Trump's Impossible Dream for Detroit

By any measure, the city of Detroit is a perfect example of the failure of Democratic rule in many of our major cities.  Run by Democrats for decades, the Motor City has the highest black population of any city in America. 81.6% of Detroit is African American.  Unfortunately, it is also the most violent. At its peak, it had 1.8 million residents.  By 2013, only 689,000 could claim residency.  Worse yet, 47% of Detroit's residents are functionally illiterate and can only read at a fourth grade level or below.  It is the poorest big city in the country with 40.1% living below the poverty line.

Illiteracy and crime will not bring good jobs and businesses back to this town. It will take decades of reform to improve the educational system sufficiently enough to attract hiring by well-paying businesses, and, the high crime rate will just continue to cause people to leave the city in fear.

In light of all these problems, it may seem that there is no way that anyone can put this town back together.

However, in the short term, Trump could attract new businesses to the Motor City by declaring Detroit an enterprise zone.  In other words, give tax breaks for every new job a business creates.  He can also provide substantial tax breaks for any company who relocates to, or starts a  new business there.

Another way to help rebuild the city would be to start a revitalization program.  Using federal funds from the Department of Education, they can take unskilled and unemployed men and women, and train them to rehab properties while learning trades such as painting, carpeting, dry walling, etc.  A program like this would help gentrify entire neighborhoods and attract people back to the city; while preparing many  for new careers.

Sadly, because Hillary will be elected, Detroit will never see any movement towards the rebuilding of a once vibrant city.  There are only so many "green" jobs Hillary can create to get Detroit and America back on its feet.  Sorry for the sarcasm (Not really!).  At least, Trump's trip to Detroit has focused a bright light on the condition of many black lives in America.

References:

Detroit mayor slams Trump's visit to black church: http://thehill.com/blogs/ballot-box/presidential-races/294420-detroit-mayor-slams-trumps-visit-to-black-church

At Least A Few Black Churchgoers Liked Trump's Detroit Speech: http://www.huffingtonpost.com/entry/trump-detroit-black-voters_us_57cb60c6e4b078581f13559f

Blackest Cities in America: https://www.google.com/search?q=detroit+blackest+city+in+america&ie=utf-8&oe=utf-8

Census bureau: Detroit is poorest big city in U.S. - Detroit News: http://www.detroitnews.com/story/news/local/michigan/2015/09/16/census-us-uninsured-drops-income-stagnates/32499231/

Detroit Population 2013: https://www.google.com/search?q=detroit+population&ie=utf-8&oe=utf-8

US Cities With The Highest Violent Crime Rates: https://www.google.com/search?q=most+dangerous+city+in+u.s.&ie=utf-8&oe=utf-8

Nearly Half Of Detroit's Adults Are Functionally Illiterate, Report Finds: https://www.google.com/search?q=detroit+literacy+rate&ie=utf-8&oe=utf-8

pb

Americans Waste Billions on College Education

As of this writing, student loan debt is rapidly closing in on a record $1.4 trillion.  But, more importantly, the average college graduate's debt has risen 350% in just the last 22 years while overall inflation has only risen 164% over the same period:

Yet, over the same period, real college graduate incomes have been relatively flat:

Combine this with the fact that, since 1993, the percentage of graduates with debt has risen from 45% to 70%. It doesn't take a math degree to figure out why 27.3% of student loans are in delinquency following the normal 6-month grace period after graduation.  The simple fact, is that high and rapidly-rising student debt, high delinquency rates, and flat wages, mean that our society isn't cranking out enough high-paying college-level jobs to support all that debt.  That fact couldn't be any clearer than shown on these two graphs from the Federal Reserve Bank of New York, as published by the Washington Post:

Essentially, 38% of college graduates are working below their achieved education levels.  And, only 27.3% of those with degrees are employed in jobs that match their original chosen fields.   Other studies confirm these results. For example, in 2014, Career Builder found that, for the class of 2014, 51% of graduates wound up working in jobs that required "no" degree.  Another study by the Center for College Affordability and Productivity found that 37% of college grads were working in jobs that only required a high school diploma.

With statistic like these, it's no wonder they can't repay their loans. A fact that hurts their credit ratings right out of the box.

So, the solution by Democrats such as Hillary Clinton, Bernie Sanders, and Barack Obama is to make college education debt free.  In other words, let the taxpayers pay the debt off.  But, that ignores the basic problem of graduating too many college students for the number of jobs available to them.  For that reason, we, as a country should be de-emphasizing the importance of a college degree.  Instead, the focus should shift to trade schools as the means to making a good salary.  In fact, all of these jobs pay more than what a median college job is paying:

1. Air traffic controller – Annual income: $108,000
2. Nuclear Operator – $75,600
3. Registered Nurse – $64,700
4. Construction Manager $95,956
5. Radiation Therapist $74,900
6. Storage and distribution manager – Annual income: $66,600
7. Transportation manager – Annual income: $77,762
8. Police and detectives supervisor – Annual income: $64,430
9. Non-retail sales manager – Annual income: $59,300
10. Forest fire fighting and prevention supervisor – Annual income: $58,920
11. Municipal fire fighting and prevention supervisor – Annual income: $58,902
12. Real estate broker – Annual income: $58,720
13. Elevator installers and repairer – Annual income: $65,893
14. Sales representative – Annual income: $62,000
15. Dental hygienist – Annual income: $66,221
16. Radiation therapist – Annual income: $72,491
17. Nuclear medicine technologist – Annual income: $71,212
18. Child support, missing persons and unemployment insurance fraud investigator – Annual income: $53,900
19. Criminal investigators and special agents – Annual income: $53,990

The simple fact is that our society is wrongly leading people to believe that any college degree will get you a good paying job.  When you have so few people working in the college major that they spent so much money to get, it is a complete financial waste, and the taxpayers should not be burdened with that waste.  As long as colleges and universities are able to turn students away because of the sheer volume of applicants, tuitions and student debt will rise unabated.  However, if we can get to a point where colleges can't fill the number of slots available, tuition rates won't increase nearly as quickly; or may even fall as they attempt to attract more students.  That's simple college level economics.


