Business Items

“The movement has more, ‘This is what we believe,’ than, ‘This is what we are going to do about it,’” - Politico

Like much of the real media and commentariat, I let Friday’s preliminary employment report for February come and go without much fanfare. Please don’t mistake employment fatigue and a lack of immediate insight for disinterest.

To summarize the summary, February saw slight growth in both the labor force and the unemployed, as well as a slight decline amongst the ranks of the employed. All of these slight factors were so slight that they added up to the same 9.7% seasonally-adjusted unemployment rate that was reported for January. That doesn’t a leave a person with much to crow or complain about.

Complicating interpretation is February’s inclement weather. Depending on who you believe, the Eastern blizzards delayed hiring, caused unemployment to go under-reported, or stimulated the economy by virtue of requiring labor to clean up. The consensus seems to be that we should more or less take a mulligan on the preliminary report.

What makes that mulligan more problematic is that dilution by Census hiring will make the number from March through the end of the year somewhat difficult to take seriously. As Calculated Risk points out, Census hiring numbers will be readily available, allowing those of us outside the Labor Department to recognize the extent to which they’re skewing employment data. Still, though, one is skeptical about the propensity of mass media to take that further step.

As you may have already forgotten, the Senate passed an alleged jobs bill in the final week of February. The crux of that bill involves forgiving employers’ payroll tax obligations when small businesses hire new employees who’ve been unemployed for 60 days or longer. It gave many Senators the opportunity to be favorably joined to the phrase “small business,” of which everyone seems to be fond. It also promises to make forthcoming BLS reports look slightly less alarming as we near November. If you happen to encounter a Senator, you might thank him or her for actively treating the symptoms rather than the disease.

The underlying disease — and how to treat it — remains a somewhat open question. Of late, the economic zeitgeist has been rumbling with ongoing discussion of how productivity and employment run at cross purposes. Representing the free market anarchist camp is Alex Tabarrok or Marginal Revolution, who makes a valid case for the long-term value of increased productivity. It makes more products and services available at lower prices while freeing labor to work elsewhere. Of course, that assumes enough demand exists to continue driving demand and new sources of employment.

On the other hand, Angry Bear isn’t wrong to recognize that the contrapositive holds, as well. Just as rising productivity causes short-term job losses, so declining employment drives productivity higher. As the least vital employees are sloughed, those that remain have a higher utility density, and the fear of job loss increases productivity per worker. The ideal situation for employers, then would be to maximizes productivity by maintaining minimal employment throughout the system. It’s a bit like the episode of The Simpsons when MENSA governed Springfield and decided to use only yellow and red lights at intersections because people drove most quickly through yellow lights.

Come to think of it, yellow lights could be a good analogy for much in the realm of employment these days.

“I have missed the Kentucky-South Carolina game that started at 9:00 and it’s the only redeeming chance we had to beat South Carolina since they’re the only team that has beat Kentucky this year.” - Sen. Jim Bunning

How about that Jim Bunning, eh? [Note: This phrase feels right, but I may have watched too much curling last month. Canada may be the Finland of North America.] Extending unemployment relief is the kind of thing one might expect to pass without a hitch. Any functional deliberative body could at least get the extension passed before existing relief efforts lapsed, right? Before you answer, ask yourself whether the U.S. Senate qualifies as a “functional deliberative body.”

I know I’m late to the party, but it still bears explanation. On Friday, Bunning began objecting to a necessary procedural motion to pass the relief bill. Having recently voted against a “pay as you go” measure, he was stalling relief on the principle that the bill included neither the appropriations nor the budget cuts necessary to pay for itself. This argument might have been brought to the fore earlier in the week. On Sunday, the benefits in question lapsed, and on Tuesday, Bunning finally relented under pressure from both parties.

To put this in perspective, Jim Bunning held up the unemployment extension longer than it takes to play the World Series of Beer Pong (WSOBP). When the bill was finally voted upon, he hid in the Republican Cloak Room. By contrast, Maxim reports that the WSOBP losers still have a good time.

