How Congress Can Spur Job Creation

The U.S. job picture continues to inch up and a Gallup poll shows Job Creation Hits Post-Recession High in April, primarily on the strength in manufacturing.

The red and deep blue anecdotes in the charts below are mine.

Gallup's Job Creation Index reached a new high of +13 in April. This does not differ much from the +12 of the prior two months, but well exceeds the +5 of April 2010.

Percent of Companies Hiring Minus Percent of Companies Firing

Survey Question

Based on what you know or have seen, would you say that in general, your company or employer is --

1) hiring new people and expanding the size of the workforce
2) not changing the size of its workforce
3) letting people go and reducing the size of its workforce

The long-suffering job markets in the Midwest appear to be benefiting from continuing improvements in the manufacturing sector, and one of the benefits of the weak U.S. dollar has been to make U.S. exports more attractive globally. As a result, this region has the lowest firing in the nation and, along with the East, shows the most year-over-year improvement.

Still, increased manufacturing activity has been enough to stimulate only a modest improvement in job growth nationwide. Although technically hitting a new high in April, Gallup's Job Creation Index suggests there has been a virtual stagnation of job market conditions over the past three months. This stagnation most likely reflects the slower economic growth of the first quarter that seems to have continued in April.

Current Conditions Analysis

Although the trend is improving (Gallup calls it a "virtual stagnation of job market conditions over the past three months"), the index is still only half it was in January of 2008 and likely must worse compared to pre-recession in October of 2007. I need a few extra months on Gallup's chart to see if I am correct.

An additional chart in the link depicts regional variations that show the Midwest and South performing the best at +15 each, followed by the East at +13 with the West lagging at +9.

Tax Hikes Cannot Create Jobs

Will the massive tax hikes that California's Governor Brown wants help? How can they? For further discussion of the mess in California please see Governor Brown Tells Cheering California Unions "You've Got a Friend"

If you thought California was bad please consider Governor Quinn Holds Illinois Cities Hostage Over Budget Proposal; Cities Face Massive Cash Crunch

Yet somehow the Administration thinks, and the fools running Illinois and California think "higher taxes are the solution".

Survey Flaws and Corporate Profits

One flaw in a survey like this is a lack of scale. A company firing just one worker counts as much as a company hiring 200. The reverse is true as well where companies firing 200 workers have as much weight in the survey as those hiring one person.

Nonetheless, the survey shows just how drawn out the "recovery" has been compared to the decline.

Corporate profits are up, and one of the reasons is that hiring has been anemic as compared to normal recoveries in prior years. Now what?

U.S. Questions and Answers

• Is there any pent-up demand for autos? No
• Will auto manufacturing increase, decrease, or level off? Level off at best
• Will retail hiring increase, decrease, or level off? Weak hiring at best
• Is housing poised for a rebound? No
• What about cutbacks at the state level? Expect more layoffs
• If the recovery falters is Congress going to start massive jobs programs? No
• Is government spending going to lead the way forward? Let's hope not. We have too much spending already and need to reduce the deficit.

Global Questions and Answers

• Is China going to slow? Yes, like it or not China must slow because it is overheating. This will reduce China's demand for commodities as well as demand for US goods and services
• Is Europe going to slow? Yes, because of tax hikes by the ECB, the strengthening Euro, and the renewed pickup in the sovereign debt crisis.
• What about property bubbles in Australia and Canada? The bubble has popped in Australia and will pop in Canada. Both will impact global growth.

Those expecting a smooth continued expansion in jobs better have different answers to the questions I asked above.

Want a sure-fire way to increase job expansion? I have two.

How Congress Can Spur Job Creation

1. Pass National Right-to-Work Laws
2. Scrap Davis-Bacon and all Prevailing Wage Laws

Unions and socialists will howl at those suggestions but government does not exist to provide high-paying jobs with preposterous benefits to pubic union workers when everyone else has to be taxed to death to pay for it.

Nor is it the role of government, or the right of government to tell corporations where they can do business. For further discussion President Obama's Slave Trade; Senator DeMint Says Team Obama Acts Like Thugs; Death of Right-to-Work?

Instead of taxing everyone to death for the sole benefit of public unions and the politicians who take bribes from public unions, why not put more money in everyone's pocket where it can be put to far better use?