References:

Student Loan Debt Clock: http://www.finaid.org/loans/studentloandebtclock.phtml

Wall Street Journal: Head of the Class Chart: http://blogs.wsj.com/economics/2015/05/08/congratulations-class-of-2015-youre-the-most-indebted-ever-for-now/

Only 27 percent of college grads have a job related to their major: https://www.washingtonpost.com/news/wonk/wp/2013/05/20/only-27-percent-of-college-grads-have-a-job-related-to-their-major/

Annual Wage by Education Chart:  http://www.slate.com/blogs/moneybox/2014/09/08/college_graduate_vs_high_school_graduate_salaries.html

51 Percent of Employed 2014 College Grads Are in Jobs That Don’t Require a Degree, Finds CareerBuilder Survey: http://www.careerbuilder.com/share/aboutus/pressreleasesdetail.aspx?sd=10%2F9%2F2014&id=pr846&ed=10%2F9%2F2099

College graduates underutilized in current job market: http://www.schoolguides.com/College_News/college_graduates_underutilized_in_current_job_market_379061.html

Student Loan Delinquency: A Big Problem Getting Worse?: https://research.stlouisfed.org/publications/economic-synopses/2015/04/10/student-loan-delinquency-a-big-problem-getting-worse/

19 Good Jobs That Don’t Require a 4-Year College Degree: http://wealthpilgrim.com/19-great-jobs-without-a-college-degree-and-how-to-get-them-fast/

Don't Expect Hillary's Infrastructure Plan to Boost the Economy

Hillary Clinton claims that she has 5 ideas that will fix the economy.  Of course, implying that it needs fixing may be a shock to President Obama who is proud of his managing of it. At the top of her list is to "create jobs with a big government investment in infrastructure."  Thus, she is proposing that, in her first 100 days as President, she would enact a $275 billion infrastructure spending bill.  Apparently on her own; as if Congress would have nothing to say about it.

While $275 billion sounds like a lot of money, it won't create a lot of jobs because most of the money spent on infrastructure goes to materials and land acquisitions, not labor.

According to the Bureau of Labor Statistics, only 316,780 workers are employed in the Highway, Street, and Bridge industry with an annual average wage of $52,750.  But, understand, that wage number is high because it includes executives, managers, and engineers who are paid more than double that amount.  Highway maintenance personnel are only paid, on average, $38,440 a year. Even so, if you do the simple math of multiplying the number of workers by the higher average wage, you will find that, at best, a total of $17 billion goes to wages.

On the other hand, according to the Congressional Budget Office, $416 billion was spent on infrastructure in 2014.  Therefore, the cost of labor represents just 4% of all infrastructure spending.  

The reality is that we do have an infrastructure problem in this country that sorely needs to be dealt with.  Estimates are that between $3 and $4 trillion will be needed to repair our crumbling streets and bridges. However, lets not mislead people into thinking that the repairs will create some type of big jobs program because it won't.  Also understand, that infrastructure projects provide, by design, short term employment that won't sustain the economy.  We have a $17-1/2 trillion economy.  Spending $275 billion over 2 or 3 years is "sofa change" when compared to the big picture.

This is just another example of how Hillary has no idea how to grow the economy.  Another one of her "5 ways" is the increases taxes for the rich.  As if that will result in some kind of an economic boost.  I really have to scratch my head on that one!

References:

Hillary Clinton's 5 ideas to fix the U.S. economy: http://money.cnn.com/2016/06/22/news/economy/hillary-clinton-economy-5-ideas/

Highway, Street, and Bridge industry: http://www.bls.gov/oes/current/naics4_237300.htm

Highway Maintenance Industry: http://www.bls.gov/oes/current/oes474051.htm

Trends in Federal Infrastructure Spending: https://www.americanactionforum.org/research/trends-in-federal-infrastructure-spending/

35% of Workforce Unemployed in 20 Years

It seems like almost everyday, there are new concerns and warnings about the coming reality of replacing workers with Artificial Intelligence (AI) coupled with robotics.

Now, the latest news comes in a joint report from the consulting firm Deloitte and experts at Oxford University that suggests that 35% of the workforce will be replaced in just 20 years. This is a less aggressive prediction than last year's estimate of a 30% replacement  -- including white collar jobs -- by 2025.

But, supporting those predictions are real life stories that prove we are -- right now -- on the path of high unemployment due to robotics.  In China, the electronics contractor Foxconn Technology Group just announced the replacement of 60,000 factory workers with robots.  At the same time, the former CEO of McDonald's, Ed Rensi, pointed to this year's National Restaurant Show and the number of working robots on display as a forewarning of the future of the restaurant industry; especially fast food.  As he noted, it is cheaper to buy a $35,000 robotic arm to bag fries than to pay someone $15/hour to do the same.  By the way, the annualized salary at $15/hour is $31,000; meaning a ROI (Return on Investment) in just a little over a year.  Even less, if the cost of providing health insurance is added in.

This is just further proof that those pushing a $15 minimum wage are, in fact, pushing the minimum wage worker right off a cliff.  And, once again, the unions are the ones doing the pushing.  In fact, unions have done more to decrease their own membership in the last 50 years; down from 35% of the workforce in 1964 to just 10% today.  Fast food workers should make note of that fact when union workers are picketing outside their workplace for a $15 minimum wage.

References:

Foxconn replaces '60,000 factory workers with robots': http://www.bbc.com/news/technology-36376966

Building robot McDonald's staff 'cheaper' than hiring workers on minimum wage: http://www.mirror.co.uk/news/weird-news/building-robot-mcdonalds-staff-cheaper-8044106

Experts predict robots will take over 30% of our jobs by 2025 — and white-collar jobs aren't immune: http://www.businessinsider.com/experts-predict-that-one-third-of-jobs-will-be-replaced-by-robots-2015-5

Union, not workers, behind push for $15 wage: http://www.heraldnet.com/article/20160417/OPINION03/160419427

The incredible decline of American unions, in one animated map: https://www.washingtonpost.com/news/wonk/wp/2015/02/24/the-incredible-decline-of-american-unions-in-one-animated-map/

pb

The Adverse Affects Of Obama's Salaried Overtime Rule

Set to go into effect on December 1 of this year, the Obama Administration announced a new wage ceiling for the salaried overtime rule under the Fair Labor Standards Act (FLSA).  Under the new ruling, salaried workers making $47,476, who work more than 40 hours in any week, are eligible for time-and-a-half overtime pay. And, the Department of Labor estimates that this will result in 4.2 million workers getting a raise;  or, that's how the media is reporting it.

