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Current Commentary

Candidates' debate
Substance over style
Financial reform must-haves
How 'little guys' are being robbed
Unemployment falls as 652,000 give up
Ban financial derivatives
Debunking the federal pension myth
Cost of inflation-free bank bailout
Answers to questions: HERE

June headline: Unemployment fell 2/10ths of a percent because 652,000 people found job hunting to be an exercise in futility.  The Bureau of Labor Statistics only counts you as part of the headline (U3) unemployment rate if you were actively searching for a job within the last 30 days.  Those who gave up looking for a job are measured in the broader (often referred to as the real) U6 unemployment rate which increased from 16.1% to 16.7%.

Other numbers:  Total jobs fell by 125,000, primarily due to 225,000 part-time census workers being laid off, so not a real cause for concern. What is a cause for concern, however, is the abysmal 83,000 private sector jobs, still below the population growth stall rate of 100,000/month.

We have spent money we don't have.  We have lowered interest rates to zero and even pulled the debt monetization lever.  Biden was quoted saying the 8 million jobs lost are gone for good just days after Geithner was quoted saying that the world needs to give up on the US as the global economic engine.  Now it's time for something different.

Ending the labor tax on small businesses would spur hiring through small business creation and small business growth.  It could be paid for by phasing out pensions for federal bureaucrats.  Unbeknownst to most people other than small business owners and HR managers lies the incredibly burdensome and regressive employer-contributed payroll tax. In short, it is about a 10% tax on labor, charged to the business owner, and it comes with a maze of regulatory requirements.  Contrary to a traditional profits tax on net income after subtracting expenses, the payroll tax is on gross payroll.  It increases the cost of labor, thereby reducing the number of employed.  It can also put a borderline company in the red, something a traditional profits tax would never do.

A healthy labor market benefits all workers, even the employed, by strengthening bargaining positions.  It is in the interests of everyone other than a few powerful, large, politically connected employers to exempt small businesses, especially during times like these.