Tag: Obamacare and middle class jobs

The New York Analysis of Policy & Government concludes its review of the policies and trends that have severely harmed America’s middle class

A substantial portion of the downturn in the middle class has been the loss of steady, well-paying jobs in the manufacturing sector.

According to the Alliance for American Manufacturing “Over 63,000 factories have closed since 2001, and 5.1 million manufacturing jobs have been lost since 2000. President Bill Clinton dramatic alteration in trade relations with China bears a great deal of responsibility for the manufacturing employment exodus. His “U.S.-China Relations Act of 2000” granted permanent normal trade relations with China…It is reasonable to ask why Clinton advocated a measure that clearly would harm industrial workers.”

Michael Bargo, Jr., writing in the American Thinker  believes the problem began early in the Clinton presidency, on May 28, 1993, he issued Executive Order 12850, which “illegally shifted the decision-making role [about China’s trade status] to the Secretary of State… Clinton’s Executive Order was issued at a time when the U.S.-China trade deficit was only $18 billion a year. In 2015 the deficit was $367 billion.”

Bargo provides a suggested motive for the odd move: “just as the Clinton Foundation has been linked to relationships Hillary had to her speech payers and donors, Bill Clinton’s decision to send jobs to China by permanently controlling its MFN status has been linked to campaign donations. Boeing Company wanted the EO. Boeing was the parent company of the Loral Corporation, which donated $100,000 to the Democratic National Committee in June, 1994, according to a Washington Post report at the time. A nice reward to Clinton for his MFN status change. The Loral Corporation is a major developer of missile flight control software and at the time they wanted to launch satellites from China. Boeing also owned McDonnell-Douglas which in 1994 made an agreement with China to open a parts factory in Beijing. If this all seems oddly similar to the deals Hillary made with foundation campaign donors, well, that’s because it is.”

There is some slight cause for optimism, though.  AP  reported in May that American industry expanded production last month at the fastest pace in more than three years. President Trump’s emphasis on U.S. manufacturing, and his rejection of extremist environmental policies, particularly regarding coal, are bright spots.
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Another factor detrimentally affecting the middle class is America’s high corporate tax rate, which has chased jobs offshore. The Daily Signal  notes that “The U.S. corporate tax rate is the highest in the developed world—by a long shot. At 39.1 percent (35 percent federal rate plus the average of state rates), it remains substantially higher than the Organization for Economic Co-operation and Development average of 25 percent. Combined with the ‘worldwide” tax system’ employed by the U.S. (where companies’ overseas income is taxed when they return it to this country) the excessively high corporate tax rate poses serious problems for the American economy.”

The final nail in the middle class coffin came courtesy of Obamacare.

Alexander Hendrie, writing for The Hill explained that “ObamaCare imposed a long list of taxes that directly hit middle class families. Further, the ACA legislation increased medical costs overall for middle class Americans.  It also harmed middle class-owned businesses. “the 3.8 percent net investment income tax on capital gains and dividends…hits many small businesses organized as pass-through entities that file as individuals, increasing their top federal rate to almost 45 percent.”

Zero Hedge  reports that “Per the Wall Street Journal, since 2007 middle class families have been forced to increase the share of their overall spending on healthcare by nearly 25% while cutting back massively on other necessities to cover the difference.”

This month, The Wall Street Journal reported that “Thanks to the ACA, hiring the 50th full-time employee effectively costs another $70,000 a year on top of the normal salary and benefits. Many business owners have described how this penalty prevents them from hiring and has caused them to reduce work hours to below the full-time threshold…Many businesses, when they do not offer coverage, keep their payrolls just below 50 full-time employees and thereby narrowly escape the ACA’s penalty…. the businesses employing just fewer than 50 often said the ACA caused them to hire less and cut hours below the full-time threshold. The penalty caused payrolls to shrink or prevented them from growing. Nationwide, we estimate the ACA-inspired practice of keeping payrolls below 50 has cost roughly 250,000 jobs. This does not count jobs lost when businesses close … or shrink because of other ACA incentives.”