The reality, is that this new overtime rule will do more damage to jobs and wages than benefit more than 4 million workers.

First of all, like raising the minimum wage, this ruling makes it more expensive to start a business in this country.  It is already extremely difficult for startup businesses to survive. 25% of all new startups fail in the first year and 50% fail in the first four years.

Secondly, applicable workers might find themselves simply reclassified as hourly and will then find themselves punching a time clock.  As a result, they will lose any bonus pay and surely lose work hour flexibility that they may have enjoyed as a salaried employee.  For example, as any hourly worker, they could be docked for coming in late, or for taking a longer lunch hour in order to get other things done.

In addition, people at or near the new ceiling may see their incomes raised to slightly above the ceiling so that companies can avoid the overtime rule.

Some may see their jobs converted to outsourced, freelance positions. A disturbing trend as employers try to sidestep regulations like this and ObamaCare.  And, those close to the ceiling may get a little bump in pay in order to avoid the overtime rule all together.  Currently, 53 million workers are contract laborers; up from just 10 million a decade ago.

However, the biggest losers will be the those making more than $47,476 a year.  The money that will be paid for more overtime will reduce the amount of money for wage increases for those working above the overtime pay ceiling.

Lastly, no one who makes $47,476 should think they will automatically be eligible for overtime pay.  This is because, under FLSA overtime rules, there are a number of exemptions.  For example, it does not apply to outside personnel such as sales persons.  Nor, does it apply to someone who:

1. regularly supervises two or more other employees, and also
2. has management as the primary duty of the position, and also,
3. has some genuine input into the job status of other employees (such as hiring, firing, promotions, or assignments).

Once again, the tampering with the workforce by the Obama Administration will result in the continued weakening of the middle class by focusing in on lower level wages.  A country cannot be strong without a strong middle class.  

Also understand that the President fears fallout from this change.  That is the reason for the odd implementation date of December 1.  It insures that it is after the November elections but, still close enough to have positive electoral impact.   A more normal effective date would have been January 1, 2017.

References: 

Millions more Americans to be eligible for overtime pay: http://www.usatoday.com/story/money/2016/05/17/overtime-pay-eligible-employees-workers/84504890/ 

Exempt and not Exempt Workers: Fair Labor Standards Act (FLSA): http://www.flsa.com/coverage.html 

53 million Americans are freelancing, new survey finds: https://www.google.com/search?q=53+million+freelancers&ie=utf-8&oe=utf-8 

Paying Bonuses Instead of Salary Increases: http://smallbusiness.chron.com/paying-bonuses-instead-salary-increases-34786.html 

Startup Business Failure Rate By Industry – Statistic Brain: http://www.statisticbrain.com/startup-failure-by-industry/

What the Obama's Aren't Saying in Commencement Speeches

Michele and Barack Obama have each given commencement speeches this year.  Both have injected politics into those speeches.  However, what neither of them are saying to these newly minted college grads, is that thanks to the bad economics under this presidency, the chances of getting a good paying, college-level job right out of college, aren't too great.

In fact, even though the actual unemployment rate is 5%, this country's underemployment rate sits at 14.5%.  In other words, we have 22-1/2 million people working below their skill and education levels and/or working part time when wanting full time positions.  The pre-recession rate of 2007 was around 8%, and usually, it is below 10%.

So, here's the truth as Newsweek puts it: "Millennial College Graduates: Young, Educated, Jobless".  That's what is really facing this year's 1.8 million bachelor-degreed graduates.

References:

Michelle Obama Injects Politics Into Commencement Speech: http://collegeinsurrection.com/2016/04/michelle-obama-injects-politics-into-commencement-speech/

Obama swipes at Trump in commencement address - PressReader: http://www.pressreader.com/usa/the-washington-times-daily/20160516/281578059886674

Millennial College Graduates: Young, Educated, Jobless: http://www.newsweek.com/2015/06/05/millennial-college-graduates-young-educated-jobless-335821.html

Current Underemployment rate: https://www.google.com/search?q=underemployment+rate&ie=utf-8&oe=utf-8

Underemployment rates 1994 to 2010: http://www.economytrack.org/underemployment.php

Fast Facts:  Education enrollment and graduation numbers: http://nces.ed.gov/fastfacts/display.asp?id=372

Out-of-Work Coal Miners and Hillary's Caracol, Haiti Project

Hillary Clinton lost West Virginia because she blurted out that she was going to put a lot of coal miners out of work.  Then she tried to soften it by saying that she had a plan to budget $30 billion to create small businesses and retrain the unemployed of Appalachia and elsewhere.  At the same time, she would use that money to protect the coal miners pensions and health benefits.  That's asking a lot from just $30 billion. To be fair though, this sounds better than what President Obama promised.  In his case, he simply told them to "take welfare".

But, if you're a soon-to-be-unemployed coal worker, I wouldn't count on Hillary to do much about it and I would certainly take Obama's advice.  One only needs to look at Hillary's failed Caracol, Haiti project for an example of her incompetence at job creation.

Following the 7.0 earthquake that hit Haiti in 2010, around 40% of that nation's 4+ million workers became unemployed.  That's about 1.7 million. Then, Secretary of State Clinton toured the rubble as she and her team put together a plan to spend millions in U.S. aid to build a nice new industrial park just north of a remote, tin-roofed fishing village called Caracol.  The target was to create a total of 65,000 jobs in a country where 1.7 million were unemployed.  Again, we can already see the lack of competence.

In order to build the park, 640 acres were needed and hundreds of subsistence farmers were "coaxed" off the their land in order to provide the required acreage.  The park was also too remote for access to the power grid, so a power plant was built.  Today, 95 percent of the vacated land is still vacant.

