(What’s Left of) Our Economy: Private Sector U.S. Jobs Increasingly Really Deserve the Name

Tags

Barack Obama, Employment, healthcare, Jobs, private sector jobs, recession, recovery, subsidized private sector, Trump, {What's Left of) Our Economy

Although unemployment in America has hovered near multi-decade lows for most of the last year, concerns about job quality rightly persist – largely because wage gains have only recently showed signs of recovering to historically normal levels for a recovery. But the latest official data from the Labor Department demonstrate that the makeup of the country’s employment picture and how it’s changed make clear continued improvement in one key measure: Growing private sector employment increasingly reflects gains in what I’ve called the real private sector, as opposed to the subsidized private sector.

Also apparent from the employment figures: The resurgence of the real private sector in relative terms as well as in absolute terms has been a Trump era phenomenon.

As known by RealityChek regulars, this trend is encouraging because the subsidized private sector consists of parts of the economy that are often (and even officially) viewed as parts of the private sector, but whose health depends largely on government largesse. That is, its total employment and its employment gains would be much smaller without huge government payouts – i.e., politicians’ decisions. The healthcare services industry is the main example.

By contrast, the real private sector consists of parts of the economy whose health flows largely from free market forces. So without getting involved in the debate over whether the United States supports too many subsidized private sector jobs or not, it should be clear that they have little to do with the state and health of the economy as a whole – unlike real private sector jobs.

According to the Labor Department’s Bureau of Labor Statistics, from 2013 through 2016, the subsidized private sector’s share of total annual employment increases more than doubled: from 11.34 percent to 25.99 percent. And its share of annual total private sector jobs gains (that is, employment increases by the private sector as conventionally defined), soared from 11.02 percent to 28.59 percent.

During 2017 and 2018 (and the data for late 2018 is still preliminary), the subsidized private sector’s share of total annual U.S. jobs gains dropped to 21.04 percent and then to 19.90 percent. And its share of the growth of total private sector jobs fell to 21.91 percent and then to 20.74 percent.

Another way to look at the Obama-era growth of subsidized private sector employment is to examine its growth as a share of the growth of real private sector jobs. In 2013, this figure stood at 12.38 percent. In 2016? Just over 40 percent. In other words, in the last year of Barack Obama’s presidency, some four in ten of the net new jobs created in the private sector came in the subsidized private sector – meaning that they were heavily dependent on government largesse.

In 2017 and 2018, subsidized private sector jobs growth as a share of total private sector jobs growth sank all the way to 28.05 percent, and then to 26.16 percent.

Looking at the economy from a static standpoint – i.e., through snapshots taken at crucial dates – illustrates these trends, too, although less dramatically. After all, even major relative changes can take many years to show up as major absolute changes in a supertanker as big as the U.S. economy.

At the outset of the last recession the subsidized private sector represented 13.67 percent of all U.S. jobs and the real private sector’s share was 70.16 percent. And the subsidized private sector’s share of the total (conventionally defined) private sector was 19.49 percent.

By the time the recovery began, in mid-2009, these figures stood at 14.97 percent and 67.80 percent – showing that during an economic downturn that decimated the overall American jobs market, subsidized private sector employment rose not only in relative terms but in absolute terms (from 18.92 million to 19.61 million. Meanwhile, the subsidized private sector’s share of the total private sector employment had risen to 22.07 percent.

By January, 2017 – the final month of the Obama administration and eight and a half years into the recovery – the subsidized private sector comprised 15.75 percent of all American jobs, and the real private sector was back up to 68.94 percent. Subsidized private sector employment had grown to 22.84 percent of total private sector jobs.

By December, 2018 (results that are still preliminary) the subsidized private sector’s share of all American employment had kept increasing – to 15.91 percent. And the real private sector’s share grew modestly, too – to 69.11 percent, as did the subsidized private sector’s share of the total private sector (to 23.02 percent).

Nevertheless, this examination of the changing dimensions of subsidized private sector employment also reveals that the national jobs market still hasn’t returned to pre-recession normality. In particular, even though the current recovery is nearing it’s tenth anniversary, that real private sector share of total employment (69.11 percent) is still below where it stood at the downturn’s onset (70.16 percent).

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Im-Politic: Want to Really Fuel Big Government? Ditch Trump’s Trade Policies

Tags

Affordable Care Act, big government, budget cuts, Congress, conservatives, discretionary spending, entitlement spending, healthcare, Im-Politic, industrial policy, Mick Mulvaney, Obamacare, Republicans, Trade, Trump, USAToday

USA Today‘s editorial yesterday on U.S. trade policy did an excellent job of stating a major objection to tariffs and other measures that interfere with international commerce – and one that understandably resonates strongly in a nation that prizes free market values, and especially among its conservatives: These trade curbs fuel Big Government, thereby preventing the economy from achieving its full potential, and harming the nation’s society and culture as well as the economy by sapping the attractiveness of individual initiative.

The essay also understandably focused on a development that looks like a poster child for trade-fostered Big Government – the process set up by the Trump administration to decide which companies will receive exemptions from recent metals tariffs, based on claims that adequate domestic substitute steel and aluminum products aren’t available.

In the words of the editorial writers:

“[T]he administration has imposed a new tax on imported metals and then put itself in a position to decide who has to pay it and who does not.

“This is Big Government at its worst — arbitrary and capricious, if not outright political, as it picks winners and losers in business. And all this is being done without any new law being passed and while a Republican Congress, which used to stand for free enterprise and limited government, remains supine.”

One obvious rejoinder is the observation that, however cumbersome the exemptions process may or may not be, Washington actually has an impressive historical record of “picking winners and losers in business.” Examples include the information technology hardware and software industries, which were practically launched with public (largely Pentagon sponsored) research and development funds, and critically nurtured by government (again, largely defense-supplied) markets; the world-class farming sector fostered by U.S. Department of Agriculture research findings; the equally world-class pharmaceutical industry aided by the National Institutes of Health; and an aviation and aerospace industry supported by the Defense Department, by the National Aeronautics and Space Administration, and by a NASA predecessor aeronautic agency. (For an excellent summary of this historical record, see this study from the National Academies of Science.) 

