econscius

Archive for the ‘Job Creation’ Category

Rejoice For The Stimulus Project Called Hurricane Sandy!

In Economy, Job Creation, Obama Administration on November 2, 2012 at 8:06 pm

Do you believe in stimulus programs?  Do you believe jobs are created by the government?  Are you Keynesian?  Are you voting for Barack Obama?

If so, rejoice!  Hurricane Sandy is a massive stimulus program.  Set aside the civilian deaths for a moment and focus on the government and private sector spending.

Think of Sandy as a $60 billion dollar injection of stimulus. [1]

In one watery swoop, Sally sept into millions of tight-fisted consumers’ wallets.  A frugal Congress can’t stop government spending via FEMA.  “Fannie Mae and Freddie Mac said they will offer help to borrowers whose homes were damaged or destroyed.” [1] 

Deductibles and out-of-pocket expenses to fix broken windows will rev up the metropolitan New York economy.  Think of all the drywall and generators sold by Home Depot.  Surely, pump makers like Britain’s Andrew Sykes Group are busy.  Ruined cars must be replaced, employing autoworkers in Japan and the USA. 

NYC looters [2] act as stimuli, forcing small businesses to restock.  Retailers who love a few dozen TVs and smartphones in a robbery have to replace their electronic inventory.   This creates jobs, doesn’t it?  Even if the products are made abroad, Americans are employed in the ports, on the railroads and at the trucking firms that bring in the replacement wide-screen plasmas.  The looters might even be 99%’s, taking from 1% retailers.

The rebuilding money comes from the federal government, consumers and insurance companies.  Isn’t it good to raid greedy insurance companies?

But does Mother Nature’s destruction of a 2011 Impala actually help us?  The 2012 Impala replacement comes from a combination of an insurance company’s settlement plus a consumer’s deductible.  Is that money free? 

The illustrious French economist Frederic Bastiat addressed the Lindsay Lohan-like thinking behind the above “Sandy stimulus” in his classic  “That Which Is Seen, and That Which Is Not Seen.” [3]   Bastiat looked at the example of the shopkeeper, whose window is broken by someone.  The Obama-Krugman view is that broken windows are very good.  The shopkeeper spends six francs to purchase a window; someone is paid to install it.  The window seller and the window installer receive those francs which they then spend elsewhere in the economy, say for beer and fishing rods, employing even more.  The broken window bonanza flows through the economy, creating what the Keynesians call a “multiplier effect”.  A single dollar spent fixing a window broken by a vandal might become $5 as it filters through the world economy.

The strange conclusion becomes that the economy really needs more broken windows.  Vandals are heroes.  Bastiat saw through that twisted logic, writing about the unseen effects, namely the things the shopkeeper would have spent the six francs on something else, which would have the same multiplicative effect on the economy.  The difference would be a net increase in the economy.  Instead of ending with a replacement window no different from the previous pane, at a cost of six francs, the shopkeeper would have bought something else.

As our shopkeeper has spent six francs upon one thing, he cannot spend them upon another. It is not seen that if he had not had a window to replace, he would, perhaps, have replaced his old shoes, or added another book to his library. In short, he would have employed his six francs in some way, which this accident has prevented. [3]

Let us take a view of industry in general, as affected by this circumstance. The window being broken, the glazier’s trade is encouraged to the amount of six francs: this is that which is seen.

If the window had not been broken, the shoemaker’s trade (or some other) would have been encouraged to the amount of six francs: this is that which is not seen.

And if that which is not seen is taken into consideration, because it is a negative fact, as well as that which is seen, because it is a positive fact, it will be understood that neither industry in general, nor the sum total of national labor, is affected, whether windows are broken or not.

The Keynesian fallacy rests on an idea of huge amounts of savings, selfishly unspent, that could be employing someone.  In the USA of 2012, most everyone is leveraged.  The US government is $16 Trillion in debt, with no hope of repayment.  Consumers are struggling to make ends meet, many deep in debt.  Tens of millions of homeowners’ mortgages are as underwater as the Queens-Midtown Tunnel.  Insurance money is not free, it comes from somewhere.  Property insurers will liquidate their stock and bond holdings to pay Sandy claims, slicing money from the economic system.  They will replenish those reserves by reducing dividends, which takes money out of the economy, and by raising insurance premiums, which also grabs cash from the economy.

Sandy is not really a Stimulus project for the US economy.  It’s an economic calamity just as it’s a humanitarian crisis.

[1] http://business.time.com/2012/10/31/hurricane-sandy-estimated-to-cost-60-billion/

[2] http://news.yahoo.com/blogs/abc-blogs/looters-arrested-post-superstorm-spree-182401079–abc-news-savings-and-investment.html

[3] http://mises.org/daily/3804/The-Broken-Window

###

US Tax Code Driving Employers Overseas

In Job Creation on August 29, 2012 at 10:26 am

Europe as tax haven?  It is true for some companies.  Certain nations such as the United Kingdom, Switzerland and Ireland are more attractive than the United States for corporate taxes.  Big name companies are reincorporating, moving headquarters from places like Chicago to London, which is exactly what Chicago-bred AON is doing.  Employers fear the Byzantine, high marginal tax rate code will worsen in 2013 and beyond.  Wall Street Journal articles today and in recent months discuss the problem.

“More big U.S. companies are reincorporating abroad despite a 2004 federal law that sought to curb the practice. One big reason: Taxes.

 

Companies cite various reasons for moving, including expanding their operations and their geographic reach. But tax bills remain a primary concern. A few cite worries that U.S. taxes will rise in the future, especially if Washington revamps the tax code next year to shrink the federal budget deficit….

 

The moves by Ensco and Rowan, which operate offshore oil rigs, show how one company’s effort to lower its tax rate can spur other shifts.

 

In moving from Dallas to the U.K. in 2009, Ensco followed rivals such as Transocean Ltd., Noble Corp. and Weatherford International Ltd. that had relocated outside the U.S. The company said the move would help it achieve “a tax rate comparable to that of some of Ensco’s global competitors.”

 

In fact, Ensco’s tax rate has declined. In the second quarter, the company said its “effective tax rate” was 10.5%, down from 19% in 2009. The savings: more than $100 million a year.

 

Around the time of Ensco’s move, Rowan executives fielded questions from investors and analysts about their own tax rate. In February, Rowan answered the questions, announcing plans to move to the U.K. from Houston. “We’re able to be competitive, with a low effective rate,” says Suzanne Spera, the firm’s director of investor relations. [1]

The off-shore moves include not only mature companies but IPO’s and even start-ups.