By 2015, Caracol had been open for 3 years.  Only 11,300 of the promised 65,000 jobs were created.  A $70 million expansion of the park by 2018 may add another 6,800 jobs.   Oh, and Bill Clinton and the Clinton foundation managed the project for which it and he were well compensated. Of course, Bill Clinton is the person who Hillary claims she will put in charge of jobs and the economy, if she is elected President. God help us all!  Of course, this is also an obvious admission that the economy has been horrible under Obama's watch.

The sad and simple truth is that Hillary is inept and has little knowledge of how jobs are created.  Nor does she understand the coal business, and how entire towns exist only because of coal. No amount of job training or small business creation is going to put those towns back on their feet.  Again, she has no idea what she was doing; just as in Caracol, Haiti.  

References:

Fact Check: Hillary Clinton And Coal Jobs: http://www.npr.org/2016/05/03/476485650/fact-check-hillary-clinton-and-coal-jobs

Obama Costs Miners Their Job — Tells Them Take Welfare: http://www.libertynewsnow.com/obama-costs-miners-their-job-tells-them-take-welfare/article1446

A glittering industrial park in Haiti falls short: http://america.aljazeera.com/articles/2013/9/10/a-glittering-industrialparkfallsshortinhaiti.html

Hillary’s Half-Baked Haiti Project: https://www.google.com/search?q=Hillary%E2%80%99s+Half-Baked+Haiti+Project&ie=utf-8&oe=utf-8

Hillary Clinton says she'll put Bill 'in charge' of fixing economy: http://money.cnn.com/2016/05/16/news/economy/hillary-bill-clinton-economic-job-growth/

We Don't Need a Trump Wall

In 2015, a Pew Research Center study found that more than one million Mexicans left the U.S. for a variety of reasons, including the recession and a lack of jobs.  The exodus included complete families and even children who were born in this country. While there was still an inflow of new illegals, it does prove that a lack of jobs can reverse illegal immigration.

To that point, we don't need a wall.  What we need to do is enforce the federal law that makes it a crime for employers to hire illegals, and for communities to declare themselves sanctuary cities.  That  law -- Section 1324 of Title 8 of the United State's Code -- makes it illegal to smuggle, transport, harbor, encourage or induce, or aid or abet an illegal alien or aliens.   The fines can be stiff:

First offenders can be fined $250-$2,000 per illegal employee.

For a second offense, the fine is $2,000-$5,000 per illegal employee.

Three or more offenses can cost an employer $3000-$10,000 per illegal employee. A pattern of knowingly employing illegal immigrants can mean extra fines and up to six months in jail for an employer.

- See more at: http://www.legalmatch.com/law-library/article/penalties-for-employers-hiring-illegal-immigrants.html#sthash.ULDOE7St.dpuf

First offenders can be fined $250-$2,000 per illegal employee.

For a second offense, the fine is $2,000-$5,000 per illegal employee.

Three or more offenses can cost an employer $3000-$10,000 per illegal employee. A pattern of knowingly employing illegal immigrants can mean extra fines and up to six months in jail for an employer.

- See more at: http://www.legalmatch.com/law-library/article/penalties-for-employers-hiring-illegal-immigrants.html#sthash.ULDOE7St.dpuf

First offenders can be fined $250-$2,000 per illegal employee.

For a second offense, the fine is $2,000-$5,000 per illegal employee.

Three or more offenses can cost an employer $3000-$10,000 per illegal employee. A pattern of knowingly employing illegal immigrants can mean extra fines and up to six months in jail for an employer.

- See more at: http://www.legalmatch.com/law-library/article/penalties-for-employers-hiring-illegal-immigrants.html#sthash.ULDOE7St.dpuf

First offenders can be fined $250-$2,000 per illegal employee. - See more at: http://www.legalmatch.com/law-library/article/penalties-for-employers-hiring-illegal-immigrants.html#sthash.ULDOE7St.dpuf

• First time offenders: $250 to $2,000 per illegal employee
• Second time Offenders: $2,000 to $5,000 per illegal employee
• More than the above:  the fines can range from $3000 to $10000 per illegal employee and can include jail time.

I am sure that if Congress added a reward system for identifying violating employers, in general, would stop hiring illegals.

Simply, the cutting off of the ability to find work and sanctuary could both slow and reverse our illegal immigration problem.

References:

More Mexicans leaving US than entering, study says: http://www.foxnews.com/us/2015/11/20/more-mexicans-leaving-us-than-entering-study-says.html

1907. Title 8, U.S.C. 1324(a) Offenses: https://www.justice.gov/usam/criminal-resource-manual-1907-title-8-usc-1324a-offenses

Penalties for Hiring an Illegal Immigrant: http://www.legalmatch.com/law-library/article/penalties-for-employers-hiring-illegal-immigrants.html

Friday's Job's Report: Another Month of Slow Wage Growth

Last Friday, the employment report for March stated that the country added 215,000 new jobs.  The White House and other Democrats were quick to promote the fact that this was a record 73 months of consecutive job creation.  However, missing in this so-called "record" is the fact that we also had 73 months of record low wage growth as noted by this chart from the St. Louis Federal Reserve's Economic Data (FRED) database:

Click on Image to Enlarge or Click on Link Below

The simple fact is that, even during the recession, year-over-year wage growth was higher than under Obama since his time in office.  This is despite the fact that as of January 1st of last year, 29 states and the District of Columbia had increased their minimum wage.

The reality is that creating a job and creating a good paying job are two different things.  65% of the jobs created in this latest report were low paying, in the categories of retail, hospitality and leisure, and in health services like visiting assistance to the elderly.  Higher paying manufacturing lost 29,000 jobs in the month. 

The bottom line is that low pay increases are resulting in declining buying power for the average American worker.