But there’s another vital point missed by USAToday and by conservatives who remain devoted to preserving or renewing the expansion of the existing free trade realm: If they succeed, they’re likely to see the kind of Big Government metastasis America has never experienced before. The reason? So many renumerative Americans jobs will be lost, and so much income destroyed, that political pressures for a much more generous welfare state will positively skyrocket.

Another favorite cause of newspaper editorialists like the USAToday writers and many Big Government-phobic conservatives – the return of mass immigration – will bring the same type of outcome, for many of the same reasons.

And if you think that the nation’s leaders will unite to uphold the causes of self-reliance and much smaller government, you weren’t paying attention to the recent fight over abolishing “Obamacare.” For better or worse, the national healthcare system created at the initiative of the former President remains largely in place even though its Republican opponents control the entire federal government and a huge majority of state governments because lots of these Republican politicians recognized that eliminating this latest entitlement would be political suicide.

At the same time, standard-issue conservatives aren’t the only Americans who may need to learn these lessons. Donald Trump belongs on this list, too. Interestingly, he won the presidency after running a campaign that both promised an Americans-First overhaul of trade policy and to protect the nation’s immense middle class entitlement programs – both of which clashed strongly with conservative dogma.

But his biggest first-year push as President involved going after Obamacare – well before he had achieved any of his trade policy goals, and before he even began pursuing them energetically. And he’s so far permitted his budget director, former Tea Party stalwart Mick Mulvaney, to propose numerous deep cuts in discretionary spending and even some entitlement spending that aren’t exactly middle class-friendly, either.

This set of priorities may have been unavoidable politically, reflecting Mr. Trump’s perceived need to establish some conservative bona fides with Congressional Republicans – who mainly still strongly support the party’s old orthodoxy, but whose staunch backing he would need in any impeachment proceedings.

At the same time, a fair number of those donors-friendly, offshoring-happy Congressional Republicans are retiring – largely because they recognize that Trump-ian trade and other unorthodox policies have won over the base. And although Democratic hardliners may indeed push successfully for impeachment proceedings if the party wins the House, it’s likely that, in the absence of a major smoking gun, this campaign could alienate independent voters – who are hardly gung ho to give Mr. Trump the heave-ho. Chances are they’d be even less receptive to an impeachment spectacle dominating Washington if the President distanced himself from meat-axe public spending cuts.

If this scenario unfolds, the loudest voices complaining that Trump-ian trade policies lead to Big Government could be mainstream media editorialists and pundits. But these voices would be less important than ever.

(What’s Left of) Our Economy: America Keeps Getting More Manufacturing-Lite

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Commerce Department, finance, GDP, Great Recession, gross domestic product, healthcare, manufacturing, real value-added, recovery, subsidized private sector, value added, {What's Left of) Our Economy

The Commerce Department’s “GDP [Gross Domestic Product] by Industry” reports aren’t considered market movers by those in the know in economics, business, and finance. Still, I find them well worth following because they provide the most authoritative evidence available on whether numerous claims about the economy’s strengths and weaknesses meet the reality test.

The big takeaway here? For all the post-financial crisis talk from politicians across the political spectrum about the need to reindustrialize the U.S. economy, manufacturing remains a major growth laggard. Indeed, by two key measures, it still hasn’t recovered fully from the Great Recession.

Commerce’s latest report takes the story up to the second quarter of this year, and revises the previously published results back to 2014. For some reason, the new 2014 numbers won’t come out till next month, but we do have the 2015, 2016, and first quarter 2017 revisions. Here’s what they say.

From 2015 through the first quarter of this year, manufacturing’s inflation adjusted growth rate – according to a gauge called “real value added,” which aims at eliminating unintentional double-counting – has been a few ticks lower than originally judged. The 2015 performance was revised down by 0.6 percentage points, the 2016 growth was upgraded by a full percentage point, and the first quarter 2017 result was downgraded by 0.8 percentage points. As for the latest, second quarter 2017 number, it’s a healthy four percent at an annual rate.

Manufacturing real value added’s contributions to growth have been a little more modest, too – which means that it’s been growing more slowly than the rest of the economy. That trend comes through more clearly from the Commerce data showing industry’s actual share of GDP. The main numbers are presented in current dollar terms, meaning that they don’t factor in inflation. But they make clear that manufacturing value added has declined from representing 12.1 percent of total American economic output in 2015 to accounting for just 11.5 percent in the second quarter of 2017.

To make the point even more emphatically, when the Great Recession broke out, in the fourth quarter of 2007, manufacturing value added represented 12.4 percent of gross domestic product.

Of course, there’s a case to be made (not that I accept it) that as long as manufacturing is growing, it doesn’t matter whether it’s becoming a bigger or smaller share of American economic output. But even by these standards, U.S. manufacturing is faltering. The new Commerce numbers show that, since the recession began, manufacturing real value-added is down. It’s not down by much – 0.18 percent in toto. But we’re talking about absolute shrinkage over a period of nearly ten years.

As RealityChek regulars know, the Federal Reserve’s industrial production reports (which also adjust for inflation), peg manufacturing’s shrinkage since the end of 2007 at an even greater 4.26 percent. Only if you take price increases out of the picture does manufacturing show a real recovery. In current dollar value added terms, it’s grown by 18.26 percent during this period.

But even by these terms, manufacturing’s laggard status stands out. In fact, since the fourth quarter of 2007, it’s share of the economy’s value-added has fallen by 10.16 percent. That’s the greatest such drop in the whole economy after mining (26.09 percent) and construction (10.42 percent).

The leaders, by these criteria? The subsidized private sector (industries, notably healthcare services, whose size is determined largely by government largesse) is number one, increasing its share of value added by 16.22 percent. Next is a supersector comprising arts, recreation, accommodation, and food services (up 13.89 percent). And remember all the concern that the pre-recession, bubble-ized economy of the previous decade was too Wall Street heavy? Since it brought the entire world to the brink of economic disaster, the finance super-sector has boosted its share of value added by a healthy 5.05 percent.

