The Buckeye Institute continues making the case for bold, fundamental reforms across the board in order to return Ohio to vibrancy. The reasons for such bold reform are manifest, but here are two things to keep in mind:
First, Friday’s job numbers is a troubling read. The bottom line – it’s nice to see the unemployment rate go down (to 8.1%), but fundamentally, the fact that 522,000 people apparently exited the labor force in April is truly frightening. Of course unemployment rates will go down… when people stop bothering to look for work!
This is the lowest rate of Americans participating in the labor force since 1981.
Meanwhile, as our monthly Ohio by the Numbers report shows, Ohio is at least five years away from returning to its peak private sector employment, which was in March 2000. That means that it would, under the best of circumstances (which these are clearly not as that labor force number indicates), it would take 17 years to go from peak to peak with private sector employment.
Looking at those two data points together paints a picture with major storm clouds brewing.
While it is probably true that some of the labor force shrinkage is due to Baby Boomer retirements, that fact reinforces the point that we must be growing the economy at a fast enough rate to absorb new, younger workers seeking to enter the force for the first time while also reabsorbing those who have left the labor force.
As Walter Russell Mead puts it in a recent blog posting,
“There are some healthy underlying trends. The private sector is growing faster than the public sector. But we need to do more: if the American middle class is going to be stable and prosperous, private sector demand for workers needs to grow. Small business and start ups will be the key to that. The central policy debate in this country needs to be over how we can create the most favorable possible conditions for the development of a wave of new business.”
That comment mirrors exactly, the thoughts outlined by Richard Epstein in an article our President, Kevin Holtsberry, just posted a blog about. According to Epstein,
“…The calcification of labor markets is the primary impediment to economic recovery. The direct effects of government regulation of labor can matter far more than the indirect effects of macroeconomic policy, whether Keynesian or austerity-based. Neither austerity nor lavish public expenditures will improve the overall situation, which is why the massive increase in American public debt has not nudged unemployment rates down. The only workable solution has to stress job creation, not by misdirected subsidies, but by dismantling the government obstacles to market exchange. [emphasis mine]”
As Kevin then outlined,
“Obviously, we agree. In Ohio Right-to-Work: How the Economic Freedom of Workers Enhances Prosperity, we detail the significant economic costs of forced unionization. This is one very a large example, but there are a great many others.
Ohio’s growth deficits and economic stagnation are a clear indication that we have allowed government obstacles to market exchange to drag our economy down for far too long. We must begin the process of removing obstacles and creating a competitive, dynamic and flexible business climate. That is the path to growth and opportunity, not more spending, more subsidies and more programs.”
Mead, Epstein and Kevin all have a very important point. We have to fundamentally change how things are working in Ohio to deal with the big picture challenges.
More of the same policies will lead to more of the same outcomes, outcomes no one can be happy with.