References:

73 Straight Months of Private Sector Job Growth: http://www.dpcc.senate.gov/?p=blog&id=462

Chart Source: Interactive Chart: https://research.stlouisfed.org/fred2/graph/?g=1Jf5

Where The March Jobs Were: The Minimum Wage Deluge Continues: http://www.zerohedge.com/news/2016-04-01/where-march-jobs-were-minimum-wage-deluge-continues

State Minimum Wages | Minimum Wage by State: http://www.raisetheminimumwage.com/pages/minimum-wage-state

Kasich is Dead Wrong on Small Business Job Creation

Time and time again, when I listen to John Kasich, he is simply factually incorrect.  For example, in a recent stump speech, he said small businesses creates most of the jobs in this country (see lengthy video link below). The problem is that was only true when I took economics in the 1970's.  Ever since then, large businesses such as Target, Wal-Mart, Home Depot, etc. have been the primary job creators in America; often at the expense of many small businesses. For example, the following chart prepared from the Bureau of Labor Statistics data shows that most of the job creation and employment had come from large companies over the 21-year period from 1990 to 2011.

When someone starts a small business, generally only a few jobs are created.  For example, if someone starts a Karate instruction school or a tanning salon, usually, the owner is the only employee. Even if the business grows over time, maybe only one or two instructors or salon employees will be added over time. However, when Wal-Mart opens a super-center, more than 300 people are instantly employed.  A single McDonalds would add more than 60 workers.

There is another problem with small businesses:  The rate of failure.  In the first year, one in every four new businesses fail.  By year four, 50% of new businesses will have been kicked to the curb, and by the end of 10 years, only 29% of new businesses will be left standing.  In other words, 71% of the jobs created by small businesses will be gone at the end of 10 years.

The biggest reason for failure (49%) is incompetence;  with an additional 30%  due to the lack of managerial experience. With this in mind, I would really like to know what steps Kasich could take to somehow legislate human failings out of existence and minimize job losses at the small business level.

The reality, is that the focus of job creation should be providing a better environment for large corporations.  Lower our world's highest corporate tax rate.  Minimize or eliminate international trade barriers.  Allow corporations to return the more than $2 trillion in overseas profits that are just parked there to avoid paying additional U.S. taxes.  This way, instead of using that money to build their businesses in other countries, those profits would be a major cash infusion into our own economy.  Lastly, we have to improve our educational system so that we don't have to import millions of workers to fill high-paying, science-technology-engineering-math (STEM) jobs through the work visa programs. 

References:

Video: Kasich: https://www.youtube.com/watch?v=cA9BTE4fJxs

Chart Source: Getting Straight on Small Business Job Creation: Firms vs. Establishments: http://www.huffingtonpost.com/jared-bernstein/small-business-job-creation_b_1685869.html

Startup Business Failure Statistics: http://www.statisticbrain.com/startup-failure-by-industry/

Big U.S. firms hold $2.1 trillion overseas to avoid taxes: http://www.reuters.com/article/us-usa-tax-offshore-idUSKCN0S008U20151006

37 percent of Silicon Valley foreign-born: http://www.washingtonexaminer.com/37-percent-of-silicon-valley-foreign-born/article/2583195

To CNN: It's the Economy, Stupid!

In 1992, Bill Clinton was able to shorten George H. W. Bush's Presidency to just one term  by coining the slogan: "It's the economy stupid!".  I think today, its still appropriate, because the liberal political class and the liberal media just don't get it.

In a discussion following Bernie Sander's unexpected win over Hillary Clinton in Michigan, the host of a CNN news and opinion show -- whose name I don't know because I was just listening to the audio - expressed her amazement that the number one issue in exit polling was the economy and jobs.  Then, she went on to state that the economy is good.  Unemployment is the lowest its been in 8 years.  The stock market is still doing well, and that gasoline prices are 68 cents lower than last year.  So, I guess in her mind all is well, and there is nothing to complain about economically.


What she apparently doesn't understand is that people outside of her own gilded life are hurting.  If the economy is so good, why do we have a record number of people living in poverty?  Why is the real median household income sitting at a level that hasn't been seen since 1986?  Why did the average weekly wage fall by $6 in February for America's more than 157 million workers?  Why more than 6000 stores for major retailers closed last year, and why another 2500 stores are set to close this year?  Apparently, CNN's hosts don't read CNN's own Money news division's commentaries about how bad things really are. (see links below).

I think show producers should get their facts straight before airing falsehoods to a national audience.  Just one of the reasons that I rarely watch CNN.


References:

Exit poll: Both parties’ voters worry about economy, disdain federal government: http://www.star-telegram.com/news/politics-government/article64901532.html

It's the economy stupid!: https://en.wikipedia.org/wiki/It's_the_economy,_stupid

Record 46.7 Million Americans Live In Poverty; Household Income Back To 1989 Levels: http://www.zerohedge.com/news/2015-09-16/record-467-million-americans-live-poverty-median-houshold-income-back-1989-levels

Major U.S. Retailers Are Closing More Than 6,000 Stores: http://theeconomiccollapseblog.com/archives/major-u-s-retailers-are-closing-more-than-6000-stores

2016 Store Closures: http://retailindustry.about.com/od/USRetailStoreClosingInfoFAQs/fl/US-2016-Store-Closings-All-Retail-Chain-Store-Locations-To-Be-Closed.htm

The cracks in America's economy are growing - CNN Money: http://money.cnn.com/2016/01/28/news/economy/cracks-in-the-us-economy/

U.S. economy grinds to near halt at end of 2015 - CNN Money: https://www.google.com/search?q=cnn+economy+doing+well&ie=utf-8&oe=utf-8

Sears announces it's closing at least 50 stores - Feb. 9, 2016: http://money.cnn.com/2016/02/09/news/companies/sears-kmart-stores-closing/

Walmart will close 269 stores this year, affecting 16,000 Jobs: http://money.cnn.com/2016/01/15/news/companies/walmart-store-closings/

Sports Authority is bankrupt and closing 140 stores - CNN Money: http://money.cnn.com/2016/03/02/news/companies/sports-authority-bankruptcy/

Macy's closings could leave a trail of dead malls - CNN Money: http://money.cnn.com/2016/01/11/news/companies/macys-dead-malls/

Obama's Alternate Universe on the Economy

Last Friday, when the Bureau of Labor Statistics announced that the unemployment rate had fallen to 4.9% -- the lowest since the recession -- and President Obama could hardly contain himself celebrating this feat and taking credit for it.  Then, he went on to claim that, contrary to the GOP predictions of gloom, the economy is "durable".

