Marketplace, January 14, 2004
Buried in last weeks disappointing employment report showing only 1,000
jobs added to the economy in December wsa the news that American incomes
grew only 2 percent last year the smallest rise in more than a decade.
Consumers are still buying, but the buying binge cant go on much longer.
Household debt continues to rise and personal savings are plummeting.
Meanwhile, companies are keeping their costs down by outsourcing jobs to
India, China, and Latin America. And theyre also installing new
technologies that replace workers such as automated checkout systems in
supermarkets and e-ticket kiosks at airports.
The reality is that unless this economy starts generating a lot of jobs
soon, and at decent wages, the so-called recovery is going nowhere.
Consumers just wont be able to keep on buying whats on the shelves and
So what is the White House doing? The administrations jobs strategy
consists of two new initiatives that are bound to make a bad situation
worse. The first is gutting the nations overtime laws. Even if this were a
good idea under normal circumstances (it isnt), its the last thing we need
right now. Employers who have to pay extra for overtime have an incentive to
hire more workers rather than pay more. Take away overtime, and you take
away that incentive to hire.
The second is the new guest-worker initiative. Regardless of how you come
out on legalizing undocumented workers, this plan will surely mean fewer
jobs for some Americans. The White house says the program will be limited
only to jobs for which no American is available, but thats nonsense. At
least 8 million Americans are unemployed right now. The only reason any job
remains unfilled is because the wage is too low. Require it to be filled
with an American and employers have to raise the wage. But if they can get
legal guest workers, they wont.
At least until the jobs recovery is in full swing, we should keep overtime
and maintain the limits on immigration. Oh, and one other thing: Reduce
business tax deductions for outsourcing jobs abroad and for buying new
technologies that replace workers. In other words, give employers more
incentives to hire.