“When Austin, Texas-based Freescale Semiconductor Holdings, Ltd. went public last month in the U.S., the company followed the footsteps of generations of American high-tech companies… But unlike its predecessors, Freescale wasn’t going public as a U.S. company. As part of a private-equity buyout that took the chip maker private in 2006, it became a Bermuda incorporated company, according to securities filings. Freescale retained its incorporation in Bermuda, a tax haven, as the company returned to public trading.

 

As savvy investors and entrepreneurs search for ways to minimize the impact of the U.S. tax system, with its relatively high rates and global reach, they are increasingly incorporating overseas, tax experts say….”

 

 “U.S. start-ups are even beginning life offshore.”[2]

The Obama Administration supports making the US Tax Code even less friendly by extending taxation to overseas profits which are not yet repatriated (“tax deferral”).  Virtually no developed nations tax overseas profits.

Terming deferral “very, very important” to multinationals’ competitiveness, IBM Chief Executive Sam Palmisano questioned Mr. Obama about the issue during a televised meeting in mid-March. [3]
 
I think many on the American political Left do not look at tax issues as a matter of optimizing American business success, which leads to more jobs, or even maximizing tax revenues.  I fear they instead see corporate taxes as an issue of “fairness”, a subjective desire to increase taxes on so-called “big corporations”.  In reality, corporations will do what they need to do to be competitive in the global economy, which increasingly means moving to Switzerland or the United Kingdom.

[1] http://online.wsj.com/article/SB10000872396390444230504577615232602107536.html?mod=WSJ_hppMIDDLENexttoWhatsNewsSecond

 
Picture of Aon Center, Chicago, USA, former HQ site, and London, UK, new HQ, from Wikipedia Commons.

How Does Utah Get 6.0% Unemployment?

In Economy, Job Creation, Unemployment, Utah on August 19, 2012 at 1:09 pm

In this time of economic stagnation and perpetual high unemployment, it is useful to look at the handful of states adding jobs and providing lower-than-average jobless rates.  Utah continues to be successful.

Utah’s 6.0% unemployment rate compares to California 10.7%, tourism-dependent Nevada’s 12.0% and Illinois 8.9% [1]  Utah was the third-fastest growing state in the decade ended 2010. [2]

The state offers good jobs.  Utah has the 14th highest median household income of the 50 states, ranking ahead of New York State and Illinois. [5]

Employers like Utah.  Its 5% corporate income tax is 1.6 points below the national average.  The Wall Street Journal points out that tax rate has been unchanged over the past 15 years, whereas New Jersey has revamped its tax code four times since 2000. [3]  Employers prefer planning with confidence in steady regulations and tax rates. 

The state is considered business friendly.  “Barriers to business creation are minimal,” as Utah ranked fourth amongst states in Pacific Research Institute’s most recent US Economic Freedom Index (from 2008). [3]

The economic growth and state-level fiscal sanity is even more impressive given Utah is the nation’s youngest state with the nation’s highest fertility rate. [4]  One quarter of youth are minority. [3]  Large numbers of young children cost the schools and require other infrastructure but are future taxpayers.

Did Utah embark on a spending binge to battle the economic turn-down in 2008?  No.  Utah cut its budget with state-agency budgets sliced an average 19%, totaling $2 billion cut in the first two years of the downturn. [3]  The economy buzzed along.

[1] http://bls.gov/lau/ July 2012 data, retrieved 8/19/12.

[2] http://www.utah.gov/governor/news_media/article.html?article=3963

[3] A nice full-length Utah story is behind the pay-wall at the WSJ: http://online.wsj.com/article/SB10000872396390444405804577559582223445656.html

[4] http://www.ksl.com/?nid=148&sid=13186729

[5] http://en.wikipedia.org/wiki/Household_income_in_the_United_States, 2009 data, retrieved 8/19/12. 

Pictures from Wikipedia Commons.

Immigrants More Likely Entreprenuers than the Rest of Us

In Illinois, Immigration, Job Creation on June 14, 2012 at 8:52 pm

Famous Mi Tierra Restaurant, San Antonio, Texas (photo by author)

“Immigrants are more inclined to own small businesses than native-born Americans,” says today’s excellent Wall Street Journal article “Migrants Keep Small-Business Faith” by Miriam Jordan.  [1] The article is free, not behind the Journal’s paywall.

Highlights include 4.7 million people were employed by immigrant owned businesses in 2010 and generated nearly a trillion dollars in revenue.

I quote a vignette from the article about an immigrant entrepreneur near where I live.  This one of countless stories of newcomers who spoke no English but quickly adapted to American culture, learned English and started thriving businesses.  They employ many and enrich our culture.

 

Delfino Bello emigrated from Mexico unable to speak English. Now, he runs three popular Mexican restaurants about 40 miles from Chicago.

 

In 1995, Mr. Bello opened his first eatery, called “El Faro,” in a shopping strip in Bartlett, Ill., that had fallen on hard times. As the taqueria flourished, it attracted other businesses. A few years later, he opened restaurants in Elgin and East Dundee, serving a clientele that includes both immigrants and Americans.

 

“I had nothing, nothing when I arrived in this country,” said Mr. Bello, 55 years old. If the economy continues to recover, he says he plans to open a fourth restaurant.

Immigrant businesses have enlivened otherwise dead cities and suburban areas.  One of Mr. Bello’s restaurants is in Elgin, an old industrial city near Chicago.  If you’ve been to Elgin or the very similar industrial city of Aurora, located on the same Fox River, you’ve seen the importance of immigrant businesses.  Both cities’ downtowns have very few national retailers or restaurant chains.  But they have many immigrant businesses.  If you travel Broadway in downtown Aurora, you see many immigrant businesses.

The country benefits from immigrant entrepreneurs.

Latin American products, San Antonio, Texas

Latin American products, San Antonio, Texas.  (photo by author)

 

 

[1] http://online.wsj.com/article/SB10001424052702303410404577464853249366254.html

Pictures of Mi Tierra (San Antonio) and Latin American products at market stalls in San Antonio by author.  Picture of 26th Street in Little Village neighborhood of Chicago from Wikipedia Commons.

