Where Did The Jobs Go? A Comment

A comment I posted on The New York Times blog post, "Mystery for White House: Where Did the Jobs Go?"

The rise in unemployment is a mystery unless one is willing to include the political agenda of the current administration as a possible cause. The excessive unemployment for this economic downturn and the lack of job creation as the economy rebounds shows that employers are shifting away from labor/worker and into capital/machinery and process improvements.

Contrary to the current administration's causality of blaming the past, employers base their hiring decisions on expectations about the future. The likely future cost increases for employees increases an employer's willingness to utilize more machinery and capital in production of goods and services, while reducing the number of employees.

Employers are acting rationally to an expected increase in the cost of labor. The new healthcare law significantly increases the cost of employing labor versus capital. Many other proposals from the Obama administration, such as card check, increase the cost of labor to companies. Obama's anti-business, pro-union policies give employers the impression that more costs are likely in the future.

Employers have responded as anyone does to increase costs. They have chosen cheaper equivalent alternatives. Employers are shifting away from workers to machinery in response to the administration's policies of increasing the costs of hiring workers.

The Democrats and the President see businesses as bottomless pits of cash and profits. Employers have logically reacted to the administration's business philosophy and are attempting to reduce their future costs by employing fewer workers and using more capital as the economy grows. Unfortunately, it takes time to switch to more capital and machinery, which adds to the slowness of the economic recovery.

It is unlikely that the current administration will change its view of business, which means that the economy is unlikely to improve until those in office see business and capitalism as their friend and not as their enemy.