(What’s Left of) Our Economy: The Dubious Labor Shortage Claims Keep Coming

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BLS, Bureau of Labor Statistics, healthcare, Immigration, labor shortages, nurses, nursing, Reuters, wages, West Virginia, {What's Left of) Our Economy

Perhaps some day we’ll find out when it apparently became mandatory for journalists to write articles about supposed labor shortages in the American economy without once mentioning the word “wages.” For now, RealityChek will have to settle for citing yet another example of this phenomenon that contains an interesting twist: The reporter in question did look at some data from the Bureau of Labor Statistics (BLS), the U.S. Labor Department division that gathers and publishes employee compensation figures. But she still left out BLS numbers on wages and salaries.

According to Jilian Mincer of Reuters:

“Hospitals nationwide face tough choices when it comes to filling nursing jobs. They are paying billions of dollars collectively to recruit and retain nurses rather than risk patient safety or closing down departments, according to Reuters interviews with more than 20 hospitals, including some of the largest U.S. chains.

“In addition to higher salaries, retention and signing bonuses, they now offer perks such as student loan repayment, free housing and career mentoring, and rely more on foreign or temporary nurses to fill the gaps.”

And as indicated above, she is clearly familiar with the BLS as a reliable source of information on the American employment picture. Later in the article, she writes that “Nursing shortages have occurred in the past, but the current crisis is far worse. The Bureau of Labor Statistics estimates there will be more than a million registered nurse openings by 2024, twice the rate seen in previous shortages.”

But for some reason, she didn’t mention the BLS wage data – a crucial omission because everything we (think we) know about economics tells us that when anything, including labor, is scarce, its price (pay in this case) will rise until the greater rewards attract an adequate supply. Common sense supports this analysis, too. If employers are scrambling to fill jobs, it stands to reason they’ll offer better pay to make sure they and not their competition attract the needed workers.

And what the BLS data tell us is that no such scramble is taking place – or at least not enough of one to bid up wages. The last year for which detailed data for occupations (as opposed to sectors of the economy) is available is 2016. The numbers say that last year, the mean (average) national annual wage for registered nurses was $72,180 before inflation, and the mean hourly wage was $34.70.

Now let’s go back five years. The 2011 numbers? An annual mean wage of $69,110 and an hourly median wage of $33.23 per hour. So pay by these key measures wages rose by 4.44 percent over those five years and 4.42 percent, respectively. And again, that’s before adjusting for inflation. Does that sound like the hospitals and other healthcare providers that employ nurses are desperate for more?

Even stranger: Nursing pay has been rising more slowly than pay overall during this period. Between 2011 and 2016, mean annual wages for all occupations were up 9.73 percent, and mean hourly wages were up by 9.75 percent. That’s more than twice as fast! (See the same links that contain the national nursing figures.)

In fairness, Reuters’ Mincer looks at an additional nursing issue – the labor situation in rural areas, which she describes as especially dire. And it does seem to make some intuitive sense that small towns and farm communities would have special difficulties staffing medical facilities. But the numbers don’t seem to back up that story, either.

The author spent considerable space reporting on West Virginia. But the BLS numbers show that, between 2011 and 2016, both hourly and average nursing pay advanced by 4.50 percent. That’s only slightly more than the national rates of increase.

Yes, Mincer’s piece did talk a lot about healthcare providers offering “higher salaries, retention and signing bonuses [and] perks such as student loan repayment, free housing and career mentoring….” It’s entirely possible that she’s right. (The government doesn’t keep detailed occupational figures on these scores.) It’s also entirely possible that the data that is tracked by BLS is way off base. But when you’re claiming “labor shortage,” shouldn’t you at least mention that the most comprehensive facts available about base pay say nothing of the kind?

Moreover, buried in the article – indeed at the end of the quote immediately above – is a clue to the apparent paradox: Mincer’s observation that the healthcare industry is relying “more on foreign…nurses to fill the [employment] gaps.”

If true, that would make clear that lax immigration policies are still enabling nurses’ employers to suppress pay by easing any shortages in the domestic labor force by hiring immigrant nurses who will work for significantly lower pay than native-born workers. And it would suggest that the Cheap Labor lobby encompassing so many American businesses is still able to keep these wage-suppressing global labor pipelines open by peddling a steady stream of warnings about bogus labor shortages to gullible journalists.

Im-Politic: Fin de Trump? Again?

Tags

2016 election, Donald Trump Jr., establishment, healthcare, Hillary Clinton, Im-Politic, Immigration, Jared Kushner, Mitch McConnell, Paul Manafort, Paul Ryan, Republicans, Russia, Russiagate, Trade, Trump, Vladimir Putin

The latest Trump-Russia revelations make me feel like the Bill Murray character in “Groundhog Day.” I’ve already written posts to the effect that “[Candidate] Trump could really be in trouble this time.” I’ve also already written posts to the effect that “[Candidate] Trump could really be in trouble and this time it could be different.” Like practically everyone else I read and communicate with, I’ve been wrong on these scores, but I’ll be plowing the same fields again – if only because the circumstances are so extraordinary, and especially because so much is still unknown.

First, my bottom lines: I remain skeptical that the emails Donald Trump, Jr. released yesterday (after he was told they’d be published) will result in the end of his father’s presidency in any direct sense (i.e., impeachment and removal, or resignation). I remain equally skeptical of meaningful (and I know that’s an important qualifier, as I’ll discuss below) Trump-ian collusion with Russia’s government (which includes lots of operatives without official positions) to undermine his chief presidential opponent Hillary Clinton’s campaign.

I am, however, more convinced than I had been that what is different about the newest disclosures is that Washington will remain preoccupied with “Russiagate” for most of the rest of the President’s (first?) term, that they’ve just about ruled out any meaningful policy accomplishments through 2020, and that one reason is that Mr. Trump will have bigger reasons than ever to toe a standard Republican establishment policy line that’s highly unpopular even with his own base, but that’s still gospel with a Washington wing of the party whose loyalty is vital to his survival.