 

It Isn’t All Labor Costs… Shale Energy & Shipping Costs Impact Imports

In China, Job Creation, Mexico on February 26, 2012 at 7:23 pm

Two container ships pass in San Francisco Bay

Lots of factors enter into decisions about where companies manufacture.  Without question, a lot of US manufacturing has gone abroad, but not all; some may even be coming back due to cost equation changes.  Not everything goes to the country with the lowest wages (which would be in sub-Saharan Africa, not China, anyway) because of matters like productivity of the workforce, energy costs, shipping costs, the time for products to be received back to the US, local taxes, corruption, safety and rule-of-law in the other country, etc.

Mexico is actually gaining on China as a more attractive place to manufacture despite slightly higher wages, on account of the evolving cost equation.  An interesting piece in the Business section of the San Antonio Express-News gives some details why.

“Production workers in the U.S. make about $15 an hour, according to data from the U.S. Bureau of Labor Statistics. Industrial workers in Mexico make about $3.50 an hour, as opposed to $3 an hour in China, according to a report from the National Council of Maquiladora and Export Manufacturing Industry.”

“But the savings in labor are eroded with the higher cost of shipping from Southeast Asia. It costs $4,300 to ship a 40-foot container from Hong Kong to San Antonio via Long Beach, Calif., and will take 24 to 26 days to get there, according to DHL Global Forwarding. It costs $1,800 to drive a 40-foot trailer from Ciudad Juárez to San Antonio, and the trailer will get there in eight to 10 hours.” [1]

I often hear “$1 a day” bandied about as a wage in other countries, but as noted in the article, industrial workers in China earn about $3/hour and Mexican workers $3.50/hour.  That is certainly less than US norms, but probably higher than most people think.

Note the key driver of expense here:  shipping.  A standard forty-foot container costs $4,300 to get from Hong Kong to San Antonio, TX.  It still costs $1,800 for the same container to make it from the major Mexican manufacturing city of Juarez (across the Rio from El Paso) to San Antonio.  I point out time is valuable for manufacturers, too, so the more distant manufacturing is, the more of a hassle it is for extending the supply chain.  A container easily takes a month by ship from China to here.  Mexico is closer and local US manufacturing is closest of all.  It is no surprise a lot of manufacturing where time is critical (e.g. food processing) or very heavy, bulky items that won’t fit in a standard shipping container (e.g. making concrete or pre-manufactured housing) take place in the US because of the savings on time and shipping costs for heavy, bulky items.

The article continues:

“Manufacturing costs in China are about 94 percent of U.S. manufacturing costs, according to a 2009 report from consulting firm AlixPartners. In Mexico, manufacturing costs are only 75 percent of what they would be in the U.S., according to the report.” [1] [2]

China has become less attractive vis-a-vis Mexico because of a 20% appreciation in the Chinese Yuan, rising wages in China, and higher shipping costs, presumably reflecting higher fuel prices. [2]

Did I say rising wages?  Yes, another article in the Wall Street Journal also refers to rising wages in China because “the pool of Chinese workers is getting shallower.  China’s one-child policy and cultural preference for boys have led to a shrinking population of young people, particularly the women who work the floors of the apparel and electronic firms.” [3]  The WSJ continues, “labor costs are going up faster than productivity increases” in China.

This will have an impact on next door Mexico and even on the US as some companies look at the overall cost-benefit equation and decide to bring some operations home. [3]

El paso border station photo

Energy costs also matter.  There is very good news for American workers in the shale-gas boom states.  Another Wall Street Journal article points out how the rapid increase in low-cost natural gas from the shale drilling boom is cutting energy costs.  Shale states like West Virginia, Pennsylvania, and on the Gulf Coast are seeing interest from chemical companies opening brand new manufacturing plants to be near low-cost natural gas energy.  Shale gas now accounts for 1/3 of all natural gas in the US. [4]  “The US chemical industry is the biggest potential winner from the shale boom.” [4]

It is important to keep in mind that manufacturing siting locations are not exclusively about wages because energy costs, shipping costs, unionization, worker productivity, proximity to markets, corruption, safety and rule-of-law are all factors.  Some factors we can control (shale energy) are helping US manufacturing attractiveness while some other factors beyond our control (higher wages in China and higher global shipping costs) are also helping.

[1] http://www.mysanantonio.com/news/mexico/article/Despite-drug-war-trade-with-Mexico-is-booming-1360569.php   Note the article also speaks of the negative impact of drug war gang violence in Mexico.

 [2] The research the Express-News refers to is: http://www.alixpartners.com/EN/portals/0/pdf/AlixPartners%202009%20Manufacturing-Outsourcing%20Cost%20Index%20HIGHLIGHTS_2.pdf.  See page 13 for China and page 14 for Mexico.  Notice wages rose in each country between 2005-8.

[3] http://online.wsj.com/article/SB10001424052970204662204577201361904633428.html (behind paywall, get slightly more free on reprint at http://www.mexbiznews.com/chinas-export-pain-might-be-mexicos-gain).

[4] http://online.wsj.com/article/SB10001424052970204844504577100421253005122.html (behind paywall).

Pictures (container ships; Ciudad Juarez, Mexico; El-Paso/Juarez border crossing; natural gas drilling rig) from Wikipedia Commons.

 

Minimum Wage Workers: 5.4% of Texas Workforce

In Inequality, Job Creation, Minimum Wage, Texas on January 28, 2012 at 10:57 pm

Some left-leaning websites state Texas is heavy with minimum wage jobs.  I looked and using data from the US government’s Bureau of Labor Statistics, the proportion earning at or below the actual minimum wage rate in Texas is only about 5.4%. [1]  Hardly scandalous.

Furthermore, minimum wage workers tend to be young, with a full one-quarter of all teenagers earning minimum wage (full disclosure: that was me, once upon a time!). [2]  The average age in the US 2010 Census was 37.2.   The average age in Texas was 33.6, making it the second youngest state of 51 (including DC). [3]  This means we would expect Texas to be unusually high on minimum wage workers.

Texas has lower taxes (on income tax, actually) and a lower cost of living so a minimum wage worker in Houston lives much better than a minimum wage worker in a similar sized metro area like San Francisco.

For more on impressive job growth in Texas, see my posts https://econscius.wordpress.com/2011/09/03/stellar-texas-job-growth-in-above-average-wage-cities/, https://econscius.wordpress.com/2011/09/11/stellar-job-growth-in-high-wage-austin-texas/, and https://econscius.wordpress.com/2011/10/06/astronomical-job-growth-in-houston-texas/.