The New York Analysis of Policy & Government reviews, in two parts, the policies and trends that have severely harmed America’s middle class

At first glance, the U.S. economy seems to be doing quite well. The June report from the Bureau of Labor Statistics  indicated that America’s businesses added 222,000 jobs last month, a four month high. In May, the unemployment rate reached a phenomenal 16 year low. Another encouraging sign, though a small one: The job participation rate ticked slightly upwards as well. Those who had left the labor force entirely jumped back in greater numbers than at any time since 1990.

But dig a bit deeper, and troublesome indicators appear. Average hourly pay growth is anemic, and that backbone of the economy, middle income jobs, remains at seriously depressed levels. This is not the result of any cyclical downturn, or even the lingering effects of the 2007 recession. Rather, it is due to bad policy decisions over the past 18 years, as well as the impact of technology.

Bloomberg News puts in this way:  “A strange thing seems to be happening to the U.S. economy. On surveys, businesspeople and consumers say the future looks bright. But recent economic activity hasn’t appeared very robust…The University of Michigan’s Surveys of Consumers show confidence at the highest levels they’ve been since before the crisis…But again, some hard numbers tell a different story. Retail sales fell in May, and have been relatively lackluster for the entire year. Auto sales are falling as well. Since cars are expensive, long-term purchases, consumers often signal lack of optimism by holding back on the purchase of a new car, choosing instead to drive their old model for a little while longer. So this is another data point that belies rosy consumer confidence numbers. Pending home sales provide a third spot of weakness.”

Middle Class Loses Ground

The reality is, middle income Americans are losing ground. In December, 2015, Pew Social Trends  reported “…middle-income Americans have fallen further behind financially in the new century. In 2014, the median income of these households was 4% less than in 2000. Moreover, because of the housing market crisis and the Great Recession of 2007-09, their median wealth (assets minus debts) fell by 28% from 2001 to 2013.”

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In a 2011Forbes article, Jenna Goudreau reports:  “Are stable, well-paying middle-class jobs an endangered species? Economists say: Sort of. ‘The idea that one can have a single-earner family, get a good job, keep it for life and have a comfortable living is all but gone,’ says Kevin Hallock, professor of labor economics and director of the Institute for Compensation Studies at Cornell University. ‘Long-term job stability is declining, … Generally, jobs are disappearing where there’s been a technological advance …or a change in the way that organizations function, says Hallock. And not only are old-fashioned assembly line jobs on the decline, several white-collar office positions are also in jeopardy. ‘There has been some long-term decline in middle-income jobs,’ says Harry Holzer, Georgetown University economist and co-author of Where Are All The Good Jobs Going. ‘Specifically, it’s good-paying production and clerical jobs that are disappearing.’ …Because over 20 million people count on clerical work, the vanishing act is a major blow to the middle, but there are other more niche positions that are also on the chopping block. Internet travel sites have essentially erased the need for travel agents, an occupation which declined by 14% and 12,500 jobs in the last five years for which data is available. Similarly, proofreaders—generally highly skilled workers with a four-year college degree—were once vital to publications and communications departments. These positions shriveled by 31%, likely due to advanced software, Holzer says.”

Bipartisan Recognition

The plight of the middle class has been recognized by both those on the right, who agree with President Trump’s drive to protect U.S. manufacturing and stop illegal immigration, and those on the left, who are emphasize the need for ‘living wage’jobs.

In 2016, Common Dreams, a progressive publication, notes: “Our middle-income jobs are disappearing…the evidence shows that living-wage, family-sustaining positions are quickly being replaced by lower-wage and less secure forms of employment. These plentiful low-level jobs have padded the unemployment figures, leaving much of America believing in an overhyped recovery…research is beginning to confirm the permanent nature of middle-income job loss. Based on analysis that one reviewer calls ‘some of the most important work done by economists in the last twenty years,’a National Bureau of Economic Research study found that national employment levels have fallen in U.S. industries that are vulnerable to import competition, without offsetting job gains in other industries. Even the Wall Street Journal admits that ‘many middle-wage occupations, those with average earnings between $32,000 and $53,000, have collapsed.”

The Report concludes tomorrow.