We trudge without enthusiasm toward electing the next crop of politicians. News channels pretend that something meaningful is happening, but federal candidates rarely offer policy positions deeper than one sentence. Instead they offer vacuous promises of greatness and pompous themes from the 1960s. Political blatherskites preach class warfare and condone hypersensitivity on college campuses. Taxpayers carrying government’s deadweight programs are less interested in entitlements than in meaningful proposals to accelerate economic growth.
Even political junkies are no longer feeling the joy. Some Democrats are joining the Trump camp and many Republicans are vowing “anyone but Trump. With eight long months before the election, many of us wish it was already over. Instead of rabble rousing and puerile insults, we would prefer cooperation in the pursuit of achievable economic goals and aggressive steps to protect the American public from cybercrimes.
On the surface, it appears that we recovered from the great recession of ’09. Last year GDP grew at 2.5% and inflation was scant. The official U-3 unemployment rate stands at 4.9%, much better than the 10% in 2009, but the pleasant news hides a disturbing story.
U-6 is the unemployment rate that includes all unemployed as well as persons marginally attached to the labor force, plus total employed part time for economic reasons. U-6 was 17% in 2009 but it fell to 9.7 percent in February 2016. There is another 92 million adults who do not participate in the labor force – a jump of 7.1 million since February 2009. These non-participants include students, retirees, homemakers, and those who choose not to work. Regardless of why they do not participate, labor force conditions influence their well-being, and some would gladly be employed if they had the chance. Economic vigor matters to everyone.
In the 4th quarter of 2015, hourly output per worker decreased at a 2.2% annual rate, forcing employers to hire more workers just to keep output at desired levels. In February 2016, 242,000 jobs were created, but 7 out of each 8 new jobs were part-time. Adding to the gloom, in February, hourly wages fell by 3 cents per hour and average weekly hours declined by 0.2 hours, resulting in nearly stagnant wages per worker.
Even more sinister is the drop in productivity. It undermines future wage increases. Productivity increases can come from better equipment or from more efficient labor. New equipment is made affordable by today’s low interest rates, so employers will substitute new equipment for labor when they can. Technological substitution and competition from low-priced offshore labor have been depleting wage-paying US jobs. Politicians generally get that part right, but they too often stumble into ranting about evil one-percenters. Punitive taxes do not address the problem, and there are not enough Peters to rob and there are too many Pauls to pay.
The genuine cure must come from equipping more of US labor with skills that win in international competition. We must fixate on producing high value goods and services not on nuts, bolts, washers, lumber and tires. That calls for a thoughtful overhaul of K-12 and encouraging “trade schools” for the service jobs that cannot be exported. Our education system needs a high performance focus – no social promotion – only competent, well-paid teachers, and no whining about standardized tests. Parents should be coached on their essential role especially before kindergarten. Fixing our labor pool will take a decade or two and it should be a natural for politicians to support.
While that is underway, we need to defend our economy from hackers. During 2015, an average of 160 US companies per week faced cyber-attack. The Target cyber-breach affected 110 million people, the Anthem Health attack affected 80 million, and the attack on the federal Office of Personnel Management exposed personal information for millions of workers, including the personal details needed to obtain security clearance. During a White House press conference and milquetoast speech on legal niceties and international diplomacy, our Department of Defense was hacked. US law precludes the private sector chasing and apprehending its attackers, yet government reactions to the attacks have been largely ineffective.
Our reaction to foreign and domestic hackers has to be a technological assault and sometimes boots on the ground supported by bounties and serious weapons. We must waste no resources on the welfare of hackers and terrorists. Our focus must be on protecting the American public. If politicians are not focused on fostering economic growth and protecting the American public, they should stay out of politics.