 

 

Footnotes:

[1] Calculation:  according to the BLS, 550,000 Texas hourly workers were at or below the minimum wage (http://www.bls.gov/ro6/fax/minwage_tx.htm) but there were 10,089,870 total workers in the state of Texas (http://www.bls.gov/oes/current/oes_tx.htm#00-0000), indicating only about 5.4% of workers were minimum wage.   Note the BLS tends to discuss minimum wage in terms of hourly workers, rather than total workers, for the obvious reason salaried workers are almost never at, or even close to, the minimum wage.  Nearly half of Texas workers are salaried.

Note: some workers, for example restaurant wait staff, may legally be paid below the minimum wage.

[2] Quoting directly from the BLS: 

“Minimum wage workers tend to be young. Although workers under age 25 represented only about one-fifth of hourly-paid workers, they made up about half of those paid the Federal minimum wage or less. Among employed teenagers paid by the hour, about 25 percent earned the minimum wage or less, compared with about 4 percent of workers age 25 and over.” (http://www.bls.gov/cps/minwage2010.htm)

[3] http://www.census.gov/prod/cen2010/briefs/c2010br-03.pdf

Pictures from Wikipedia Commons (Austin, TX skyline & San Antonio, TX Riverwalk).

There is No Santa Claus for Illinois Unemployed after 2011 Income Tax Hike

In Illinois, Income Tax Rates, Job Creation, Unemployment on December 2, 2011 at 12:17 am

People told me a Christmas tree dealer’s showroom in nearby North Barrington, Illinois is great for kids because it displays some 200 decorated Christmas trees.  My young sons happen to be connoisseurs of garish Christmas lights.  Thinking that walking the boys through an indoor forest of lit Christmas trees would occupy some free time on a gray, rainy Saturday, I looked up Tree Classics to check hours and address.

I was surprised when the Tree Classics website only showed an address in Wisconsin. [1]  Could I have the wrong name?  I tried an internet search and sure enough, Tree Classics was listed in yelp.com reviews and in business directory Manta.com as located on North Pepper Road in North Barrington, Illinois.  Except that in 2011 Tree Classics moved a bit closer to the North Pole. 

These days, it seems most anything not bolted down is leaving Illinois for Wisconsin, Indiana, or some other state.  Motorola, Caterpillar, Sears, Navistar, Chicago Board Options Exchange and the Chicago Mercantile Exchange are some of the big Illinois employers demanding tax concessions to keep them in the state. [2] [3]  “We’re not real happy with the tax rates and we’ve made our feelings known on the subject,” said Irene Rosenfeld, CEO of Illinois-based Kraft Foods. [4]

I could not find any articles about why Tree Classics left Illinois.  It might be about taxes.  Chicago is a much larger market than Milwaukee which makes the move questionable, but perhaps they have their reasons.  Maybe something else dragged Tree Classics out of Illinois.

As we saw in my post https://econscius.wordpress.com/2011/08/03/stimulus-recipient-among-illinois-mass-layoff-notices-indiana-welcomes-another-illinois-company/, smaller companies are leaving Illinois.  Smaller companies do not have the pull to extract tax breaks from the state legislature.  The departure of a company with 50 or 75 employees may not even get a notice in the newspaper, but the state’s job market shows the toll. 

The Department of Labor graph below clearly demonstrates how the Illinois income tax grinched the Illinois job market:

Pertinent facts: 

1. From January 2010 to December 2010, Illinois employment grew by 173,795 jobs.  The Illinois unemployment rate declined from 11.2% to 9.2%, converging with the national average.

2. In January 2011, Illinois passed a 66% increase to the personal and corporate income tax rate, made retroactive to January 1, 2011. [4]

3. After Illinois companies had a few months to react to the tax increase and explore their options, the state unemployment rate surged from 8.8% in March to 10.1% by October.

4. After the December 2010 peak of 6,052,731 jobs, Illinois lost 93,787 jobs through October.

5. The US unemployment rate has been steady in 2011, being at 9.0% in both January and October. [5]

Why did 2010’s job growth in Illinois abruptly end in 2011, then reverse into job losses and a 10.1% unemployment rate even as the US national unemployment rate held flat at 9.0% in 2011?  Might income tax rates have something to do with it?  Job losses continue:  we have breaking news literally today that Unilever is eliminating all 800 office and manufacturing jobs at the Melrose Park, Illinois headquarters of its Alberto-Culver unit. [6] 

There is no Santa Claus for Illinois workers in 2011 and my sons need another interest to replace seeing groves of articifical Christmas trees.  Perhaps they could count moving vans on the interstates leading out of Illinois?

  How the Grinch Stole Christmas cover.png

[1] http://www.treeclassics.com/Contact-Us-Information-s/63.htm

[2] http://www.chicagotribune.com/business/breaking/chi-caterpillar-tax-vote-sign-of-illinois-dysfunction-20111201,0,3403745.story

[3] http://www.chicagotribune.com/business/breaking/chi-motorola-mobility-could-lay-off-790-and-keep-state-tax-break-20110619,0,2021941.story

[4] http://www.chicagotribune.com/business/columnists/ct-biz-1106-phil–20111106,0,2792639.column

[5] http://money.cnn.com/2011/01/13/news/economy/illinois_corporate_tax_hike/index.htm

[6] 2010 and 2011 employment and unemployment data and graph retrieved 12/1/11 from http://data.bls.gov/timeseries/LASST17000003 (US) and http://data.bls.gov/timeseries/LNS14000000 (Illinois).

[7] http://www.suntimes.com/9185920-417/unilever-closing-alberto-culvers-melrose-park-plant-offices.html

Grinch pictures from Wikipedia Commons; Christmas tree picture from www.treeclassics.com.

Occupy Chicago Is Completely Wrong on CME Tax & Job Claims

In Illinois, Income Tax Rates, Job Creation, Occupy Wall Street Protests, Political Rhetoric on October 15, 2011 at 12:51 am

Occupy Chicago protesters rally Thursday in the Loop, echoing their Occupy Wall Street counterparts in New York. But how about a march on Main Street by the wealthy? That may be just the catharsis America needs.

I heard a theatre teacher from Occupy Chicago talk on the radio about the movement’s demands.  The various Occupy movements have been criticised in many corners for a lack of specific proposals, but Occupy Chicago has a specific demand.  A quick analysis shows the math does not work behind an Occupy Chicago idea and the concept is completely divorced from reality.