Second, let’s knock down the main talking points offered by Mr. Trump’s aides and other supporters (full disclosure: I support much of his agenda, and most of his establishment-bashing). As should be obvious, the failure of the Russian lawyer actually to produce any damaging information on the Clinton campaign does not absolve the president’s son – or son-in-law cum adviser Jared Kushner, or then campaign manager Paul Manafort, of the charges that they tried to cooperate with foreign agents to affect an American political campaign (the heart of the politically salient collusion charge).

The email exchange showed that this information was the principal reason that all three figures attended the meeting. Their motives are completely unaffected by the false pretenses under which they acted.

Just as obvious, and just as bogus, is Trump, Jr.’s claim that he and his colleagues viewed an offer from Russia as nothing special because the Russia-gate charges had not proliferated. Manafort, for example, formally joined the Trump campaign manager on March 29. Certainly by May 2 – a month before Trump, Jr. first heard about the supposed Russian information – Manafort’s longstanding lobbying for pro-Russia politicians in Ukraine was making news. As a result, even if the president’s son was politically inexperienced enough not to recognize the potential dangers, Manafort himself, a veteran Washington operative, surely knew the score.

Even more important, the Russia business ties of Trump, Sr. himself were being scrutinized and fretted about at least as early as March 15.

Have any laws been broken? Beats me. That’s now officially the responsibility of Robert Mueller, te Justice Department’s Special Counsel, to determine. But much of this uncertainty centers on how much is known about this meeting, and how much is known about similar activities. Further, neither impeachment nor the future of the Trump presidency will necessarily hinge on such legal questions. A president, as I’ve noted previously, can be impeached for anything the House of Representatives believes satisfies the definition of “high crimes and misdemeanors” – which itself is a political, not a legal, concept. The Senate, moreover, can remove a president from office for equally political reasons.

So public opinion will be crucial. There are no signs yet that Russia-related charges have significantly damaged President Trump’s support either with the general public or among Republicans. But the more such Russia-related material keeps coming out, the likelier such erosion becomes.

Nor will the president’s political support depend completely, or even largely, on politicians’ often less than steely backbones. The new Trump, Jr. emails – and the continuing and utter failure of anyone in the Trump circle (including the president himself) to provide straight, durable answers to perfectly reasonable questions – understandably revive questions of how extensively individuals associated in any significant way with Mr. Trump or his campaign worked with the Russian government to sway election results.

Until yesterday, as I’ve written, I’ve felt confident that no important collusion evidence would emerge because none had yet been leaked – even though the matter had been probed for months by several official and many unofficial investigations, and even though bureaucrats at the highest levels have been positively eager to reveal incriminating Trump information even if national security could be undermined.

In addition, it’s never been clear to me why Russian interference with the election ever required cooperation from the Trump campaign – or any other American source. As long as Moscow was so motivated, its formidable hacking and disinformation capabilities were amply capable of producing the desired results on their own. Moreover, the U.S. intelligence community’s January report on the Russian interference campaign itself reported that Russian leader Vladimir Putin was wary of praising candidate Trump too enthusiastically precisely for fear of generating a backlash.

At the same time, even the canniest political leaders and other figures don’t always behave logically or sensibly. It’s also now clear at least that many in the Trump circle have been less than canny or, when it comes to explaining controversial events, even minimally competent. As a result, as stated above, there’s now indisputable evidence of receptivity to collusion by three extremely influential Trump aides (including two family members).

If the June Trump, Jr. meeting represents the extent of the collusion, there’s still an excellent chance that the president ultimately will survive the Russia mess. After all, what kind of (serious) collusion effort, once started, would feature no follow up? But because no one close to Mr. Trump now enjoys (or deserves) much credibility on these matters outside hardcore Trump-supporter circles, Democrats now have the pretext they need to force the administration to keep trying to prove a negative – a challenge no one should relish. Special Counsel Mueller has a comparable justification for prolonging his own investigation considerably.

Yet even before the possible crumbling of the president’s political support, for either legal or political reasons or some combination of the two, the Trump administration’s Russia-related problems could profoundly impact the nation’s policy agenda – and not in a good way if you’ve hoped Mr. Trump would be an agent of serious change. Here’s what I mean.

Recall that last year, Mr. Trump did not simply assume the leadership of the Republican party after winning its presidential primaries. He engineered a hostile takeover, supplanting a party mainstream that strongly opposed him on his two signature issues – trade and immigration policies. The shocking Trump fall victory, however, gave the incoming president crucial leverage in this relationship, and for a very powerful, concrete reason. The Republicans’ establishment leaders in Congress gave his campaign, and especially the inroads he made with new constituencies, abundant credit for saving the party’s control of both the House and Senate.

Once the Russia-gate charges and Team Trump’s failures to address them adequately began gaining critical mass, though, the dynamics of this relationship began changing dramatically. President Trump’s future became more dependent on the establishment GOP’s support. Therefore, he needed to warm to its establishment agenda – notably their budget and healthcare proposals – despite the poor poll numbers they’ve been drawing. Additionally, his ability to reach across the aisle on promising areas of bipartisan agreement, like infrastructure, turned into a function of the overall party’s flexibility – which seems pretty limited to date.

Since such vast new – and, due to the Trump circle’s constantly changing responses, legitimate – investigative frontiers have been opened up by the new emails, the Trump wagon now looks to be hitched to the Congressional Republican star more tightly than ever. That’s not to say that House Speaker Paul Ryan and Senate Majority Leader Mitch McConnell will never stray from their party’s orthodoxy. McConnell, at least, has hinted that bipartisan compromise may be needed on healthcare. Moreover, the party establishment is by no means united on all major issues, either. Consequently, intra-party divisions may widen the scope for bipartisanship (as has generally been the case to avoid or mitigate various budget crises).

But the main point here is that at this point, these decisions are likeliest to be driven by the establishment, not the president. And the tragedy, at least for anyone rooting for the president or any of his agenda, is how many of the resulting White House political and policy wounds will have been entirely self-inflicted.