Putting the 4.9% unemployment rate aside as a mere quantitative number, the issue that bothers most Americans is the "qualitative" status of our economy.  In that area, Obama appears to be living in an alternate universe where his reality is much different than ours.  A reality that seems to forget that he promised that we would see a 5% unemployment rate by July of 2013 if we passed the stimulus package. Not the more than two years later when, in October of 2015, 5% unemployment was finally achieved.

While he was quick to jump in front of the microphones to take credit for the 4.9% unemployment, I have never seen this President come out and lay claim to the following:

• A record 47 million people in poverty and 45 million needing food stamps to survive.  
• The fact that real median household incomes are back to where they were in 1989.  
• That the real unemployment rate is actually 9.9% when you include people, who (1) in frustration, have stopped looking for work; or, (2) are forced to work part time for for a lack of full time work; or, (3) are underemployed and working at jobs they are overqualified for.

In addition, Obama seems to ignore that realityh that the economy had grown by just seven tenths of a percent in the fourth quarter of last year, and overall, under his presidency, has only grown at a rate of 1.78%. Well below the average economic growth in this country since World War II, and before he too office, of 3.24%.

There are many more statistics I could quote, but these are the ones that really impact the average American.  They are the ones Americans feel and that are mostly in direct contradiction to Obama's "good economy" claims.

References:

Obama Celebrates 'Durable Economy' As Unemployment Drops Below 5 Percent: http://www.npr.org/sections/thetwo-way/2016/02/05/465686010/u-s-added-151-000-jobs-in-january-unemployment-dropped-to-4-9-percent

Record 46.7 Million Americans Live In Poverty; Household Income Back To 1989 Levels: http://www.zerohedge.com/news/2015-09-16/record-467-million-americans-live-poverty-median-houshold-income-back-1989-levels

Food Stamp Beneficiaries Exceed 46,000,000 for 38 Straight Months: http://www.cnsnews.com/news/article/ali-meyer/food-stamp-beneficiaries-exceed-46000000-38-straight-months

Record-breaking 11M receive Social Security disability benefits: http://nypost.com/2014/05/21/record-breaking-11m-receive-social-security-disability-benefits/

2013: Where’s that 5% unemployment rate Obama promised by now?: https://www.aei.org/publication/wheres-that-5-unemployment-rate-obama-promised-by-now/

Real Economic Growth: https://research.stlouisfed.org/fred2/series/A191RL1Q225SBEA

United States GDP Growth Rate - Trading Economics: http://www.tradingeconomics.com/united-states/gdp-growth

Which Presidents Have Been Best for the Economy?: http://www.usnews.com/news/blogs/data-mine/2015/10/28/which-presidents-have-been-best-for-the-economy

The December 2015 Jobs Report Exposes Deceptive Calculation of the Unemployed

Despite supposedly creating nearly 900,000 new jobs in the last three months of 2015, the unemployment rate remained at exactly 5% for each of those months; and the number of unemployed has remained at roughly 7.9 million. (Sources: Employment Situation Report: Tables A-1 and A2).

To any logically thinking person, creating 900,000 new jobs should have reduced the 7.9 million unemployed to 7 million, and the unemployment rate should have dropped to at least 4.5%.  But no.  And, that "no" is all about how this country has been calculating unemployment rates since the Great Depression and how it is all about politics.

For all the years that Obama has been in office, the unemployment rate and the number of unemployed have been artificially enhanced by not counting the number of people who are out of work; frustrated at not being able to find a job; and therefore, no longer looking for work.  Now, to use that well-worn phrase: "The chickens have come home to roost!"

The fact that the unemployment rate has stayed constant, despite the creation of thousands of new jobs, just tells us that the market is finally improving to the extent that those people who previously were not counted are finally able to find work.  This is a good thing.  But, to a politician like Obama, it could be bad thing.  Especially, if more and more people start looking for work and the unemployment rate starts rising again; versus just holding at 5%.

The reality is that Americans are not being told the truth about overall unemployment.  The fact that bench-sitters haven't been counted means that the unemployment rate is understated by half.  I think it's high time that the practice of reporting unemployment numbers be changed to reflect the actual truth.

One more thing.  In those last 3 months of 2015, the average weekly wage fell from $871.92 in October to $870.78 in December (source Table B-3).  Creating jobs is one thing.  People getting good paying ones is another issue.

Reference:

The Unemployment Situation Report for December 2015: http://www.bls.gov/news.release/pdf/empsit.pdf

What's the REAL unemployment rate?: http://www.cnbc.com/2016/01/08/whats-the-real-unemployment-rate.html

pb

Caracol, Haiti and Why Hillary Can't Create Jobs

Following the massive earthquake that devastated Haiti in 2010, the country needed some serious help in rebuilding itself and creating jobs.  Enter Secretary of State Hillary Clinton, with the promise of a new industrial park in Caracol that would create 65,000 new jobs and boost their economy.  Hundreds of small farmers were forced to give up 600 acres of land in order to build a $300 million industrial park.

The only problem is that, when the park opened in 2012, it only employed one-tenth of the promised workforce at a cost of about $50,000 per person.  Given that the minimum wage is $5-a-day in Haiti, $50,000 could have been used to give each of those 6000 workers a guaranteed equivalent salary for 31 years.

In order to employ even more workers at that site, millions more would be needed to build an additional 12 buildings that could employ a total of 20,000 workers.  Still well short of the 60,000 that Hillary promised.   Basically, Caracol is now looking to be the proverbial money pit and it has Hillary's fingerprints all over it.

Finally, it is interesting to me that the Clinton Foundation is still touting Caracol as a success on their web page.  Note this from that site:

"In collaboration with the Government of Haiti, the Inter-American Development Bank, and the U.S. State Department, the Clinton Foundation assisted with the development of the Caracol Industrial Park, which could ultimately create up 60,000 jobs and help to decentralize the Haitian economy. In October 2012, President Bill Clinton joined Secretary of State Hillary Rodham Clinton, President Martelly, Prime Minister Lamothe, and President Moreno of the Inter-American Development Bank (IDB) for the opening of Caracol Northern Industrial Park. Today, the Korean apparel manufacturer Sae-A is the anchor tenant and will create 20,000 jobs alone."