Occupy group Stand Up Chicago is demanding the City of Chicago place a 25 cent per trade tax on all contracts traded at the Chicago exchanges, of which the CME is the largest.   Occupy Chicago says this would earn $1.4 billion of fresh tax revenue, which it claims could be used to create 40,000 new City of Chicago jobs. [1] [2]

One sign of a complete lack of perspective and knowledge is how Stand Up Chicago’s statement demanding the tax calls the Chicago exchanges “giant casinos” it claims brought on the financial crisis.  Considering the financial crisis was caused by subprime mortgages going bad, it is quite curious to blame Chicago’s options and futures markets.  The CME and Chicago Board Options Exchange did not make loans nor did they bundle mortgages for securitization.   CME is the parent of the legendary Chicago Mercantile Exchange and iconic Board of Trade.  Clearly, Stand Up Chicago does not understand.

It just so happens the CME was already negotiating with Florida and Texas about relocating its operations.   Illinois raised its state income tax in January, becoming the 3rd highest in the nation.  [3] The CME then announced its attention to look at alternatives.  Illinois was desperately trying to keep the CME from leaving before Occupy Chicago’s idea of a fresh $1.4 billion tax came along.  Such a tax certainly is not going to stop the CME from leaving.

The idea of taxing the Chicago exchanges will not work.  Surely, the CME will leave and Chicago will end up with fewer taxpayers and thus fewer taxpayers as a result.  CME employs 2,000 in the Chicago area, but it has a large multiplier effect because of the numerous trading firms that reside in Chicago to be near the CME’s trading floors.  Banks and other financial institutions employ many who service the CME and trading firms.  Large private firms maintain traders and support staff, for example, meteorologists who predict weather patterns on behalf of agricultural companies’ hedging activities.  “Some estimates place the job count from the trading industry here, which includes the Chicago Board Options Exchange, at more than 60,000.” [3]

But Occupy Chicago’s ideas are even more outlandish than they seem at first blush.  Let us look at the math.  First, the CME had 2010 revenue of $3 billion, on which it earned a profit of $951 million. [3]    A $1.4 billion tax on a local industry where the primary firm, the CME, earned less than $1.0 billion is a very significant tax, indeed. 

Even if the CME were to stay in Chicago despite the special tax, there is nothing stopping aspiring exchanges in Singapore, London, Dubai, Mumbai, Hong Kong, Shanghai or Tokyo from working to steal away the CME’s business.  Since they are not in Chicago and thus not subject to a special tax, these international competitors would gain a significant opportunity.

Would $1.4 billion create 40,000 new jobs for the City of Chicago? 

No.

A quick check of the City of Chicago budget shows the City employs 32,922 employees at a cost of $3.3 billion.  [4]The average city worker earns about $75,000. [5]  The average worker costs about $100,000, including benefits.  That means a $1.4 billion tax, even if enacted and collected, would employ one-third of the claimed 40,000 but rather 14,000.  Adding 40,000 employees would more than double the entire City of Chicago workforce. 

Adding the 40,000 workers would require a tax of $4.0 billion, or more than 4X the entire profit of the CME.  As a reference for the relative size of a hypothetical $4.0 billion Occupy Chicago tax, consider that the entire city budget, serving 2.7 million residents and long known as one of the least efficient and most corrupt of municipal governments, is $6.2 billion. [6]

The cost of an employee is more than just payroll and benefits.  The 40,000 hypothetical workers will require new leases of office space, and expenses for business cards, computers, telephone connections, pens, staplers, and many other things, all costing money.  Any tax will hire fewer City workers because of these other overhead costs.

The Occupy Chicago tax idea and related job claims may make for good populist press, but they are so divorced from reality they must be dismissed out of hand.  Chicago’s financial industry is already at serious risk of leaving the city over the tax burden already in effect.  A $1.4 billion tax increase would certainly drive it out altogether, putting as many as 60,000 private sector jobs at risk.  The Occupy Chicago claims of 40,000 new City of Chicago jobs are triple what a $1.4 billion tax could realistically pay for.  [7] The Chicago exchanges are not in the mortgage business and did not cause the financial crisis.   Just as protesting capitalism will not create any jobs, excepting the occasional protester paid by a union to attend, a huge tax on financial transactions will cause Chicago to lose jobs, not gain them.

 

 

[1] http://articles.chicagotribune.com/2011-10-11/news/ct-met-take-back-chicago-20111011_1_protesters-demonstration-cboe-holdings

[2] http://www.chicagonow.com/chicago-muckrakers/2011/10/40000-jobs-for-25-cents-a-new-plan-for-job-growth-in-chicago/

[3] http://www.suntimes.com/business/5854347-417/cme-group-leaders-cite-illinois-taxes-in-threat-to-leave-chicago.html

[4] pg. 5 of http://civicfed.org/sites/default/files/ChicagoFY11BudgetAnalysis.pdf 

[5]  http://anthonytrendl.blogspot.com/2011/06/chicago-city-worker-salaries.html

[6] pg. 3 of http://civicfed.org/sites/default/files/ChicagoFY11BudgetAnalysis.pdf

[7] I take the $1.4 billion tax revenue claim at face value though it seems a bit rich.  The CBOE had 1.124 billion contracts trade in 2010 ( http://ir.cboe.com/releasedetail.cfm?releaseid=549018) and the CME approximately 3.0 billion contracts (based on daily avg. 12.2 million contracts (http://cmegroup.mediaroom.com/index.php?s=43&item=3088) multiplied by 250 trading days a year).  Apply 25 cents to 4.124 billion contracts and we only get $1.0 billion in tax.  There are a few other small, inconsequential exchanges.

Pictures from Wikipdia Commons, except Chicago protest from Chicago Tribune (credits embedded in picture).

Astronomical Job Growth in Houston, Texas

In Houston, Job Creation, Oil, Texas on October 6, 2011 at 12:57 am

We saw in https://econscius.wordpress.com/2011/09/03/stellar-texas-job-growth-in-above-average-wage-cities/ the majority (509,560, or 59%) of the 860,740 net new jobs created in Texas in 2001-10 occurred in three metropolitan areas, each of which has enjoys wages above national averages.

After we looked at metro Austin in detail, [1] today we drill into metro Houston (pardon the pun).

The Houston-Sugarland-Baytown MSA, which also includes Galveston and Brazoria Counties, had 5,946,800 residents in the 2010 Census, up 1,231,393 (26%) from 2000. [2]   Metro Houston’s  job growth of 274,510 in 2001-10 accounted for 32% of all Texas job growth. [3]  The rest of the USA actually had negative job growth during the same time frame. 