(What’s Left of) Our Economy: Where the Trump Record is Looking Different

Tags

Barack Obama, Bureau of Labor Statitics, Employment, Great Recession, healthcare, Jobs, Mainstream Media, private sector, real private sector, recovery, subsidized private sector, Trump, {What's Left of) Our Economy

Since of course there’s no Mainstream Media bubble or echo chamber, it must be a total coincidence that the press last week was filled with articles noting that the U.S. economy today (which President Trump keeps praising) looks pretty similar to the U.S. economy before the last presidential election (which candidate Trump decried).

Generally speaking, these observations are right – with one important exception that’s been universally overlooked: Job creation this year so far has owed significantly more to the “real private sector” of the American economy and less to the “subsidized private sector.” That is, more hiring is coming in the part of the economy in which employment levels generally reflect free market forces, and therefore speak volumes about the whole economy’s fundamentals. And less hiring is taking place in industries like healthcare services, where job creation largely reflects levels of government support that stems from political decisions. Therefore, however worthy their services, employment performance in these sectors says little about the state of the economy.

RealityChek observed the possible start of this trend two months ago. Now that we’re halfway through the year, it looks more solidly established. As usual, the best evidence comes from comparing job creation in the first six months of this year with job creation during the same periods in past years. (Keep in mind, however, that the statistics for May and June, 2017, are still preliminary; that is, they’ll be revised in the next two months – and then revised again early next year along with the results for all of 2017. For good measure, the Bureau of Labor Statistics will recalculate them again further down the road.)

For the first six months of this year, total U.S. net employment gains (in the “non-farm” sector that represents the Bureau of Labor Statistics’ American employment universe) came to 1.079 million. Of these, 20.95 percent came in the subsidized private sector, and 74.05 percent came in the real private sector. (The rest came in government at all levels.)

Those figures are much different than those for the first six months of 2016 – 28.44 percent and 60.83 percent. In fact, the January-June 2017 results represent the first time since 2014 when the subsidized private sector share of total job creation fell and the real private sector share rose. At the same time, the subsidized private sector’s role in total hiring is way up from January-June, 2013 – when it was only 14.22 percent. And the real private sector’s role is way down (from 92.63 percent that year).

Another way to look at hiring developments: During the first half of 2013, subsidized private sector job creation totaled 13.31 percent of job creation in the private sector as it’s conventionally defined (that is, including the subsidized industries). By the first half of 2016, the subsidized industries’ share of conventionally defined private sector net new employment had more than doubled: to 31.86 percent.

Finally, let’s see how these employment numbers have changed on a stand-still basis.

In December, 2007 – on the eve of the Great Recession – the subsidized private sector accounted for 13.22 percent of all non-farm jobs, the share of the private sector conventionally defined was 83.83 percent, and that of the real private sector was 70.62 percent.

In June, 2009 – when the recovery began – these figures were: subsidized private sector, 14.97 percent; conventional private sector, 82.77 percent; and real private sector, 67.80 percent.

And this June? Subsidized private sector, 15.78 percent; conventional private sector, 84.73 percent; and real private sector, 68.96 percent.

In other words, although the punch has slacked off a bit, the subsidized private sector is still punching above its weight when it comes to job creation. We know this because its share of new hiring for the first six months of this year (20.95 percent) remained greater than its share of total American employment as it stood in June (15.78 percent). The real private sector is outperforming, too, but the gap is much smaller proportionately.  (The – big – slacker has been the public sector.)

Also, eight years into the current economic recovery, the real private sector’s share of total American jobs is smaller, and the subsidized private sector’s share is larger, than they were at the start of the expansion.

There’s no doubt that the American job market today is in much better shape than it was at the start of the recovery – and that most of this progress took place before President Trump took office. Nor is there much reason to doubt that until the economy’s reliance on the subsidized private sector for job creation falls considerably more, it will difficult to claim legitimately that the employment scars of the recession have fully healed. But something else that’s now increasingly clear is that a crucial job quality front, the Trump economy is looking notably different – and better.    

Im-Politic: The Polls Say “Let Trump Be [Campaign-Version] Trump”

Tags

2016 election, ABC News, budget, conservatism, discretionary spending, entitlements, Freedom Caucus, healthcare, Im-Politic, Immigration, independents, NBC News, Paul Ryan, polls, poverty, Republicans, The Wall Street Journal, Trade, Trump, Washington Post

They’re only polls and we all should remember how badly most polls blew their calls in the last presidential election. But two new surveys from the Washington Post and ABC News on the one hand, and the Wall Street Journal and NBC News on the other, are signaling to me anyway that Donald Trump has made a major mistake so far in his young presidency in tilting so markedly toward the keepers of the orthodoxy (especially the most doctrinaire versions) in his own party. Instead, he should have been focusing all along on developing a promising new American political center of gravity that he started defining (in his own imitable way) during his campaign.

As widely observed during the 2016 elections, Mr. Trump was anything but a conventional conservative – at least as the term has been understood for the last quarter century. Yes, he made frequent nods toward cutting taxes and regulations, as well as to balancing budgets (objectives that of course aren’t always consistent). He also expressed some support for social conservative positions like further restricting abortion and appointing “strict constructionists” to the Supreme Court. But as also widely observed, if that mix of views was what voters in the Republican primaries and general elections really wanted, they would have voted for an orthodox conservative.

Instead, Mr. Trump trounced his opponents even though he at least as often promised to protect massive federal entitlement programs heavily relied on by the middle class and senior citizens; to guarantee adequate healthcare for non-seniors who can’t afford it; to preserve government support for Planned Parenthood’s provision of non-abortion-related women’s health services; to uphold the rights of gay, lesbian, and transgender Americans; and of course to ignore free market dictates when they seemed to undermine public safety and prosperity by fostering unrestricted trade and immigration.

