November 15, 2013

Update to Fiscal Times Item Published Tuesday (GM’s Reaction and My Response)

Filed under: Business Moves,Economy,Taxes & Government — Tom @ 6:09 pm

A spokesman for General Motors responded to my Tuesday column at The Fiscal Times (“Is GM Steering Toward Another Subprime Loan Crisis?”).

I responded back.

Go there and scroll down to see abbreviated versions of each.

WSJ: ‘Small Businesses Aren’t Buying It’ (That Obamacare Is Good For Them)

Filed under: Business Moves,Economy,Health Care,Taxes & Government — Tom @ 7:05 am

In the Wall Street Journal Tuesday evening:

Small Business and ObamaCare
A new survey shows that employers will drop coverage and cut hours.

One of President Obama’s proudest boasts about the Affordable Care Act is that it helps small business. … Small businesses aren’t buying it.

Some 64% of small business franchise owners (such as owners of fast food and retail stores) believe the law will have a “negative impact” on their business, while only 5% expect a “positive impact.” For non-franchise businesses the ratio was 53% negative and 12% positive. Only one in 12 agree with the President that the health-care law will “help” their business.

Even more problematic is how businesses are already responding to the new law. The White House continues to deny any relationship between hiring and ObamaCare. The poll finds 27% of franchise businesses and 12% of non-franchises have already replaced full-time with part-time employees in anticipation of the law’s employer mandate. ObamaCare defines a full-time employee as someone who works 30 hours or more a week.

The survey also reveals that the “49er” effect is very real. These are businesses that will cap their full-time payroll workforce at 49 employees to avoid ObamaCare’s insurance mandate for companies with more than 50 full-time equivalent workers. Of firms with between 40 and 70 employees, a little over half say they are likely to “make personnel decisions to keep” their “workforce below the threshold of 50 full-time employees and avoid the requirements and penalties associated with the new health care law.”

More than one in four businesses (28%) say that in 2015, when the employer mandate is scheduled to take full effect, it is “likely” they will drop their insurance coverage and pay the penalty of $2,000 a year per employee. These are the plans employers and employees were promised they would be able to keep.

Jay Carney and the rest of the Obama adminisration will continue to contend that all the stories about businesses going to part-timers, planning to stay below 50 employees, and drop insurance coverage are just “anecdotes,” and that there are no larger trends. They’re wrong.

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UPDATE: Investor’s Business Daily’s list of “job actions with strong proof that ObamaCare’s employer mandate is behind cuts to work hours or staffing levels” is up to “363 employers, with more than 100 school districts among them.”

What Is the Real Unemployment Rate?

Filed under: Business Moves,Economy,Health Care,Taxes & Government — Tom @ 6:59 am

It’s far higher than the official 7.3 percent.

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This column went up at PJ Media and was teased here at BizzyBlog earlier this week.

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Just beneath the surface, the government’s latest employment report shows how much damage the POR (Pelosi-Obama-Reid) economy, now well into its sixth year, has done to the country’s economic fabric. The impact of Obamacare, if it isn’t stopped, will only compound it.

Even the relatively decent news in Uncle Sam’s October report was suspect.

Employers are said to have added 204,000 seasonally adjusted jobs. But as the Associated Press noted, the government, thanks to the 17 percent government shutdown, had an extra week to retrieve its surveys from employers, and therefore had a higher than usual response rate. It doesn’t seem as if this should matter, but apparently the Bureau of Labor Statistics has a history of estimating high in its initial releases when it has more time to collect and assemble the data. Additionally, economist Mark Zandi believes that “Businesses may have inadvertently counted employment for an extra week.”

Even more questionable are the BLS’s revisions to August and September. As seen below, the raw (i.e., not seasonally adjusted) figures show no revised net improvement during those two months. But that goose egg somehow turned into 60,000 additional jobs during seasonal conversion:

NSAandSAjobs2000toOct2013

Then there’s the unemployment rate. Even though it ticked up to 7.3 percent, that was also supposedly good news, because it would have dropped if it weren’t for the 850,000 federal government workers furloughed during part or all of the partial shutdown and treated as unemployed.

