Friday, August 14, 2009


A column by Jerry Bowyer at NRO introduced me to a new set of labor statistics, the JOLTS or Jobs Openings and Labor Turnover Survey. The hire rate has been declining for several years. In July of 2008 it slipped below 3.5, and the latest report, for June 2009, it has slipped below 2009. Business is reluctant to hire. Bowyer argues that it is because business is scared of the tax burden of hiring--any fires increase unemployment insurance they must pay.
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.
A problem with that explanation is that it does not explain the drop in the hire rate that predates the election of Barack Obama.

The Obama administration has done at least a respectable job, and maybe much better than merely respectable, on the demand side in trying to end the recession. They do not seem to see need to do anything on the supply side, which does create an interesting test for economics.

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