Undoubtedly, much of candidate Trump’s appeal also sprang from simple, nonpartisan voter anger at the failures and self-serving priorities of the bipartisan national political establishment. But Mr. Trump did the best job of all last year’s presidential hopefuls of identifying the combination of specific grievances that created this anger: notably, over those jobs and incomes lost to Americans Last trade and immigration policies, over those related dangers posed by terrorism and leaky borders, and over the astronomical costs and risks of fighting seemingly futile foreign wars and defending free-riding allies.

The president’s Inaugural Address – which declared his intention to fix these problems with America- and Americans’- First policies – unabashedly proclaimed that President Trump would govern like candidate Trump.

Yet although the president has by and large kept his immigration promises, and approved some (limited) measures to combat foreign trade predation, his domestic policy proposals look like they’re right out of the Chamber of Commerce and Moral Majority playbooks. Nowhere has this development been more obvious than in his endorsement of House Speaker Paul Ryan’s healthcare plan, and in his release of a budget outline that, outside of defense spending, libertarians should be swooning over.

Late last month, I ventured that the president’s support for the “Ryan Care” proposal was a head fake: He had knowingly backed a measure so draconian that he knew it would fail, in order to establish some orthodox conservative street cred with Congressional Republicans and thus enlist their support for the pivot to greater moderation he had planned all along. Something like this scenario could still unfold; according to press reports, even the hard-core anti-government House Freedom Caucus members are growing more amenable to a compromise proposal that would preserve many of the more popular provisions of President Obama’s healthcare reforms.

But Mr. Trump’s continuing insistence on a federal spending blueprint that either eliminates or greatly slashes funding for medical and other scientific research, Chesapeake Bay cleanup, and food and heating aid for the poor, is not only plain bizarre, especially since the dollars involved are trivially small. It’s also politically inexplicable, because there’s absolutely no evidence that these are viewed as priority savings among any important Trump constituencies.

And that’s where the new polls come in. As per the headline results, Mr. Trump’s popularity at this point in his presidency is much lower than the ratings of most of his predecessors early in their first terms. In fairness, the Post-ABC survey also shows that the president would beat his chief 2016 rival, Hillary Clinton, in the popular vote if a new election was held – showing that he’s even more popular versus the Democratic nominee than on election day.

But the both polls showed the president’s support tightly concentrated among his own core voters and Republicans generally. Even accepting the claim that rapid partisanship by Democratic party leaders is proving effective in limiting Mr. Trump’s appeal to their rank and file, it’s still a sign of trouble for the president that his ratings among self-described political independents is markedly on the wane according to the Journal-NBC findings (falling to 30 percent) and low (38 percent) according to the Post-ABC survey.

One main reason: The Washington Republicans President Trump is apparently still courting are even less popular than he is. The Journal-NBC poll reports that many more Americans are dissatisfied with the Republican-led Congress nowadays than in February, and Ryan’s approval ratings are even lower. Moreover, the Republican-led Congress and the Speaker, in turn, are less popular than the president even among voters identifying as Republicans.

None of these results necessarily bodes ill for the Freedom Caucus. Its members don’t care for Ryan, either – allegedly for being too moderate. But many of the latest measures of Americans’ views of major policy issues do. For example, the Journal-NBC poll found that, since February, the share of respondents agreeing that “Government should do more to solve problems and help meet people’s needs” shot up to 57 percent. Even more independents (59 percent) endorsed this position. The share of total respondents believing that “Government is doing too many things better left to businesses and individuals plummeted to 39 percent.

More pointedly, the Post-ABC poll showed Americans opposing the Trump budget proposals by 50 percent to 37 percent overall, and independents disapproving by an even wider 52 percent to 35 percent margin.

The Journal-NBC survey also found record shares of Americans viewing “free trade” and “immigration” positively – at 57 percent and 60 percent, respectively. But the abstract nature of these questions could well have tilted these answers. One reason for supposing so: The Post-ABC poll reporting that, by a strong 73 percent to 22 percent, Americans favor “Trump pressuring companies to keep jobs in the United States.” Among independents, the results are an even better 75 percent to 19 percent.

So the recipe for Trump political success seems pretty clear: Dump the Freedom Caucus under the Trump Train on the budget and healthcare; preserve (and even boost to some extent) discretionary spending programs that strengthen the economy’s foundations and provide for the needy; keep the campaign promises on entitlements so highly prized by the middle class; and take bolder measures to Buy American and Hire American (as one new set of trade-related Trump jobs programs is called).

Keeping the focus on these priorities, along with a well thought out infrastructure program, should attract and keep enough backing among Republicans and independents to offset any losses in Freedom Caucus ranks, both in Congress and at the grassroots level (where they seem modest in number). Adding new policies to combat predatory foreign trade practices, moreover, should please organized labor enough to bring into the fold many union members and leaders plus the Congressional Democrats they strongly influence. An extra bonus – this program could well give President Trump the political leeway he needs to stay his course on immigration (which of course has seen a softening of his views on the so-called Dreamers).

Often in American history, calls to “Let [name your favorite politician] be [name that same politician]” have reflected core supporters’ naive beliefs that campaign promises can easily be turned into policy by the office-seekers they elect. But as is so often the case with the current president, Letting Trump be Trump, could confound the political conventional wisdom.

Following Up: Healthcare’s Outsized Job Creation Reported in The New York Times

Tags

Affordable Care Act, Chad Terhune, Employment, Following Up, healthcare, healthcare services, Jobs, Obamacare, private sector, productivity, subsidized private sector, The New York Times, Trump

Well this is pretty cool! A new New York Times op-ed piece has spotlighted a trend that RealityChek has long covered: how strongly the creation of healthcare services employment has dominated recent American job creation, and how this trend has been especially noteworthy since the financial crisis and Great Recession broke out nearly a decade ago.

At the same time, author Chad Terhune, who reports on the healthcare industry for Kaiser Health News and the California Health Care Foundation, explains a major dilemma being created by outsized healthcare job creation for the Trump administration: Because so many of the new jobs in the sector have been driven by the build-out of Obamacare, the president’ promise to abolish this vast new structure could endanger his broader promise to jump-start feeble U.S. economic growth and stagnating incomes.