The Houston-Sugarland-Baytown MSA job growth was in the following US Bureau of Labor Statistics categories:  Business & Financial (+26,870 jobs, average wage $71,190), Sales & Related (+42,080, average wage $38,680), Food Preparation (+50,270, average wage $19,900), Healthcare Practitioners (+37,070, average wage $72,330), Healthcare Support(+21,350, average wage $), Education & Training (+35,600, average wage $51,450), Production Occupations, which includes oil refining (+22,430, average wage $28,671) and all other groupings combined (+38,840 jobs). [3]  This shows most of the job growth was in white-collar jobs. 

Houston MSA Job Growth; Source: BLS data, 2001 vs. 2010

The proverbial “burger flipper” jobs of the Food Preparation category accounted for only 18% of the total job growth, are often held by teenagers, and such growth is to be expected when the metro area had 26% population growth in the decade.  As a proportion of job force, Houston’s Food Preparation category grew from 7% to 8% of the total, which shows the off the cuff claim that “all” the job growth is in “fast food” is incorrect.  By comparison, BLS data shows the USA actually had 9%, a slightly higher percentage of jobs in the Food Preparation category, indicating Houston jobs are less fast-food dependent than jobs are nationally.

Source: 2010 BLS data, http://www.bls.gov

The Houston MSA vs. USA average wages graph below is quite interesting.  It certainly discredits the claims Texas jobs are low wage.  Houston had the greatest absolute job growth of any Texas metro area, accounting for almost a third of the entire Texas total.  As you can see in the graph, Houston wages are competitive with USA averages in all categories. 

One difference shows is how Houston’s skilled professions (management, architecture & engineering, computer and mathematical and healthcare professions are all above US averages, some by wide margins.  The engineering category benefits from Houston’s concentration of well-paid engineers.  The 10,350 petroleum engineers earn a remarkable average of $135,270.  My speculation on why Managers are so well paid would be Houston’s disproportionately large concentration of corporate HQs, meaning the metro area has an unusually large proportion of highly compensated top corporate managers.

On the other hand, a few categories of workers at lower skill levels (Food Preparation, Protective Service and Healthcare Support) earn slightly less than US averages, despite the overall higher Houston wages.  This may reflect the weakness of unions in Houston vis-a-vis the nation at large.  Interestingly, we saw a very similar wage pattern in Austin with the highest skilled workers earning more than national averages and low skilled workers slightly below national averages.

Source: BLS, 2010 data

Houston’s job distribution is quite similar to US averages.   One difference is how the high-wage Architecture & Engineering category is 3.2% of Houston employment, compared to 1.8% nationally.   Another anomaly is the US Healthcare Practitioners & Support categories total 8.9% of workers, but these categories account for 7.6% of Houston workers.  The probable explanation is the younger average age of metro Houston residents meaning they are healthier and less needing of health care.

Source: BLS DataSource: 2010 BLS DataSource: 2010 BLS data

 

Houston has one university in the US News Top 100.  Rice University is ranked #17 [4], which puts it ahead of acclaimed universities like California-Berkeley, Michigan, NYU and Notre Dame.  Other major schools include the University of Houston and the University of Texas maintains a medical center in Houston.  Texas A&M is ranked#58 [5] and is located in College Station, TX, which is 95 miles northwest of downtown Houston.

The 29.7% of metro Houston residents with a college degree matches the US average and exceeds the Texas average of 25.5%.  Interestingly, Houston’s college graduates are more likely to hold a degree in science, engineering and related fields, at 47.4% vs. 43.6% nationally. [6]

What drives the Houston economy?  Energy, both oil and natural gas.  We often hear Houston has grown the way it has “because of oil”.  While oil is extremely important to the Houston story, Houston’s success comes from more than just drilling and refining.  Oil is found in many other places, such as California, Alaska, Pennsylvania, Louisiana, and Oklahoma. 

 Today, Houston is the undisputed capital of the energy industry, but that was not always the case nor was it inevitable.  “In 1960, Houston served as home for only one of the nation’s large energy firms, ranking well behind New York City, Los Angeles and even Tulsa.  Today Houston has 16, which is more than all the other cities combined.”  [7]

ConocoPhillips Logo.svg

Many major energy and related services companies relocated to Houston.  Oil services company Schlumberger relocated its U.S. corporate HQ from New York in 2006.  The corporate HQ of Heartland Oil and Gas moved from Denver in 2007.  CITGO Petroleum switched its HQ from Tulsa to Houston in 2004.   Direct Energy, the Toronto-based electricity provider moved its U.S. head office from Stamford, CT in 2007.  When Houston-based Conoco and Oklahoma-based Phillips Petroleum merged, the new company chose Houston for its HQ.  All of these companies have research & development operations in the Houston area.  Vestas Wind Systems chose Houston for a new US R&D center. [8]  Oil services company FMC Technology relocated from Chicago in 2003. [9]  

Shell logo.svg

Major international energy companies like Shell Oil Company (HQ of the US subsidiary) and BP America moved to Houston.  Pennzoil, now owned by Shell, started in California and had relocated to Houston in the 1970s. [10] BP America relocated its headquarters and some 3,000 employees from metro Chicago in 2008.  [11]  BP again centralized more R&D and even moved jobs from its British HQ in 2010. [12]  BP’s North American operations came from British Petroleum’s purchase of California-based ARCO, Chicago-based AMOCO and Cleveland-based Standard Oil of Ohio. 

Why Houston?  It is not just oil –  presumably, other factors must have made Texas favorable for energy companies.  These factors most likely include low costs of doing business, low taxes, infrastructure, and an educated workforce for the various R&D and corporate HQ staffs.  Eventually Houston attracted enough energy companies to enjoy the benefits of industry concentration. 

Metro Houston has 10,380 petroleum engineers (37% of the entire USA total) with an average wage of $135,270 (higher than the US average $127,970).  There are 9,730 oil and gas derrick, rotary drill & service unit operators (13% of USA total) and they work at slightly above average US wages.  Sixteen percent of the nation’s petroleum pump operators work in Houston at an average wage of $58,540. [3]  If you were a new entrant into the energy business today, your company would probably be very attracted to Houston because the concentration of other energy companies there means a deep talent pool of industry workers.  Houston’s economy includes upstream energy processing such as refineries and chemical companies.

This concentration effect has occurred in other places, such as Detroit with the emerging automotive industry in the 1910s and more recently, Silicon Valley for technology start-ups.   The energy concentration is both an advantage and potential disadvantage for Houston.  Houston has developed some major non-energy businesses, including large computer maker Compaq, which was acquired by HP but still employs 9,000 in Houston (see chart below).  Waste Management relocated from Chicago in 1998 but Houston lost the Continental HQ to Chicago when the airline was acquired by United Airlines in 2011.