The real problem, thanks to the POR economy’s progenitors and the Obamanomics policies which have accompanied it since January 2009, is that the official unemployment rate is more unreflective of true job market conditions than it has ever been.

During Republican and conservative presidential administrations, those on the left, particularly in organized labor, often complained bitterly that the official rate unemployment rate fails to count discouraged workers and those who are working part-time for economic reasons. For some reason — I wonder why? — they’re incredibly quiet these days, even though their complaint, as we will see, is far more valid.

In August 1982, AFL-CIO head Lane Kirkland contended that the previous month’s official 9.8 percent unemployment rate, so adjusted, would have been 13.6 percent, or 3.8 points higher. That’s interesting, because October 2013′s seasonally adjusted “U-6″ unemployment rate, after I adjusted the official 13.8 percent down by 0.2 points to account for those furloughed government workers, was that very same 13.6 percent, even though the official 7.3 percent “U-3″ unemployment rate was 2.5 points lower than it was at the time of Kirkland’s complaint.

Though Big Labor’s beef has always been somewhat valid, the difference between the U-3 and U-6 rates was almost always between three and five percentage points throughout the 1980s, 1990s, and the majority of the most recent decade, meaning that there was no reason to be overly concerned about that difference — until the POR economy came along:

U6vsU3rateDifference1994toOct2013

As seen above, the difference between the U-3 and U-6 rates gradually and consistently fell during the first six years the BLS began formally tracking U-6. It rose during the 2001-2002 recession, fell slightly for a few years after that, and remained stable until the spring of 2008.

Then disaster struck. The difference quickly widened, not at all coincidentally beginning when America figured out that Barack Obama would likely become its next president, i.e., when the POR economy began. After only a year, the U-3 vs. U-6 gap, which had almost never been above 5 points, exploded to over 7 points. After Barack Obama’s nearly five years at the helm, the gap has barely narrowed, and is still miles above any previous era.

But even the U-6 rate understates how bad things are. That’s because of the staggering number of people who have dropped out of the workforce entirely. While many of those involved are retirees, most aren’t.

The civilian labor force dropped by a seasonally adjusted 720,000 in October. The government furloughs did not influence that decline. In the 57 months since Barack Obama took office, the labor force has grown by only 607,000 — an average of less than 11,000 per month. Meanwhile, the adult population has grown by 11.642 million.

If only a very conservative one-third of the 11.035 million additional adults who are now sitting things out (11.642 million minus 607,000) were included in the workforce, the U-3 and U-6 unemployment rates (without adjusting for the furloughs) would be much, much higher:

AdjustedU3andU6unempRates1013

Based on the above, it is reasonable to assert that almost 16 percent of Americans would like to be working full-time somewhere — and aren’t.

Related to all of this, the overall workforce participation rate has dropped from 65.7 percent to 62.8 percent during Barack Obama’s presidency thus far. That rate dropped by 0.4 points in October alone, to the lowest level seen since 1978.

Add to all of this the fact that millions of workers are, out of necessity, in jobs for which they are overqualified. Half of all college graduates are working jobs which do not require a college degree. Even if you subtract out those who are exactly where they want to be by choice, that’s a staggering figure. The “underemployment rate,” if you will, is surely well above 20 percent. Yet we continue to churn out college grads, pretty much ensuring that this dangerously wasteful trend will continue, even as household incomes continue to stagnate.

Obamacare threatens to turn what is already a very rough situation into a potential cataclysm.

Barack Obama’s “signature achievement” discourages work. Its millions of individual and small employer group policy cancellations will suddenly force millions of Americans to spend hundreds of dollars extra per month most of them don’t have, leading to massive cuts in discretionary spending — or will cause them to go without insurance entirely. A no-growth Obamacare Christmas may well be in the offing.

As long as the Obamacare albatross hangs around, employers will have to play it close to the vest on hiring. The uncertainties about what this authoritarian administration may or may not do are too daunting — and we don’t even know whether the Mother of All Website Failures will ever function properly.

The only real solution is the one certain courageous conservatives pushed in September before they were overcome by the wing of the Republican Party which, carrying on in the sellout tradition of Bob “Tax Collector for the Welfare State” Dole, is on track to become the welfare state’s health insurance premium collectors.