Even worse, according to Terhune, any effort to make healthcare more affordable, or even keep it at its current affordability levels, will significantly weaken the healthcare job-creation engine.

As the author sees it, healthcare hiring got a major boost “as coverage expanded in 2014 under the [Affordable Care Act] and new federal dollars flowed in. The law gave hospitals, universities and companies even more reason to invest in new facilities and staff. Training programs sprang up to fill the growing job pool. Cities welcomed the development — and the revenue.”

Sharpening the healthcare jobs conundrum faced by the president: “rising health spending has been good for some economically distressed parts of the country, many of which voted for Mr. Trump last year.” And Terhune cites specific examples from West Virginia to Pennsylvania to Ohio and Missouri.

Just as important, the author convincingly shows that American healthcare’s success in creating employment – which clearly predates Obamacare’s passage – also largely explains its inefficiency. In Terhune’s words, because of the system’s

“redundancy, inefficiency and a growing number of jobs far removed from patient care….[l]abor accounts for more than half of the $3.4 trillion spent on American health care, and medical professionals like health aides and nurse practitioners are in high demand. But the sheer complexity of the system has also spawned jobs for legions of data-entry clerks, revenue-cycle analysts and medical billing coders who must decipher arcane rules to mine money from human ills.”

And although Terhune doesn’t make the point explicitly, this labor-intensivity means that the sector of the economy fueling so much of its output and hiring is pathetically unproductive. In other words, the more outsized growth and employment healthcare creates, the less able the entire economy will be to raise living standards on a sustainable basis.

Moreover, one big reason for this low productivity is a feature of the healthcare system – both under Obamacare and before it – not mentioned by Terhune, either, but that’s vital to recognize: As I’ve observed, although this gigantic industry is officially (and no doubt popularly) considered a part of the private sector, its scale owes largely to subsidies from the public sector, which is renowned for low productivity.

As always, RealityChek readers – and others – need to understand that placing healthcare (and similar industries, like the for-profit educational system and social assistance agencies) outside the “real private sector” is not the same as questioning its fundamental value. After all, no truly civilized society would ever reduce public policy to a quest for productivity to the exclusion of all other goals, whether economic or non-economic. Moreover, as some readers have alertly pointed out, the steady aging of the American population is bound to mean continued healthcare sector growth.

But Terhune’s article is a badly needed reminder that the economy’s heavy reliance on the current healthcare system’s employment power has major downsides. As its title indicates, it’s a “costly addiction,” and its price is bound to rise without a major overhaul of some kind.

Im-Politic: Did Trump (and Trump-ism) Really Lose Big in the Healthcare Fight?

Tags

border adjustment tax, Congress, conservatives, Freedom Caucus, healthcare, Im-Politic, Immigration, infrastructure, Obama, Obamacare, Paul Ryan, Peggy Noonan, Republicans, RyanCare, tax reform, Tea Party, The Wall Street Journal, Trade, Trump

The list of realities, considerations, factors – call them what you will – that President Trump either forgot or overlooked as he pushed for House passage of the Republican healthcare bill is long, impressive, and pretty obvious according to the Washington, D.C. conventional political wisdom. On the off chance you haven’t heard it or read it, it includes the difference between cutting deals among real estate tycoons and negotiating with ideological politicians; his own voters’ tendency to rely heavily on the kind of government healthcare aid that the GOP legislation either eliminated or sharply curbed; the powerful vested stake developed after years or working with it in the current healthcare system – however troubled it might be – by major participants in the system; and the dangers to Mr. Trump’s own credibility and political power of choosing to tackle first a highly contentious subject (like healthcare) instead of a priority that’s reasonably uncontroversial (like infrastructure spending).

All those points seem valid to me, but I would add two more that seem at least equally important. Then I’ll present an interpretation of the healthcare story that hasn’t appeared anywhere else yet but that shouldn’t be overlooked – if only because it ties the otherwise puzzling story together in ways that are admittedly byzantine, but that make eminent sense in a Machiavellian (and therefore quintessentially political) way. In fact, this analysis dovetails exceptionally well with the president’s clear (to me, certainly) determination to remake American politics by rejecting the doctrinaire conservatism embodied by the Republican party for decades, and thereby increasing its appeal to independents and moderates.

The first such consideration that should be added to the overlooked list: how much more difficult it is both politically and substantively to take away government assistance used by economically stressed Americans (like those who backed Trump in droves) than it is to enable them to thrive without the assistance via other major planks of the Trump platform – chiefly immigration and trade policy overhaul.

One of the secrets of Trump’s success, after all, was his recognition that vast numbers of working and middle class Americans no longer buy the mainstream Republican argument that they could greatly increase their economic self-reliance through the wealth that would trickle down to them through shrinking taxes and government. He understood that this promise would always ring false as long as so many good jobs and so much income were being sent to foreigners through offshoring-friendly trade policies and mass immigration.

So it’s easy to understand why the Republican healthcare legislation registered so little support from even Republican voters – no doubt including many Trump backers. He seemed to be putting the cart before the horse not when it came to the kinds of government programs touted by liberals that Trump-ites viewed as bupkis, but with a program that had become central to their lives. (For a terrific analysis of Main Street views of healthcare at the usually ignored gut level, see this column by The Wall Street Journal‘s Peggy Noonan.)

The second neglected consideration flows directly from the first: President Trump’s election shows that the Republican party has moved significantly in his more populist and particularly less ideological direction, if not at the interlocking think tank/donors/Congressional level, at the far more important voter level. As a result, there was no apparent reason for Mr. Trump to defer to the more ideological Congressional Republicans on the healthcare front.

More specifically, even though the national party’s leadership did indeed treat Obamacare repeal and replacement as a defining principle and promise to its grassroots, and even though candidate Trump expressed strong opposition to his predecessors’ signature achievement, healthcare was never the defining principle of the maverick movement he led. That’s why he so frequently spoke of achieving healthcare goals that have been so widely rejected in Republican and conservative and leadership circles, like ensuring universal coverage.