Waste Management Logo.svg

How much of the Houston economy is related to energy?  The answer is about half.  The non-energy proportion of the Houston economy decreased from 52.2% in 2001 to 50.3% in 2010 as oil prices surged and companies like BP and CITGO relocated to Houston.  Both figures are better than 1996’s  44.5%. [13]

The Houston MSA area is 38% Latino, 16% Black and 7% Asian [14], compared to the US average of 16% Latino, 13% Black, and 5% Asian. [15]  Thus, non-Hispanic whites are a minority in metro Houston and the city has a much larger minority population than the US average.  Given the lower average educational and income attainment of racial minority groups, it is quite impressive metro Houston is above the US average in income and at the US average for percentage of residents with a college degree.

 
 
Summing up, I find the 2001-10 job growth in Houston to be very impressive, especially when compared to the negative job growth in the rest of the USA in the same 2001-10 timeframe.  The data prove Houston’s wages are above US averages, though there is a skewed effect of the highest skilled workers earning a significant premium to highly skilled workers elsewhere, which presumably reflects the concentration of corporate executives and highly skilled engineers.  On the other end of the spectrum, some low skill worker classifications are slightly below the US averages, quite likely the result of the lack of unions in metro Houston.  The Houston distribution of jobs by type quite closely mirrors that of the US at large, with the largest differences in healthcare as the young Houston population is healthier and in engineering, where Houston is almost twice the national average.   
 
The job growth was across-the-board and not disproportionately in low-wage categories.  In fact, the majority of the job growth was in white collar areas; we even saw how a smaller proportion of Houston workers are in Food Preparation than is the case nationwide.  Houston has an unusually large minority population, which includes an estimated 150,000 or more former residents of New Orleans who were displaced by Hurricane Katrina.  Above all, Houston has a large Hispanic/Tejano population.  Given the lower average wages of racial minorities nationwide, the higher than average wages in Houston show the metro area has done well by most of its residents, including the 54% of the metro area’s population that is Black or Hispanic.
 
Houston is concentrated in the oil industry.  Its success cannot be solely attributed to higher oil prices as nearly the entire American energy industry has slowly but surely been relocating its HQs and R&D groups to Houston.  Higher oil prices had nothing to do with major oil companies leaving Chicago, California, New York, Denver and Oklahoma for Houston.  The open questions on Houston’s future job growth are how well the city will perform if oil and gas prices decline, how much more will it diversify into other non-energy industries, and to what extent will alternative industry players locate in Houston (like Vestas Wind’s R&D group)?  These answers will help determine if Houston continues its astronomical job growth in future decades.
 
We finish with the chart below, showing the largest employers in metro Houston.  The biggest for-profit employers are primarily energy companies like ExxonMobil, Shell, National Oilwell Varco, Chevron, BP, KBR, Baker Hughes, Anadarko and Halliburton but the list also including major non-energy firms UnitedContinental, Kroger, HP (formerly Compaq), and ARAMARK.  Large non-energy firms on the list and headquartered in Houston include Sysco, BMC Software, restaurant chain owner Pappas and Service Corp., the largest operator of funeral homes.
 
Sysco late 2008 logo.png
 
  Metro Houston Employers With More Than 1,000 Employees
1 Houston Independent School District            25,514
2 City of Houston            21,588
3 Memorial Hermann Healthcare System            19,500
4 University of Texas M.D. Anderson Cancer Center            18,599
5 United Continental Holdings            16,000
6 Harris County            14,983
7 The Methodist Hospital System            13,000
8 ExxonMobil            13,000
9 Shell Oil Company            13,000
10 Kroger Company            12,000
11 National Oilwell Varco            10,000
12 The Methodist Hospital*              9,991
13 UTMB-Glaveston Health              9,318
14 Baylor College of Medicine              9,232
15 HP              9,000
16 Cypress-Fairbanks Independent School District              8,917
17 ARAMARK Corp.              8,500
18 Houston Community College              8,098
19 Chevron              8,000
20 Pappas Restaurants              8,000
21 HCA, Inc.              7,855
22 Pasadena ISD              7,447
23 BP America, Inc.              7,387
24 Macy’s              7,000
25 Baker Hughes              7,000
26 AT&T              6,900
27 Katy ISD              6,556
28 Aldine ISD              6,540
29 ExxonMobil Chemical-Baytown              6,500
30 Fort Bend ISD              6,319
31 Dow Chemical              6,100
32 St. Luke’s Episcopal Health System              6,000
33 Texas Childrens Hospital              6,000
34 H-E-B              6,000
35 Halliburton              5,748
36 EPCO, Inc              5,700
36 University of Houston              5,542
37 Fiesta Mart              5,500
38 KBR              5,089
39 LyondellBasell Industries              5,080
40 CenterPoint Energy              5,000
41 Spring Branch Independent School District              4,842
42 UTHealth              4,690
43 ConocoPhillips              4,000
44 Bank of America              3,100
45 Comcast Cable Communications, Inc.              2,700
46 Rice University              2,600
47 Wells Fargo              2,471
48 Amegy Bank              2,215
49 Anadarko Petroleum              2,200
50 El Paso Corporation              2,200
51 Sysco Corporation              1,800
52 Deloitte              1,500
53 The Boeing Company              1,500
54 CITGO Petroleum Corporation              1,367
55 Service Corporation International              1,300
56 Houston Chronicle              1,295
57 BMC Software, Inc.              1,100
58 City of Pasadena              1,088
59 PWC              1,050
60 San Jacinto College District              1,026
61 Oceaneering International, Inc.              1,005
62 Ernst & Young LLP              1,000
63 Accenture              1,000
 

Chart by author, sources: http://www.houston.org/greater-houston-partnership/employers/ and http://hereishouston.com/?q=node/40 and http://www.texastribune.org/library/data/government-employee-salaries/.  This list may not be fully exhaustive, especially of non-public companies.

 

[1] https://econscius.wordpress.com/2011/09/11/stellar-job-growth-in-high-wage-austin-texas/

[2] http://en.wikipedia.org/wiki/List_of_United_States_metropolitan_areas, retrieved 9/29/11.