At this point, deferring Obamacare’s worst impacts for a year is a necessary stopgap. Defunding it and repealing it entirely before 2015 is an absolute necessity. Once those items are in place, we might finally be able to talk about how to embark on a meaningful economic revival and how to make the all-inclusive unemployment rate come down.

Friday Off-Topic (Moderated) Open Thread (111513)

Filed under: Lucid Links — Tom @ 6:05 am

(Moved to the top until this evening.)

This open thread will stay at or near the top today. Rules are here. Possible comment fodder may follow. Other topics are also fair game.

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A prediction was made on Tuesday for today: “CNN’s Dana Bash Friday ‘De Facto Deadline’ Before Dems ‘Defy’ Obama” on avoiding Obamacare-related legislative fixes. It will be interesting, in light of puny October enrollment numbers (Update: And his attempted “fix” outlined yesterday), to see how this plays out.

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An earlier prediction looks more likely (HT Rare via Instapundit):

U.S. consumers now estimate they will spend $704 on Christmas gifts this season, down from their $786 average prediction in October. Americans’ latest estimate is also significantly below the $770 they forecasted at this time last year — a particularly worrisome sign for retailers.

Hmm. In just one month, “something” has suddenly caused Americans to plan to spend 10 percent less on Christmas.

I wonder what that could be?

Try this: “A No-Growth Obamacare Christmas?” I may have been way too optimistic.

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Perspective: Oil companies “make more profit off the bottled water and candy you buy inside” their convenience stores “than off the fuel you buy outside.”

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At Heritage: “Obama’s Cancellation “Fix”: Violating the Law for a Short-Term Public Relations Move.” Related: “Is he allowed to do this by decree?’ Questions about Obama’s unilateral law ‘fix’ abound.”

Good thing we don’t have to worry about Bush 43′s “imperial presidency” any more. (/sarc)

Update: Telepathy — Fouad Ajami in the Wall Street Journal (“When the Obama Magic Died”) writes that “The imperial presidency is in full bloom.”

Update 2: Reuters“White House: Obama would veto Republican healthcare bill.”

Reax (HT Twitchy) — “Obama has threatened to veto a bill literally named after his most memorable presidential promise.” It was actually an unconditional guarantee.

Positivity: US bishops unanimously reaffirm opposition to HHS mandate

Filed under: Life-Based News,Positivity,Taxes & Government — Tom @ 6:00 am

From Baltimore:

Nov 14, 2013 / 03:15 am

At their annual fall gathering in Baltimore, the U.S. bishops issued a message voicing their continued opposition to the federal contraception mandate and the threats that it poses to religious liberty.

“We stand together as pastors charged with proclaiming the Gospel in its entirety. That Gospel calls us to feed the poor, heal the sick, and educate the young, and in so doing witness to our faith in its fullness,” noted the Nov. 13 message from the U.S. Conference of Catholic Bishops.

“Our great ministries of service … strive to answer this call every day, and the Constitution and the law protect our freedom to do so. Yet with its coercive HHS mandate, the government is refusing to uphold its obligation to respect the rights of religious believers.”

Passed unanimously, the message was the first statement issued by the general membership of the bishops’ conference since the previous day’s election of Archbishop Joseph E. Kurtz of Louisville, Ky., as the group’s president and Cardinal Daniel N. DiNardo of Galveston-Houston as its vice president. Their terms officially begin at the conclusion of the bishops’ meeting on Nov. 14.

The bishops’ statement renewed their opposition to the HHS mandate, or federal contraception mandate, which requires employers to offer health insurance covering contraception, sterilization and some drugs that can cause early abortions, even if doing so violates their religious convictions.

Issued under the Affordable Care Act, the mandate is being challenged in lawsuits by more than 200 plaintiffs across the country. The lawsuits are currently in different stages of the judiciary process and could reach the Supreme Court in a future term.

Although the Obama administration went through a lengthy process to revise the mandate, religious freedom advocates warn that the changes are not sufficient to secure the constitutionally-protected right to free exercise of religion. …

Go here for the rest of the story.