Here's the reasoning, from Louis Woodhill, from the Leadership Council of the Club for Growth.
Because a lot of PBI [private business investment] goes toward offsetting depreciation and increasing productivity, it takes a 5% year-over-year increase in PBI to produce a 1% increase in the number of jobs. Correspondingly, a 5% decrease in PBI will yield a 1% reduction in total employment.As my colleague Dan Indiviglio pointed out, that 14 percent is a slippery number, for a couple reasons. First, employers aren't necesssarily resorting to lay offs. They're also cutting hours, instituting furloughs, mandating vacations, freezing hires or freezing promotions, and so on. Furthermore, total unemployment -- which includes: the officially unemployed; part-timers seeking more hours; and hundreds of thousands who have given up looking -- is probably already at 16.5 percent, already.The unemployment rate a year ago was 5.5%. Because the potential labor force is growing, we need employment to increase by 1% annually to keep the unemployment rate from going up. The 37.9% investment decline reported by the BEA [Bureau of Economic Analysis] can be expected to eventually produce a reduction in total employment of about 8.5%. Accordingly, we can expect unemployment to rise to about 14% within a year unless the downward slide of PBI is reversed.
To be sure, "total unemployment is at 16.5 percent" doesn't pack the psychological wallop even of "unemployment is now in double digits." But the point is that even if Woodhill's analysis is spot on, unemployment is such a tricky concept to measure, and firms have so many different ways of shaving hours without cutting their staff numbers, so I'm not sure that the 5-1 ratio of investment to employment necessarily holds. But it's still an interesting thought.
Has Obama, or the very liberal Dem congress, done or proposed anything that would be considered business friendly?
Obama inherited the bank bailout from Bush and immediately went about sticking a scarlet letter on every banker. The GM and Chrysler "bailouts" clearly showed that Obama considered the UAW well ahead of any creditors (aka "businesses").
Virtually everything done or proposed would be considered business unfriendly. In light of that, why should business not retrench as much as possible. With Obama and and his liberal congress, business has seen proposed "Change". They have not seen any proposed "Hope".
The world economy is on a slippery slope. It's time to show the children how to chop wood and carry water. period.
As a small business owner the Obama administrations anti-business posturing does not in anyway make me want to invest in staff or equipment.
Here are some very good reasons;
a.) Card Check bill, essentially mandatory unions - less staff will make this easier to deal with.
b.) Health Insurance, Surtax before deductions, should conserve cash, don't make any capital expenditures.
c.) Repeal of the Bush tax cuts, again don't make any capital expenditures that could get classed as income.
d.) Cap and Trade, will raise my electric and gas rates, amount unknown at this point - but figure 50% - that means I can afford one less employee.
e.) Trade Wars, kiss my overseas customers goodbye.
Who elected this guy ?
Much of the G8 world has a problem that could be defined as ATTITUDE/ENTITLEMENT. So how is this "fixed"? What about the word NO?