Sounds like a miracle of job creation, doesn't it?  Too bad it's just another Clinton lie.

References:

Hillary Clinton-backed post-quake Haiti project ‘a work in progress’: http://www.miamiherald.com/news/nation-world/world/americas/haiti/article20129688.html

Hillary’s Half-Baked Haiti Project: https://www.google.com/search?q=Hillary%E2%80%99s+Half-Baked+Haiti+Project+&ie=utf-8&oe=utf-8

A glittering industrial park in Haiti falls short: http://america.aljazeera.com/articles/2013/9/10/a-glittering-industrialparkfallsshortinhaiti.html

The Clinton Foundation: Creating up to 60,000 jobs in northern Haiti: https://www.clintonfoundation.org/our-work/clinton-foundation-haiti/programs/caracol-industrial-park

pb

Two Distrubing Employment Facts That Aren't Being Reported

Every month the Federal Bureau of Labor Statistics (BLS) releases two reports regarding the state of employment in the country.  The first is the Employment Situation Report which most of us simply call the employment report or monthly jobs report.  The other is less-known and is called the Job Openings and Labor Turnover Survey (aka the JOLTS report).

On September 4th, the Employment Situation Report was released with data covering August's employment data. It showed that the August unemployment rate fell to 5.1% from 5.3% in July with a total of almost 8 million people out of work. But what is generally overlooked is the fact that 4.1% of the workforce is working part time because they can't find full time work.  The BLS labels this as workers " working part time for economic reasons". This is an amazing 6.5 million workers which is not that much less than the 8 million who are officially out of work.  To put it into perspective, normally part time workers equal about 2.7% of the workforce, and this 4.1% is 52% higher than the norm.

It is quite possible that ObamaCare is responsible for this substantial increase in part time work. After all, the employer mandate and the associated penalties are based on how many full time equivalent (FTE) workers an employer has.  Businesses that are close to the mandate threshold can escape it all together by converting some full time workers to part time.  Something that many opponents of ObamaCare said would happen.

Then, just five days later, the BLS released its JOLTS report for July.  In that month, the number of unfilled job openings rose  to a record 5.8 million since this reporting began in the year 2000, and that July number beat the previous record of 5.4 set in May. So, here we have 8 million unemployed workers looking for work and 6.5 million working part time for economic reasons, and the number of job openings is increasing.  This, too, is not normal.  If in fact, the unemployment rate is falling, so should the number of job openings.

This contradiction exposes the fact that we have a skills and education problem in this country.   Essentially, job openings are being left on the table because we don't have the kind of workforce that can fill them.  This is why big businesses and major corporations want immigration reform.  They don't care about a bunch of uneducated or poorly educated workers streaming over our southern border.  What they desperately need is more H1B work visas to provide the kind of educated employees we need so that we don't have 5.8 million jobs left open.  This is something that no politicians -- especially the political left that supports the teacher's unions -- want to talk about when the subject of immigration is broached.

References:

The Employment Situation for August 2015: http://www.bls.gov/news.release/pdf/empsit.pdf

Job Openings and Labor Turnover Survey for July 2015: http://www.bls.gov/news.release/pdf/jolts.pdf

CNN Money: Business wants immigration reform. Why? Because they can't find enough workers: http://money.cnn.com/2014/07/11/news/companies/immigration-washington/

H1B Work Visas: https://www.google.com/search?q=h1b+visa&ie=utf-8&oe=utf-8

The Obama Economy: The True War on Women

Last month, a record 93.8 million Americans weren't working.  Of that number, 60% or 56.2 million were women.  Another record. 

The simple fact is that women are being disproportionately hurt by a slow economy under this President's watch.  As such, the women that were such a strong part of Obama's winning coalition are now turning away from Hillary Clinton. A surprising fact when you think that she might be this nation's first woman President.  There is no enthusiasm. In a recent survey, 56% of women polled say they voted for Obama in 2012.  Now, only 49% of those polled say they are interested in voting Democrat again in 2016.


References:

Record 93,770,000 Americans Not In The Labor Force: http://www.breitbart.com/big-government/2015/08/07/record-93770000-americans-not-in-labor-force/

Record 56,209,000 Women Not In The Labor Force: http://www.breitbart.com/big-government/2015/08/07/record-56209000-women-not-in-labor-force/

President Obama has presided over an economic recovery — now more than six years old — that is far worse than all the previous 10 stretching back 70 years: http://news.investors.com/ibd-editorials/073015-764333-tepid-gdp-growth-leaves-economy-even-further-behind-the-pace.htm

2016: Obama coalition of blacks, women, GenX, losing interest in voting: http://www.washingtonexaminer.com/2016-obama-coalition-of-blacks-women-genx-losing-interest-in-voting/article/2566950

Why Trump Is So Popular: It's the Economy, Stupid!

Many think that Bill Clinton became President and beat George H.W. Bush in 1992 because of a single catch phrase: "It's the economy stupid!".   That may be true since the economy had slipped into recession under Bush.

While we are not in a recession -- at least not yet -- most people feel that we are.  In poll after poll, Americans again are saying that the economy and jobs are the number one national priority; well ahead of anything else such as immigration.

What people see in Trump is his success in business.  A man who can create jobs and get things done.  He tells it like it is.  We're right back to "it's the economy, stupid" all over again.  A recent Gallup poll supports this with 56% of Republicans; 35% of Independents; and even 16% of Democrats saying he would do a good job with the economy.

Simply, this is why Trump is doing so well against his rivals.  He is the only one of those 17 GOP candidates who is a successful businessman.  A multi-billionaire.  While, Carly Fiorina was also a business person, many know and remember how she had to be let go as CEO from Hewlett-Packard; a scar on her record.  She also wasn't successful in her run against Barbara Boxer for California's U.S. Senate seat.  Another scar.

