The Jobs Cure
A record-high 46 million Americans are living in poverty today. That is more than one out of every eight Americans. The number of homeless children (1.36 million) has doubled since the recession of 2008. Real median household income is still significantly (6.5%) lower than before the 2008 recession.
Typically, the solution politicians offer is to spend more money. But this proposal immediately bumps up against the reality that we have $18.4 trillion in debt, and will have nearly $20 trillion by the time President Obama leaves office. Our spending continues to grow, with no sign of slowing down.
The federal government has spent $20 trillion on means-tested programs for the poor since 1965. One would think that, if spending were the solution, then the problem of poverty would be long solved by now.
So it seems that we have two enormous, mutually-compounding problems: our poverty causes more debt by triggering more usage of welfare programs, and our debt, by hurting our economy, makes poverty all the more intractable.
We can help solve both our poverty problem and our national debt problem in large part by encouraging — or at least not discouraging — the hiring of more employees.
The proof is simple: among those who are poor, most are unemployed. According to research from the University of California Davis, among those who work full-time year-round, the poverty rate is only 3%. Among the unemployed, it is more than ten times that. Overall, it is 14%. That’s the difference a job makes for our society.
On an individual basis, getting a job can mean the difference between dependence or independence. On a collective basis, jobs are the difference between high spending on welfare with low tax revenue, and low spending on welfare with high tax revenue.
So how do we get people working?
Wage growth — either among those already employed or expanding the number of those employed — is dependent upon economic growth. If the economic pie does not grow, then there is no money for new jobs or raises.
Economic growth creates jobs, and jobs decrease both poverty and the deficit. The solution to both our poverty problem and our spending problem is economic growth.
Think back on the past few centuries, or even millennia, for a moment. Think of all the new, specialized jobs that exist today that would have been unheard of even decades ago. Until about 1865, over 90% of Americans were farmers. Today, that number is only 2%. Because our economy grew, it has become more diverse and inclusive. When the pie grows, then there is more room for everyone to get a slice of it.
Unfortunately, just as in recent weeks we have had bad news about poverty, we have accordingly had bad news about economic growth. In the third quarter of 2015, our economic growth slowed down sharply from the strong 3.9% annualized growth of the second quarter, to just 1.5%.
Government can help the economy to grow primarily by not hindering its growth. Every day, you and every other American participate in economic activity — spending, working, saving, investing, selling, and so on. All of these create value.
But big government likes to get in the way of these transactions by taxing them, regulating them, or banning them outright in some cases. The examples of counterproductive laws are countless: taking hard-earned tax dollars and giving them to rich sugar growers, banning the incandescent light bulb, or taxing rainwater are just some of the most egregious. We ought to find the ways in which the government is hurting economic growth, and strongly reconsider those policies.
It is not a coincidence that our labor participation rate is the lowest it has been since Jimmy Carter was President, and that we have record-high numbers of Americans in poverty. Even among Americans who have found jobs in recent years, these jobs are disproportionately part-time. Despite creating 11.5 million new jobs since the recession, we still don’t have as many full-time jobs as before the crash, and that with our population having grown by about 150,000 per month over the last 6 years! Too many people are being left out by our stagnant economy.
Too many can’t live the American Dream because of job-killing government mandates. If we care about the poor, the least of our brothers and sisters, and if we care about our children and the financial burden of their debt, then promoting economic growth ought to be our focus. We have a responsibility to them to grow our economy by allowing people access to free participation in commerce.
We need to grow our economy so that there is room for all of us.