Friday, September 30, 2011

Regulatory uncertainty: A false explanation for our jobs crisis

After being sidelined in policy debates for far too long, America's jobs crisis is finally at the center of discourse.  In Regulatory uncertainty: A phony explanation for our jobs problem, EPI President Lawrence Mishel juxtaposes the two prevailing explanations for the country's jobs crisis.  The evidence-based explanation pinpoints the country's depressed demand for goods and services because of the bursting of the housing and stock market bubbles. The other story, mainly espoused by Republican politicians and business trade associations, purports that business investment and hiring is being held back by uncertainty over future regulations and taxation.

The report examines what employers are actually doing and saying in private surveys regarding investments and hiring.  As it turns out, neither their actions nor their privately surveyed statements support conservatives’ “uncertainty” narrative.  Mishel notes that not only is the term "uncertainty" a misnomer, as the regulatory process is moving along and the rules are becoming final and therefore certain, but also that it is not even true that regulations cause job losses.

A comparison of investment and private-sector job growth between this recovery and the most recent recoveries suggests that future regulations and taxes are not the problem, as investment in the current recovery has increased more than it had at the same time period in the prior two recoveries and roughly the same as it did during the 1980s recovery.   What differentiates this recovery is actually the loss of public-sector jobs.  Finally, when the National Federation of Independent Business asked “what is the single most important problem your business faces?” the most common response was “poor sales.” Surveyed businesses do also report a high level of concern over regulation and taxation, but not more so than they did under  Presidents Reagan, Clinton, or either of the Bushes.

Mishel's paper is getting significant media coverage, particularly amongst noted economic columnists and bloggers, including the New York Times’ Paul Krugman, Washington Post’s Greg Sargent and Ezra Klein, Slate's David Weigel, Brad DeLong, and the Center on Budget and Policy Priorities’ Jared Bernstein.

In his New York Times’ blog, Paul Krugman wrote:

“Larry Mishel has a very good piece systematically debunking the zombie claim that fears of regulation are holding back job creation. There is, literally, not a shred of evidence for this claim — not in the numbers, not in what businesses say. Yet it has been eagerly adopted not just by Republican politicians but by Chicago economists, Federal Reserve presidents, and more.”
Krugman discussed the issue further in his column, "Phony Fear Factor."

The Washington Post’s Greg Sargent said: “Lawrence Mishel offers the most thorough takedown yet of the conservative idea that regulatory uncertainty is behind our economic problems.”

Slate’s David Weigel praised the paper calling it "an important, useful report out about the Republican argument that ‘regulatory uncertainty’ is depressing growth and investment.”

And from Jared Bernstein's On the Economy: "Larry Mishel, president of the Economic Policy Institute, has an extremely useful piece up collecting all the reasons -- with evidence -- why the conservatives' ‘uncertainty’ talking point is shovel-ready nonsense."

White-collar unemployment is double its pre-recession level for almost 2.5 years

The nation’s persistent high unemployment and stagnant recovery has impacted Americans of all demographics and skill levels.
This week’s Economic Snapshot shows that the unemployment rate among white-collar workers has been 6 percent or higher for 29 consecutive months, double its pre-recession level of 3 percent in December 2007. The only other time since 1973 that white-collar unemployment reached 6 percent was a six-month period from November 1982 through April 1983. This persistent high unemployment among white-collar workers runs counter to the claim some make that our high unemployment is primarily “structural,” a false notion that there are plentiful job openings but an inadequate supply of workers with the right skills to fill them.

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