Trump may fade but, for now, people seem to think he would be a strong leader on the very issue they consider to be "the" priority.


References:

It's the economy stupid!: https://en.wikipedia.org/wiki/It%27s_the_economy,_stupid

Polling Report: Priorities: http://www.pollingreport.com/prioriti.htm

Trump Stronger on Economy Than Foreign Affairs, Immigration:  http://www.gallup.com/poll/184166/trump-stronger-economy-foreign-affairs-immigration.aspx

Why ObamaCare May Kill Jobs For Older Low-Wage Workers

Starting January 1st, 2015 the employer mandate of ObamaCare went into effect.  For those who don't know, this is a requirement that a business with 50 or more full time workers -- those working 30 hours or more a week -- offer health insurance to its employees and their dependents.  Dependents, as defined by the law, are children and not spouses.   Further, if an employee's total household income is between 100 and 400% of the poverty level, the employee cannot be charged any more than 9.5% of their income for coverage.  Therefore, for the first time in U.S. history, employers are required to ask for an employee's spouse's salary so they can determine how much they will have to pay for their insurance.  Also, if the employer fails at any of the above, a $2000 annual fine (tax) will be imposed for every employee at the business.

The way health insurance works, the younger healthier insured pay less than the older and potentially more costly.  Women, too, are more expensive to cover because of different health examinations and the potential of pregnancy. When a company needs to establish a group plan, the contracted insurance company needs to know all it can about the sex and age of the insured.  Some might require an annual physical paid by the employer before the cost of their insurance can be determined.

Companies are going to find out that having too many low-paid, older workers is going to cost them money.   For example, a single employee aged 55, and making less than $30,000 would have the 9.5% rule applied.  While a single person in their twenties might only cost $1500 a year to insure, this 55-year-old would cost at least $4,300.  In that case, the employer would be on the hook for $1,450 of it; and the employee would pay $2,850.  Whereas the young 20-something would not be subsidized at all.  Of course, this assumes that the company achieve that low of a cost to insure a 55-year-old.  Chances are, the smaller the company, the higher the cost of per employee insurance.  So, they could be on the hook for double or even triple that $1,400.

The fact is simple.  Employers now have an incentive not to hire or keep older, low-income workers. Another unintended consequence of such a wide sweeping law.

References:

Employer Mandate: https://www.uschamber.com/health-reform/employer-mandate

Health Insurance Coverage for 50- to 64-Year-Olds - AARP: http://www.aarp.org/content/dam/aarp/research/public_policy_institute/health/Health-Insurance-Coverage-for-50-64-year-olds-insight-AARP-ppi-health.pdf

pb

A Rise to a 5.5% Unemployment Rate Is a Good Thing?

Since the latest jobs report was released yesterday morning, more than a few economists are touting a strengthening jobs market because the unemployment rate rose from 5.4% to 5.5%. Oddly enough, this would normally be true since the official and publicly announced unemployment rate is calculated without including workers who have given up looking for a job but still want to work.  Sensing a better chance of employment, many of those are once again attempting a job search. Add some of those people back into the workforce and it is natural for the unemployment rate to go up.  That is as long as the number of workers rejoining the workforce is greater than the number of jobs being created.  Superficially that was the case.  The size of the workforce grew by 397,000 and 280,000 jobs were created; resulting in an increase of unemployed by 125,000 and an increased unemployment rate.

However, if this was really true, we should have seen a corresponding reduction in the number of people not looking for work.  We didn't.  Instead the U-6 number of Table A-15 -- the Alternative measures of labor underutilization -- stayed the same at 10.8%.

Also, if the job market was truly improving, the number of people who are long term unemployed should be going down.  But, again from Table A-15, the U-1 percent for those people out of work for more than 15 weeks rose from 2.3% (in the prior month) to 2.4%. At the same time, job losers (the U-2 report of the same table) rose from 2.6% to 2.7%; month-over-month.

I guess I'm tired of economists simply looking at the top line numbers and ignoring the details and coming up with the false conclusion that this report shows a strengthening job market.

References:

THE EMPLOYMENT SITUATION—MAY 2015 - Bureau of Labor Statistics:  http://www.bls.gov/news.release/pdf/empsit.pdf

Economists agree that the May jobs report was good all around: http://www.businessinsider.com/why-the-unemployment-rate-rose-2015-6

pb

Will Socialism Be The Only Answer In A World Run By Robots?

We already have cars being tested that drive themselves.  So, when they are finally perfected and approved, why would we need cab drivers?  What about bus drivers and truck drivers?  In Nevada, German truck manufacturer Daimler is already testing a self-driving truck. Microsoft has replaced its human security guards patrolling it's Silicon Valley campus with 5 foot tall robots that use artificial intelligence to navigate and detect security problems.  There's even a robot capable of sorting items at recycling centers.

The reality is, that an increasing number of jobs are being replaced by intelligent machines.  So rapidly, in fact, that some experts believe that 30% of all jobs will be replaced by 2025.

The 30% of workers that do lose their jobs will no longer be paying into Social Security and Medicare to support the millions already living off of those two programs. They'll pay no taxes that typically support welfare and wards of the state. So, how is society going to take care of the millions of workers forced into unemployment by these machines?  I think initially, the politicians will try to stop robot takeover through a tax on every one being deployed; arguing the taxes will be needed to pay for all those people who lost their jobs.   Eventually, though, the only answer will be to allow robot takeover and dump capitalism in favor of socialism with everyone being paid by the state and allotted certain necessities for free.  And, in the irony of all ironies, capitalism, the chief driver of innovation in the world, will die by its own hands.

References:

Self-driving Cars Are No Longer a Thing of the Future | TIME: http://time.com/3661446/self-driving-driverless-cars-ces/

The World’s First Self-Driving Semi-Truck Hits the Road: The World’s First Self-Driving Semi-Truck Hits the Road

Microsoft's Silicon Valley campus is protected by robots:http://www.dailydot.com/technology/microsoft-robot-security-guards/

Green machine: Intelligent robot system recycles waste: http://www.cnn.com/2013/06/07/tech/zenrobotics-recycling-robot/