With BLS set to release February’s preliminary Employment Situation Summary tomorrow, I ought not get ahead of myself. Nonetheless, the enormity of Bunning’s endeavor deserves the shedding of some light. As a portion of the civilian non-institutional population (seasonally-adjusted), fewer Americans held full-time jobs in January 2010 than at any point since at least February 1983.

Keep in mind that much of the pain in 1983 was more or less self-inflicted. Inflation having grown to thunderous proportions in the preceding years, The Wise One (Paul Volcker) was easing the fed funds rate down from its height of 19.1% (summer 1981) to around 8.5% in February of 1983. As the economy reacted to loosening monetary policy, jobs returned.

By contrast, our contemporary fed funds rate can’t get low enough. This is true in the most literal sense. That’s why we all know what quantitative easing means.

Of course, extending relief efforts isn’t a solution to the jobless situation, which will extend through at least the medium term — barring some miracle. Perhaps it’s just adding insult to injury, but a pair of Brits recently released a book arguing that income inequality either exacerbates or causes many social ills. Included is a summary of how U.S. income inequality has consistently grown in the past 30-odd years. If you have a surfeit of free time, then you might check it out from your local library.

Normally, a person would just assume that income inequality wasn’t a Republican priority. This week, however, they’ve done us the favor of making their support of that socially deleterious situation explicit.

It seems some knucklehead at a Republican National Committee (RNC) fund raising meeting forgot to take his or her handouts home, and their contents have now been reported by Politico. How do they plan to raise funds as the out-of-power party? Going back to the fear-mongering well, their line is “Save the country from trending toward Socialism!” I guess that’s an easier sell than “F*$k poor people!” but seriously…these people don’t even have the sense to write a sales pitch that doesn’t equivocate.

Then again, what can you really expect? Even CNN is reporting evidence that conservatives may have gotten the downside of the cranial Schwartz.

“Canadian rage feels like an apology.” - Stephen Colbert

Canadians have an incomplete understanding of the War of 1812. Much of their oversight has to do with the fact that Canada, at the time, was populated not by Canadian citizens but by British subjects. Canada doesn’t include Alaska because the Brits refrained from bidding when Russia put it up for auction. Canada does, however, have the 2010 gold medal in men’s hockey. For sure.

While our neighbors to the North have been graciously hosting the Olympic Games, apathy and antipathy in the U.S. have proceeded apace. I’m talking, of course, about last week’s legislative summit at Blair House. Needing to sleep, I only caught the first 3 hours.

In those 3 hours, I saw Eric Cantor and other Republicans describe some of their “common sense reforms.” The thought that people might believe these proposals are credible makes a person think the Department of Education could do with a bit more funding.

One must commend the President, for instance, for illustrating how a perfunctory understanding of insurance precludes incremental adoption of coverage reforms. Whether administered by a public or private body, health insurance is a matter of risk dispersion. In effect, those with a low risk of injury or disease — athletes, for example — subsidize the treatments required by higher-risk policyholders. In return, these low risk individuals defray their own medical expenses, should they do something like accidentally shoot themselves when their own firearms slip out of their sweatpants at night clubs.

You can see, then, why insurance companies reasonably be required to offer affordable coverage regardless of preexisting conditions without receiving an off-setting base of healthy clients.

More contemptible is the call to allow interstate health insurance sales in the absence of federal regulation. Practically, such action would cause health insurers to nominally relocate to whatever state provided the loosest regulations. Seeking revenue from corporate taxes, states would compete, in turn, to provide the least protection to policyholders. All this competition would certainly lead to lower premiums; it would also lead to extensive lapses in oversight and coverage.

What makes the interstate commerce argument so despicable, however, is that it’s touted by people who claim the preeminence of local government as a “fundamental principle.” Federal regulation means living under guidelines determined by a body in which the voices of local representatives are diluted. Selling health insurance across state lines without substantial federal regulations would leave the majority of states’ residents living under guidelines determined externally to their electoral franchises.

Of course, we could circumvent much of this debate by simply instituting some form of socialized insurance or medicine. That’s another thing they’ve got in Canada.