Hot Issue: Job Destruction in America
As America celebrates renewed economic growth, something is terribly wrong. Even as gross domestic product, retail sales, and consumer durables awake from their slumber, unemployment remains close to 10 percent, with a large share of the unemployed out of work for six months or more. The composition of the workforce is changing, with government jobs taking an increasing share of the total. Low-skill workers are finding it increasingly difficult to get jobs.
It is most troubling that whereas jobs are the first priority of most Americans, the administration’s legislative agenda would reduce jobs rather than create them. Proposed energy and environmental legislation, financial regulation proposals, tax increases, and the Employee Free Choice Act would all serve to drive jobs abroad rather than attract them to the United States.
The administration’s emphasis is on creating union jobs and passing legislation to help unions recruit additional members using measures such as project labor agreements and “high road” contracting, which give preferences to unions. This is vital to the union sector, because it needs more workers to bolster the finances of its underfunded pensions, both at the state and at the private multi-employer level. However, this raises the price of projects and increases federal and state budget deficits.
This document is divided into six sections. The first section reviews America’s current employment situation, and the second offers an overview of the changing composition of the workforce from private to government sector. The third section shows how the administration is trying to regulate employers through regulations on federal contractors. The fourth section describes how the administration’s legislation priorities will result in fewer jobs, with a higher concentration of employment in the union sector, and fewer workers employed in low-skill jobs. (I take a specific look at the impact of health care, cap and trade, and the ‘Employee Free Choice Act.’) The fifth section discusses the underfunding of union and state and local pensions. The final section contains conclusions and policy recommendations.