So why did the president lead off his legislative agenda with orthodox Republican-style healthcare reform? Here’s where the story gets Machiavellian to me – but in ways that should be entirely plausible to anyone familiar with how successful political strategists think. Further, it’s a narrative that fully takes into account the hyper-partisan nature of Washington and legislative politics with which Mr. Trump needs to deal. And it goes like this.

The president recognizes that even though he’s remade much of the Republican base in his own image on the issues level, he also must realize that the Washington Republicans – which include the party’s mainstream conservative Congressional leaders and its more ideological Tea Party wing – remain hostile on the highest profile matters on his own agenda. I imagine he also recognizes that they might be powerful enough to undermine his initiatives on trade, immigration, and/or infrastructure – especially if Democratic leaders remain in their adamant “resistance” mode.

For even if Democrats are ultimately winnable on trade and infrastructure, they have no interest even in these areas in giving the president the kind of quick victory that would greatly strengthen the odds of turning his first term of office into a success that would boost the odds of his reelection. They have even less interest in helping Mr. Trump further strengthen his appeal to many of big Democratic constituencies.

So the Washington Republicans needed to be at least neutralized – and sooner rather than later. And appearing to fight the good fight for their healthcare reform proposal was an ideal way to demonstrate his loyalty to their objectives and strengthen his case for demanding concessions from them in return in areas he valued much more highly. This calculation looks especially shrewd since the Republican bill was so draconian that even had it squeezed through the House, the Senate was bound to prevent its reaching his desk in anything like its current form.

As a result, now that the “RyanCare” legislation is dead, Mr. Trump can say to both the House Republican leaders and even to the hard-line Freedom Caucus something to the effect, “We tried it your way, I carried lots of your water, and I paid a noticeable price. Now we drop the healthcare effort, pivot to my priorities, and I expect your votes, even if you won’t pull front-line duty. And when we do address healthcare as Obamacare’s failures multiply, you’re going to do right by your own constituents and drop the free market extremism. P.S. Anyone remaining obstructionist comes into my social media cross-hairs with your reelection bids coming up.”

I have no inside information here, and my reasoning could certainly be too clever by half. Moreover, one of the most important lessons I’ve learned in my professional life is that just because an analysis seems logical or commonsensical, doesn’t mean that it’s true. But even though it’s only about a day since the healthcare bill was pulled from a scheduled floor vote for the second and final time, I derive some satisfaction in seeing the president is making nice with both House Speaker Paul Ryan and the Freedom Caucus members, and making clear that it’s tax reform time (which could bring a tariff-like border adjustment tax). Which could mean that Donald Trump’s presidency is highly conventional in at least one respect – temptations to dismiss it as a failure should be strongly resisted.  

Im-Politic: Trump’s Draft Immigrant Welfare-Use Curbs are Anything but Radical

Tags

Christopher Ingraham, food stamps, healthcare, Im-Politic, immigrants, Immigration, legal immigration, Los Angeles Times, public assistance, refugees, Statue of Liberty, Stephen Miller, Steve Bannon, Trump, Washington Post, welfare

So much talk these days about immigrants’ welfare use in the United States. Specifically, so much of it due to the Trump administration’s consideration of supposedly cruel and radical proposals to (1) deny admission into the United States anyone deemed likely to become a user of welfare programs, and (2) to deport even many legal immigrants benefiting from welfare. And so little reporting that this intention has been the law of the land for decades – but that the statutes have been written in utterly ludicrous ways.

The completely unjustified furor began when the Washington Post obtained a draft Trump administration Executive Order mandating the immigrant welfare crackdown. In the words of Post reporter Christopher Ingraham,

“Such a move would represent a departure from current practice but would be consistent with the goals of Trump advisers Stephen K. Bannon and Stephen Miller, who, in the words of the Los Angeles Times, ‘see themselves as launching a radical experiment to fundamentally transform how the U.S. decides who is allowed into the country.’”

Let’s leave aside for the moment the peculiarity of one journalist using others as sources of unassailable expertise. The more important point is that Ingraham (and his editors) briefly noted that “Strict eligibility guidelines…prevent many immigrants from receiving federal aid” – but are basing their conclusion about a radical break from the present on the completely specious distinction that American immigration law has been drawing between forms of public assistance classified as “cash welfare” and those placed in an (Orwellian) “non-cash” category.

Here’s how current American law is described by an organization dedicated to “Helping low-income individuals solve legal problems.” (And with its services offered in no less than 27 foreign languages, immigrants are plainly a high priority.)

“Depending on your immigration status, the Department of Homeland Security (‘DHS’) and State Department consular officers can deny your application to become a permanent resident, or refuse to let you enter or re-enter the U.S., if they think you will not be able to support yourself without these benefits in the future.” (See this link.)

As WashingtonLawHelp explains, the government’s present focus is identifying (and excluding) anyone “who cannot support themselves and who [would] depend on cash welfare for their income.” But what the emphasis on “cash welfare” leaves out are those numerous and massive programs that do not involve outright cash payments – e.g., food stamps, and medical and housing benefits.

This bizarre loophole is what the Trump Order seeks to close. For it would add these programs to the roster of types of assistance whose receipt would legally turn an individual and/or their family into the kind of actual or potential “public charge” that current immigration law (only partly) aims to exclude from legal U.S. residence.

(For those of you now fearing that the Trump draft proposals would betray in an unprecedented manner the iconic and admirable Statue of Liberty commitment to America as a haven for the world’s “poor” and those “yearning to breathe free,” you can relax. These measures – like current law – would apply only to immigrants, not to those applying for entry as refugees, asylum seekers, or human trafficking victims.)   

So a big immigration policy change is definitely being contemplated. And it would certainly be dramatic, for Ingraham’s article makes clear that such non-cash assistance is the predominant type used by immigrants. But does the change really qualify as radical? Or even significant in a logical sense? If so, why? Because American taxpayers ultimately aren’t as completely on the hook for these so-called non-cash benefits as for cash benefits? What baloney.

So here are two descriptions for the possible change that actually deserve to become the standards: “Commonsensical” and “long overdue.”