Friday, September 3, 2010

Un-Happy Labor Day

The long Labor Day weekend is nearly upon us, and tens of millions of Americans will celebrate with parades in America's downtowns and cookouts in the backyard or the park. The U.S. Chamber of Commerce, however, anticipating a wave of rousing union speeches at those parades, decided to get an early start on the rhetorical battle with an offensive that might be summed up as "Un-Happy Labor Day."

The nation's largest business lobby says its members have little to celebrate. They believe that the economy is stuck in low gear, creating little-to-no incentive for them to hire. "I have never seen a more burdensome agenda for employers," Chamber vice president Randel K. Johnson said during a conference call. He said that the agenda of Congress and the Obama administration—not to mention the federal debt and deficit, labor regulation, and the potential for tax increases—are working against small business and the economy.

"Employers are saying, 'Wow, if I hire a worker, who knows what I will be exposed to in terms of liability,'" Johnson said. The group's biggest concerns include the end of anonymous unionization votes, health insurance reform, rules on the hiring of workers from abroad, and the possible end of some limits on liability in legal cases brought by workers who say their civil rights were violated.

The group isn't happy with the Obama administration's plan for a $30 billion lending fund and $12 billion in tax cuts for small business. Johnson says small banks that would receive the $30 billion—now tied up in Congress—have been sent a mixed message. The feds took student lending away from the banks because they didn't like the way the program was handled. But now the government would turn small-business lending over to them while "looking over their shoulder." What happens if the loans go bad? Who gets the blame?

The administration and Democrats in Congress say the Republicans—which are well-represented in the Chamber—are just holding up the legislation to try and keep the Democrats from claiming a victory ahead of the November election.

The group says job growth is critical for the health of the economy and businesses, but that the government should emphasize policies that promote generally healthy businesses, instead of creating narrow incentives to hire.

Meanwhile, the economy is growing much too slowly to replace the 8 million jobs lost during the recession at any point in the foreseeable future, according to Chamber economist Martin Regalia. The recessions of 1974-75 and 1982 were steeper than the most recent contraction. But those earlier downturns were followed by economic growth in the 5 percent to 6 percent range, allowing the economy to replace lost jobs in a year or less.

The economy is now expected to grow less than 3 percent in 2010 and less than 2 percent in 2011. At that rate of expansion, it will take more than five years to replace the jobs lost during the latest recession and absorb the new workers who have entered the economy. And that does not include doing anything to help discouraged workers who have left the labor force or people who are working part-time because they can't find full-time jobs.

"We need more than 3 percent growth," Regalia said. The danger is that the employment problem gets harder to solve the longer it goes on. After two years, it becomes more difficult for unemployed workers to find new jobs because their skills become out of date."We are facing not just cyclical unemployment, but structural unemployment," he said.

Un-Happy Labor Day, indeed.


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Steve Rosenbush is the blogs/industry editor for Portfolio.com.