Job Growth is Accelerating But Burdensome Regulations Keeping a Foot on the Brake
President Obama will soon give his second “State of the Union” speech. Countless newly elected governors have given their “State of the State” addresses. Yesterday the Chamber of Commerce gave their lesser known, but no less important, “State of American Business in 2011.”
Shedding the somber economic mood that has haunted America’s business landscape for much of the past three years, Chamber President Tom Donohue took a more hopeful turn.
I can report that when it comes to the nation’s economy, we begin 2011 in better shape than we found ourselves last year. The state of American business is improving.
Last year, we worried about a double dip recession. Today, we are cautiously optimistic that the recovery will continue and pick up steam as the year progresses.
May graduates everywhere just breathed a sign of relief. An expanding economy, leads to job growth, which means a brighter hiring picture for many college seniors. Time recently noted that, “Already, those on the front lines of the job search – like college career officers – are noticing a difference. For college graduates, 2011 figures to be a much better year than the two that preceded it.” A recent study of employers seems to justify these claims. The survey, conducted by the National Association of College and Employers, found that 48 percent said they expect to hire more college graduates from the Class of 2011 than they did from the Class of 2010.
But as Donohue warned in his speech, “we still face a number of risks that could send us in the wrong direction.” One of the biggest risks arises from the uncertainty among companies due to “unanswered questions about regulations, taxes, and other policies that must be addressed in order to unleash aggressive hiring.”
Aggressive hiring is perhaps an understatement. We need an all-out job creation effort because as Donohue notes, even if we create 2.5 million new jobs this year, that would only drive down unemployment by about one percent! The following chart should give you an idea of just how steep a hill we have to climb if we want to get back to full employment;
The fact is, we’re in an enormous hole that is going to take huge job gains to get out of. One of the best ways to accelerate the hiring market is to get government’s foot off the brake.
In addition to doing counterproductive things like the federal stimulus package, the government has issued a flood of regulations that are holding down businesses ability to hire. As Donohue said in his State of American Business speech, the “regulatory tsunami poses, in our view, the single biggest challenge to jobs, our global competitiveness, and the future of American enterprise.”
Two of the main culprits for the growth in job restricting regulations have been healthcare reform and the Dodd-Frank financial bill. The Obamacare bill creates 159 new agencies, commissions, and panels to carry out the complicated provisions of the new law. This could perhaps be justified if the law was working to control costs. But as we’ve seen, Obamcare does anything but bend the cost curve, and has actually contributed to record premium increases in some states. The regulations and restrictions found in the job-killing healthcare bill have also added to the uncertainty many employers are feeling – in many cases convincing businesses to ride the status quo rather than hire .
The Dodd-Frank reform bill could also have a negative impact on job growth. As Rep. Jeb Hensarling (R-TX) wrote in July,
“[While] restructured agencies struggle to organize, hire staff, stake out their jurisdictions and write an estimated minimum of 12 new government reports, 44 studies, and 243 new rulemakings required under the bill. . . banks and investors will sit cautiously on the sidelines waiting out the regulatory uncertainty of Dodd-Frank before they resume lending, Thus hampering our prospects for economic growth.”
Though the economy is slowly beginning to trend the right way, we must ask ourselves if the government couldn’t be doing things to speed it up. New House Majority Leader Eric Cantor promised that in every action they take House Republicans would ask themselves just that. “Are our actions focused on job creation and the economy? Are our actions focused on cutting spending? Are our actions focused on protecting and expanding liberty? If not, why are we doing it?,” said Rep. Cantor.
Hopefully those are three questions everyone in government will be committed to asking themselves. Because while there are reasons for optimism, there is also room for growth. Although June graduates are probably excited to learn that the hiring freeze is beginning to thaw, they should also push for policies that will further improve their prospects.
by Brandon Greife, Political Director of the College Republican National Committee