September 2, 2011

September 2, 2011 | Commentary on Jobs and Employment Report

Another Jobless Labor Day For America

This is the third consecutive Labor Day marked by widespread duress and dismay in the American workforce. 

The nation's official 9.1% unemployment rate, still alarmingly high over two years after the recession officially ended, would be even higher if millions had not effectively dropped out of the workforce and ceased being factored into the statistic. 

The “labor participation rate” at 63.9 percent is the lowest since 1984. 

The average duration of unemployment is a record-long 40 weeks, and 22 million Americans are unemployed or underemployed. If these under-employed and discouraged workers were counted, the unemployment rate would be above 16 percent.

Seemingly oblivious to the real-life challenges of private sector employers battered by the financial crisis of 2008, the Obama administration charged full-speed ahead in 2009-10 on a policy agenda that greatly increased the costs of doing business and having workers on payroll. 

It should surprise no one that private sector job creation has virtually frozen at the severe recession lows. Our economy now generates hundreds of thousands fewer jobs each month than is normal for this point in a cycle of economic recovery.

Yet Washington, D.C., has remained an island of relative prosperity. The borrow-spend-and-centralize agenda that has been so destructive to job creation elsewhere in America has been a gravy boat inside the Beltway.

Washington’s parasitic approach to the private sector must change for there to be widespread, near-term and enduring prosperity and job creation. 

The expenses of complying with Washington’s torrent of mandates and regulatory overreach are costing American workers jobs and income growth. A September 2010 Small Business Administration report found that federal regulations cost more than $1.75 trillion in 2008. That report also found that small businesses face a 36 percent higher regulatory cost, per worker, than large companies.

America’s corporate income tax of 35% is the second highest in the world. That tax burden and the expense of operating in our nation’s highly litigious environment -- which Washington has long fomented -- are two more huge disadvantages in the increasingly competitive worldwide economy.

A moratorium on making those situations worse, and a credible commitment to making them better -- through significant immediate regulatory relief, tax and tort reform -- would boost private sector performance and confidence. This would be especially helpful to smaller and new enterprises -- historically the drivers of job creation. State and local governments could also do much more to foster conditions more favorable to private enterprise.

The current administration has been particularly hostile to America’s private sector. They need to do an about-face, becoming the champion rather than the nemesis of private sector employers. This would include reinvigorated efforts to open foreign markets to American exports. The president should begin to deliver on his stated support for free trade by signing the Korea, Colombia and Panama trade agreements that are already poised for ratification.

These and other initiatives are actions that can be taken to enhance the private sector’s ability, confidence, and willingness to hire new workers. They could be accomplished before the end of this year, but only if this Congress and this White House have the will to do them.

Elaine L. Chao, from 2001-09 the 24th U. S. Secretary of Labor, is currently a Distinguished Fellow at The Heritage Foundation.

About the Author

Elaine Chao Distinguished Fellow
Distinguished Fellows

First appeared in