Millennials are struggling to find jobs. According to the December data from the Bureau of Labor Statistics, the unemployment rate for workers aged 16-19 is 22%; for age 20-24 the rate is 12.8%.
Frustrated with the inability to enter the workforce, young people are looking to Washington and President Obama for help. Sean Kibby, director of Strategic National Operations for Generation Opportunity, a millennials-focused advocacy group, states it this way: “Young people are asking the president and our elected leaders to do what they have failed to do on urgent issues like youth unemployment – take action and achieve real results."
Obama’s policies have restricted the economy to the weakest recovery in the post-World War II era. And yet millennials voted overwhelmingly to re-elect him in 2012, preferring him to Mitt Romney by 24 points (60% to 36%). Either millennials are not paying attention or do not make the connection between policies and economic outcomes.
If you want job growth, you have to have a healthy economy. And the growth of an economy comes from two inputs – labor and capital – and typically, younger workers begin as the labor part of the equation. You and the owner (who provides the capital) both profit from the arrangement, but not equally. An owner has money invested in the venture that laborers do not, and in return for the associated risk, he expects more of the profit. Occupy Wall Street was an expression of resentment to this employer/employee arrangement. It appears that Barack Obama also resents this arrangement, since he is making a concerted effort to redistribute the profits in the economy from owners to workers. That may seem more “fair” in the short run, but in the long term, when owners lose all incentive to take risks, there is nothing to spread around. No profit = no jobs.
Examples of redistributive and regulatory policies this administration has undertaken that undermine job creation include:
- Creating new “super” regulatory agencies (with new regulations requirements, fewer businesses are created).
- Restricting energy resources (preventing drilling in the Gulf and the Keystone pipeline).
- Auto-efficiency mandates – estimated to increase sticker prices $3,000 by 2025 ( Higher prices = fewer purchases = fewer jobs needed to build fewer cars).
- Micro-managing health care. The medical loss ratio (MLR) requires insurance companies to lower administrative and operational spending to within a certain margin. Less administration = fewer jobs.
- Consumer Financial Protection Bureau (CFPB) to regulate financial transactions of all types. CFPB has unprecedented authority and virtually no accountability. The power to effectively amend other laws and enforce them upon lenders. CFPB has the ability to withdraw hundreds of millions of dollars from the Federal Reserve to funds its operations.
- Attempting to tell private businesses in what state they can locate and restricting expansion, new jobs (NLRB lawsuit against Boeing; preferring union over non-union workers).
- Telling religious institutions which employees are “religious” under certain federal laws.
- Attempting to regulate the internet.
- EPA continuing its’ regulation expansion: Increased air quality standards for soot, severely limiting manufacturers’ plans for growth by restricting counties’ ability to issue permits for new facilities, new jobs.
- Increasing capital gains tax. The capital gains tax rate was recently increased from 15% to 20% for those making $450,000+ (mostly small business owners.) An increase in the tax rates on investments negatively impacts many sectors of the economy, including manufacturing, utilities, telecommunications firms, retailers, drug companies, and food producers that employ millions of Americans are vital for economic growth. Increased capital gains taxes reduce private investments by 6%, leading to an estimated loss of nearly two million jobs.
- Obamacare taxes that reduce profit and restrict business expansion: a) Obscure 2.3% tax on gross sales of medical devices, which equates to roughly 15% on actual earnings. (Cook Medical already announced it was scrapping plans to open five new plants because of the tax.) b) Investment income subject to new 3.8% tax c) Regular income above $250,000 for a married couple will be hit with a .9% Medicare surtax.
These policies have contributed to the following economy: (Economic statistics from Jan. 2009 to Jan. 2013).
- Unemployment rate 7.8%, unchanged;
- Workforce participation rate declined from 65.7% to 63.6%, down 8.3 million;
- Gas per gallon up from $1.84 to $3.30, up 79%;
- Federal debt - $10.67 trillion to $16.57 trillion, up 55%;
- Debt per person $34,731 to $52,237, up $17,506;
- Food stamp recipients 32 million to 46.7 million, up 46%;
- Americans in poverty 39.8 million to 49.1 million, up 9.3% million;
- Insurance premiums $13,425 up to $15,745 up 17% due to increased requirements in Obamacare;
And Obama seems poised to drastically expand his regulatory overreach in his second term, which some fear could “bring the private sector to its knees.”
Note to millennials: Whether you realize it or not, you choose an economic policy when you vote for a presidential candidate. And your choice has a dramatic impact on what your future will look like. So when the next election cycle rolls around remember this: It doesn’t matter if you think the president is somebody who would be “cool” to hang out with and grab a beer ... they’re not going to invite you to have a beer with them. But his/her policies will have a great impact on whether or not you can afford to have a beer with your own friends. Choose wisely.