Brux column: Uncertainty and workers in our current economy
Let's consider the nature of our economy today and tie it to our need for young workers. Mostly we need coherent economic policies to guide rational decision-making. Let me explain.
Unemployment rates are at historical lows, making it difficult for businesses to find workers to expand production. Even if this were not so, businesses are reluctant to increase production when the future of our economy is so uncertain.
This is one reason businesses haven't made commitments in the form of hiring new workers into permanent full-time jobs at top wages, which they would normally do when unemployment rates are so low.
Think about this uncertainty for a moment. Businesses expand production (thereby creating jobs) in response to rising demand (purchases) by four basic sectors: consumers, government, businesses and foreigners. However, amidst economic uncertainty, the four sectors are quite risk-averse:
• Consumers are cautious amid uncertainty. When the president can shut down the government at will, uncertainty about continued jobs and incomes is not conducive to consumer purchases of homes, cars, furniture, etc.
• Our government purchases goods (such as highways) and services (such as those of security agents). But — government deficits are at historic highs, to the consternation of conservatives who are unlikely to support increased government purchases.
• Businesses themselves are reluctant to demand (purchase) new plants and equipment when they are uncertain about the economy and wondering whether expanded production will be purchased.
• Foreign demand for U.S. goods is unsettled due to erratic trade restrictions and retaliation. And, I am currently overseas and can say that Europeans are outraged that a BBC journalist was assaulted by a Trump supporter during one of Trump's frenzied speeches against the media. Our foreign relationships are mired in anger and uncertainty.
In other words, the uncertainty caused by a chaotic presidency and haphazard economic policies have negative outcomes for our economy. Aside from insults, Trump randomly creates policy based on capricious statements like "trade wars are good and easy to win" and "the Federal Reserve has gone crazy ... I have a gut and my gut tells me more sometimes than anybody else's brain can ever tell me."
Let's add immigration to the equation. The level of uncertainty regarding immigration policy leaves businesses uncertain about keeping their documented employees. Many are shutting down or moving south.
More importantly, our country needs an injection of consumer demand that is achieved from immigrants when they rent homes and buy everything from food to clothing. This added demand creates jobs. Immigrants don't take jobs away from Americans — they create jobs.
Finally, immigrants tend to be young, in contrast to our rapidly aging population. Our post-war baby boomers are now entering retirement and expect the Social Security and Medicare benefits they've paid into all their working lives.
These programs are "pay-as-you-go," meaning that the actual funding comes from taxes paid by younger workers. And, this crop of young workers is vastly smaller in size than the baby-boomer generation itself. In 1940, there were 159 workers for each Social Security recipient. By 1960, there were 16 workers, and by 2010, there were 3. Current projections to 2030 anticipate the number of workers per beneficiary falling to 2. The situation for Medicare is even more precarious due to rising healthcare costs.
So, who will perform the work needed in our society, while also paying the payroll taxes needed to fund benefits of current retirees? A strong case can be made that we need younger immigrant workers to restore our vibrant economy.
Don't let the hysteria over immigration concern you. According to U.S government data, Mexican border crossings are at all-time lows. There are no known international terrorist organizations operating in Mexico, and no credible information that any terrorist has ever crossed the Mexican border. Only seven convicted criminals (of crimes other than previous illegal entry) have entered the U.S. (and these came from Canada.)
The real crisis at the border is a humanitarian one for those seeking asylum, and especially their children. We are now learning that thousands of additional children were separated from their parents. Two children have died for lack of border health care, and mace and tear gas have been used against them. The real "national emergency" in America is its moral failure to apply compassion and respect for U.S. and international law pertaining to asylum-seekers. This harms our economy in every possible way.