Furchtgott-Roth: US Needs 400,000 Jobs a Month for Lasting Improvement

Friday, 07 Sep 2012 07:57 AM

By Forrest Jones and John Bachman

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The economy is not adding nearly enough jobs to make a serious dent in high unemployment rates and put more people back to work, said Diana Furchtgott-Roth, a senior fellow at the Manhattan Institute.

The U.S. economy added a net 96,000 jobs in August, the Bureau of Labor Statistics reported. July's figures were revised down to 141,000 from 163,000, while June's figures were revised down to 45,000 from 64,000.

The unemployment rate fell to 8.1 percent, as more people stopped looking for work.

"I would say a good target number would be 400,000 jobs a month," Furchtgott-Roth told Newsmax.TV in an exclusive interview.

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Unemployment rates measure the portion of the labor force that is out of work.

To be counted in that group, jobless workers must be actively looking for work, in other words, those who quit sending out resumes out of frustration from fruitless job searches aren't counted as part of the labor force.

Add those discouraged workers back in and the real unemployment rate comes to around 14 percent, said Furchtgott-Roth, author of "Regulating to Disaster: How Green Jobs Policies Are Damaging America's Economy."

Editor’s note: To pre-order 'Regulating to Disaster' at a great price — Click Here Now.

"In order to have the unemployment rate go back down, we need significantly more than 163,000 a month. It's difficult to put a number on it because we have had so many discouraged workers drop out of the labor force, so our unemployment rate appears high but really it should be even higher when you count discouraged workers, workers who are marginally attached to the labor force," Furchtgott-Roth said.

"And we have the lowest labor force participation rate since the early 1980s, which was the beginning of the decade when millions of women moved into the labor force. So, in order to get the unemployment rate down and also attract those discouraged workers back into the labor force, we need a far higher rate of job creation."

President Barack Obama's tax policies aren't helping either.

The president has proposed extending the Bush-era tax cuts that expire at the end of the year, but not for wealthier Americans, while taxes are set to rise when the president's new healthcare reform begins to take effect.

"It will slow our recovery because small businesses are taxed on the individual tax code, and if they have fewer resources, they can hire fewer people," Furchtgott-Roth said.

"The last thing you want to do — and President Obama has actually said this in December 2010 when he spoke in favor of extending the Bush tax cuts — is when the economy is slow, you don't want to raise taxes," Furchtgott-Roth added.

"Back in December 2010, the economy was growing at 2.5 percent. Now it's growing at about 1.5 percent. So if he didn't want to raise taxes in December of 2010, he should not, by the same logic, want to raise them in September of 2012."

Obama's healthcare reform will penalize companies with 50 employees or more that don't provide health insurance for those employees, which will prompt businesses from adding to their payrolls.

"He has pushed forward his signature achievement, the new healthcare law, which imposes a tax of $2,000 per worker if you are a firm of 49 or more people. If you have 49 people, your 50th worker will cost you $40,000 a year beginning in 2014 if you don't have the right health insurance," Furchtgott-Roth said.

The first 30 workers would be exempt from the tax, so $2,000 per worker per year for the remaining 20 workers would cost a firm $40,000 a year for failing to buy the right kind of health insurance.

"These are policies that diminish employment rather than expanding employment."

Editor’s note: To pre-order 'Regulating to Disaster' at a great price — Click Here Now.

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