Don’t get me wrong, I feel sorry for anyone loosing his or her job. However, in a dynamic and thriving economy, jobs are lost and new ones are created. In the Carrier case, 850 jobs were saved by government intervention; the other 1,400 will go to Mexico as originally planned.
If we were all doing today what we did 30 years ago, there would have been no economic progress.
Most jobs are lost to automation, others to outsourcing and offshoring. The two pillars that have contributed the most to American economic prosperity as compared to the rest of the world are immigration and free trade.
An economy with a stagnant workforce will grow only slowly, if at all. Suppressing free trade will have the same economic impact as slowing automation.
There will always be pockets of unemployment. What is bad for one part of the economy is good for the other. When the cost of crude oil goes down, jobs are lost in the energy sector, and the consumer wins by being able to buy gasoline at lower prices. When interest rates are low, as they are right now, people on fixed incomes are the losers. The winners are those who take out loans to buy cars and homes, and so forth.
A testament to how well the system works, is that unemployment is currently the lowest it’s been in a decade. The Federal Reserve defines full employment as being somewhere between 5.1 and 5.3 percent of unemployment. Last month’s unemployment rate came in at 4.6 percent of people who are actively looking for a job. The percentage of people who are underemployed or who have given up altogether looking for a job, the U-6 rate, is at 9.3 percent. It is also at a decade low, and within the historic average. At 62.3 percent, the labor participation rate is also within range of the historic average, despite 10,000 baby boomers retiring each and every day.
Labor markets are very tight by almost any measure, and could soon lead to wage inflation, which will only eat into any real wage gains. In the last year, Wal-Mart has been forced into raising wages by 20 percent to attract and retain worker. Amazon is scrambling to fill 120,000 positions of seasonal workers, and will probably fall short of that goal.
What is bad policy, however, is when the government intervenes in the economic process, on a select basis, as Trump did last week in the Carrier case. At the end everyone loses: the company, its workers and society at large.
