As the monthly unemployment rate falls, even by only 0.1 percent, President Obama pats himself on the back while noting that “more work needs to be done.” If forced to acknowledge why the unemployment rate was actually falling, however, he would end the boasting. The unemployment rate is not declining because of Obama’s policies, it is falling primarily due to retiring baby boomers and discouraged individuals giving up looking for work, according to research by labor economist James Sherk of the Heritage Foundation.
“Today, 5.7 million fewer Americans are working or looking for work,” Sherk wrote in a recent analysis. “This drop accounts for virtually the entire reduction of the unemployment rate since 2009 — those not looking for work do not count as unemployed.” Besides baby boomers retiring, Sherk attributed the rest of the drop in the labor force participation rate to “millions more people going on disability insurance or attending school.”
On the other side of the same coin, the paucity of new hiring is due to high taxes and government regulations, according to a National Federation of Independent Business survey of its members. So Obama administration spokesmen want Americans to believe that the president’s policies produced the drop in unemployment, but in fact those policies led to the feeble economy that drives the rate lower.
“Excessive taxes and increased regulation discourage risk-taking and investment,” Sherk said. Proposed and enacted tax increases (18 in Obamacare alone) have generated an uncertain business climate in which employers can’t know what their total tax costs will be next year. About all they can be sure of is that they will be paying more, thanks to the fiscal cliff tax hike enacted in January 2013 that boosted the average top marginal tax rate to 48 percent.
America’s corporate tax rate is also the highest among the industrialized nations of the world. Costly regulations have spiked under Obama, with an annual cost ranging between $7 billion and $11 billion. Amid the onslaught of new taxes and regulations, every few months, Obama “pivots” to job creation. Despite the 19 such pivots Sherk identified, the labor market is not improving. Since the recession ended in June 2009, the number of reported layoffs has shrunk to pre-recession levels, but new hiring has fallen, and is mostly now for part-time positions, thanks to Obamacare.
The president and Congress must face reality: The economy is going the wrong way and more pivots won’t turn it around. Putting America back to work and strengthening the economy for everybody begins with government doing what needs to be done – cutting spending, taxes and regulations – instead of what Washington’s politicians have been doing for the past five years. The Obama recovery has been the slowest one since World War II. The only way to remedy the situation is to get government out of the way and let the private sector do what it does best: create jobs.