[3] Houston-Sugarland-Baytown, Brazoria, Galveston-Texas City MSA/PMSA employment and mean wage data retrieved for Total and Occupational categories in 2001 and 2010 from BLS data (2010) http://www.bls.gov/oes/current/oes_26420.htm#00-0000 and (2001) http://www.bls.gov/oes/2001/oes_3360.htm.

[4]http://colleges.usnews.rankingsandreviews.com/best-colleges/rice-university-3604

[5] http://colleges.usnews.rankingsandreviews.com/best-colleges/texas-am-college-station-10366

[6] http://www.houston.org/pdf/research/12AW001.pdf

[7] pg. 61 of http://www.houston.org/economic-development/joel-kotkin/pdf/KotkinReportwithlinks.pdf

[8] http://www.houston.org/pdf/research/16BW010.pdf 

[9] http://www.highbeam.com/doc/1G1-90932695.html and http://www.highbeam.com/doc/1G1-127881332.html 

[10] http://en.wikipedia.org/wiki/Pennzoil, retrieved 9/29/11..

[11] http://www.bizjournals.com/houston/stories/2007/10/15/daily58.html?t=printable and http://www.katyhomefinder.com/blogs/team_dimuria/archive/2008/02/23/bp-relocating-4000-from-chicago-to-houston-3200-request-katy.aspx

[12] http://www.chron.com/business/energy/article/BP-expands-Houston-s-role-centralizes-operations-1695645.php

[13] http://www.houston.org/pdf/research/10FW002-Data.pdf.

[14] http://www.dshs.state.tx.us/chs/popdat/ST2010.shtm

[15] http://en.wikipedia.org/wiki/Demographics_of_the_United_States, retrieved 9/10/11.

Additional background data on Houston comes from http://www.dallasfed.org/research/houston/2005/hb0503.html

Pictures from Wikipedia Commons.

Obama Jobs Solution: Suing Employers For A Job?

In Economy, Job Creation, Lawsuits, Obama Administration, President Obama, Unemployment on September 27, 2011 at 8:07 pm

The “Jobs” Bill that President Obama sent to Congress “includes a provision that would allow unsuccessful job applicants to sue if they think a company of 15 more employees denied them a job because they were unemployed.” [1]

While I understand the frustration of the unemployed, the President’s idea is likely to be counterproductive and lead to even less hiring of the unemployed.

Lawrence Lorber, a labor law specialist who represents employers, said Mr. Obama’s  proposal “opens another avenue of employment litigation and nuisance lawsuits.” [1]  Most employers are small and do not have lawyers on staff to defend against these lawsuits.  Even larger companies with a slew of in-house legal counsel have no desire to be sued over matters that are difficult to disprove.

Why would an employer discriminate against the unemployed?

(1) It is an open secret in the business world many employers formally downsize under-performing employees in order to avoid law suits.  A downsizing of just one person in a large company may actually be a polite way of firing an underperformer.  Most workers are the member of some protected class (female, racial minority, veteran, over age 45, etc.).  If the underperforming employee has not made themselves easy to fire (e.g. by repeatedly skipping work), it can be difficult to prove in Court the subjective judgments that a particular employee’s work is mediocre or worse.  Defending a wrongful termination case is something many companies try to avoid.  Even when the company wins, it racks up legal expenses.  Many companies feel it is better to pay a small severance package and let the employee be downsized “not for cause” rather than terminated “for cause” at the risk of a lawsuit.

This open secret is one reason employers have long preferred to hire someone employed at another company rather than someone who is unemployed.  

(2) Employers think other companies let go of underperformers first and hold on to top performers.  The thinking is that, when XYZ Company lets 10% of its workforce go, it probably is mostly letting go of its 10% least desirable employees.  

(3) Lastly, companies feel that people who are out of the workforce for extended periods of time, such as two or three years, may lose some of their work-related skills.

Are these beliefs always correct?  No, though they surely are at least partly accurate some of the time.  In a normal job market, these biases against the unemployed are not a big deal.  Does every employer feel this way?  Undoubtedly no. 

Unemployment surely is always a disadvantage, but America has traditionally had enough jobs to go round so that most any able-bodied unemployed person would, sooner or later, find something.    In today’s bad job market, the already existent bias against the unemployed is a bigger issue for the unemployed because there are so few jobs available. 

There are other small biases that exist in hiring: in favor of the tall, in favor of the attractive and in favor of people with degrees from prestigious universities.  Studies have shown taller people earn more [2] and more attractive people earn more [3].  These facts add insult to injury to men because studies also show women prefer taller and wealthier men; attractiveness is universally desired in a mate.  But, I would not recommend a federal statute banning discrimination on account of height; how does one even begin to measure such discrimination in a real world situation?  Would it not open to the door to frivolous lawsuits?

 

What would happen if the President’s bill passes and the unemployed are allowed to sue employers for discrimination?  Would the long-term unemployed now quickly find jobs?   I think the answer is no

Let’s think ahead and assume President Obama’s bill becomes law.  It is not clear that employers who are predisposed against the unemployed would be any more likely to actually hire the unemployed.  There are myriad reasons an employer can give (“doesn’t fit our culture”) for passing over an applicant.

But, the new law would make it far more risky to interview the unemployed.  Any unemployed person who applies for a job but is not hired would have legal standing to try to file a lawsuit against the employer.  The safest bet for an employer hoping to avoid these lawsuits would be to try not to interview the unemployed in the first place.  How might they do that?  Obvious options would be to employ recruiters who cold call people already employed elsewhere, look to internal (already employed) candidates, outsource to another country, or automate rather than hire anyone at all.

I know this is cold comfort to the long-term unemployed, but the idea of forcing employers to hire the long-term unemployed through lawsuits will backfire and make it even tougher for the unemployed to get interviewed and may result in fewer new jobs.  A much better idea to actually accomplish that goal would   be a carrot, rather than the stick:  a tax credit for hiring the long-term unemployed.

Unfortunately, this is another example of President Obama- who has no experience whatsoever in private business – proposing something that would actually be counterproductive.   The continuous flow of proposed high taxes, new regulations and laws such as this one creating a new protected discrimination class of unemployed people are exactly what is making American business skittish to hire at all.  The private sector creates jobs, not the government through new laws allowing for more lawsuits.

As always, comments are welcome.

[1] http://news.yahoo.com/blogs/lookout/obama-proposes-letting-jobless-sue-discrimination-191042168.html

[2] http://www.sciencedaily.com/releases/2009/07/090710092226.htm

[3] http://money.cnn.com/2005/04/08/news/funny/beautiful_money/

Pictures from Wikipedia Commons.