for Policy Innovation, and General Counsel of the American Civil Rights Union. He served in the White House Office of Policy Development under President Reagan, and as Associate Deputy Attorney General of the United States under the first President Bush.
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