The jobs report released today (March 7) by the U.S. Bureau of Labor Statistics was grim.
According to this latest look at the employment situation, we’ve been losing jobs over the past few months.
For example, according to the household data, 654,000 jobs were lost from November to February.
If we switch to the establishment payroll data, then 85,000 jobs were lost from December to February. But the private employment picture was worse. The private sector dropped 141,000 from November to February.
Two thoughts. First, these job losses certainly strengthen the case for the U.S. economy being in recession. Second, keep in mind that the bulk of new jobs in the economy are created by small businesses, and this is a strong signal that the entrepreneurial sector of the economy is not growing.
Friday, March 07, 2008
Thursday, March 06, 2008
Bad Tax Policy Proposals in New York
Well, apparently some lawmakers in New York are concerned that politicians in neighboring New Jersey might get ahead of the Empire State in terms of bad economic policy decisions.
In a March 5 BusinessTrends Blog posting, I noted the push for paid family leave in New Jersey, and the fact that the Garden State already ranked 50th on the “Small Business Survival Index 2007.”
Meanwhile, big government New York ranked 46th on the Index, or the sixth most costly public policy climate among the 50 states and District of Columbia.
Now, there are all kinds of talk in New York about possible tax increases. For example, news reports note the following:
• Various health groups are pushing to double the state’s cigarette tax from $1.50 to $3.00 per pack. New York City imposes its own $1.50 tax on top of the state tax, and Mayor Michael Bloomberg wants to jack up the city tax by another 50 cents. If all of this were to pass, the cigarette tax in New York City would tally up to $5.00 per pack. That’s a surefire recipe for raising costs for consumers and small business retailers, and expanding the underground economy, including smuggling and criminal activities.
• The Democratic majority in the state assembly and others are advocating a state income tax increase. One plan would increase the top tax rate from 6.85% to 7.7%, while the Working Families Party is pushing for an increase as high as an additional four percentage points. New York already is a relatively stagnant state in terms of population, economic growth and entrepreneurship. Higher income taxes would only make matters even worse, by chasing away entrepreneurs and investors.
Is there hope? Well, Governor Eliot Spitzer (D) does not like the higher income tax idea. He was quoted in the March 6 New York Times saying: “That is not something that we can afford to do. The idea that we would turn around at this moment and start raising taxes is the wrong way to go.”
In a March 5 BusinessTrends Blog posting, I noted the push for paid family leave in New Jersey, and the fact that the Garden State already ranked 50th on the “Small Business Survival Index 2007.”
Meanwhile, big government New York ranked 46th on the Index, or the sixth most costly public policy climate among the 50 states and District of Columbia.
Now, there are all kinds of talk in New York about possible tax increases. For example, news reports note the following:
• Various health groups are pushing to double the state’s cigarette tax from $1.50 to $3.00 per pack. New York City imposes its own $1.50 tax on top of the state tax, and Mayor Michael Bloomberg wants to jack up the city tax by another 50 cents. If all of this were to pass, the cigarette tax in New York City would tally up to $5.00 per pack. That’s a surefire recipe for raising costs for consumers and small business retailers, and expanding the underground economy, including smuggling and criminal activities.
• The Democratic majority in the state assembly and others are advocating a state income tax increase. One plan would increase the top tax rate from 6.85% to 7.7%, while the Working Families Party is pushing for an increase as high as an additional four percentage points. New York already is a relatively stagnant state in terms of population, economic growth and entrepreneurship. Higher income taxes would only make matters even worse, by chasing away entrepreneurs and investors.
Is there hope? Well, Governor Eliot Spitzer (D) does not like the higher income tax idea. He was quoted in the March 6 New York Times saying: “That is not something that we can afford to do. The idea that we would turn around at this moment and start raising taxes is the wrong way to go.”
Wednesday, March 05, 2008
Paid Leave, Higher Business Costs in New Jersey
On the Small Business Survival Index 2007, New Jersey had the worst public policy climate for entrepreneurship and small business among the 50 states. Only the District of Columbia was worse.
Yet, state lawmakers in the Garden State continue to work very hard to make matters even worse.
Consider that on Monday, March 3, the state senate passed a measure that would allow employees to take up to six weeks off to care for a newborn or sick relative. The New Jersey version differs from the federal Family and Medical Leave Act by making this paid leave. According to various news accounts (see, for example, the New York Times and the Philadelphia Business Journal), the leave could allow employees to take as much as two-thirds of their pay, up to $524 a week. It would be funded by what’s being called an employee payroll deduction of 64 cents a week, or $33 a year. That is, it would be funded through a new payroll tax.
The fallout for business would be significant. The cost of labor would increase in various ways, such as through the new tax, and through higher costs related to training, turnover, the use of temporary employees, etc.
The Philadelphia Business Journal noted opposition from the New Jersey business community, reporting:
Unfortunately, Mr. Leonard is absolutely correct.
The state assembly is expected to pass the measure, and Governor Jon Corzine said he would sign it. And so goes the continuing decline of New Jersey.
Yet, state lawmakers in the Garden State continue to work very hard to make matters even worse.
Consider that on Monday, March 3, the state senate passed a measure that would allow employees to take up to six weeks off to care for a newborn or sick relative. The New Jersey version differs from the federal Family and Medical Leave Act by making this paid leave. According to various news accounts (see, for example, the New York Times and the Philadelphia Business Journal), the leave could allow employees to take as much as two-thirds of their pay, up to $524 a week. It would be funded by what’s being called an employee payroll deduction of 64 cents a week, or $33 a year. That is, it would be funded through a new payroll tax.
The fallout for business would be significant. The cost of labor would increase in various ways, such as through the new tax, and through higher costs related to training, turnover, the use of temporary employees, etc.
The Philadelphia Business Journal noted opposition from the New Jersey business community, reporting:
"The passage of paid leave in the Senate demonstrates that although there is much rhetoric about growing the state's economy, the reality is that it is anti-business as usual in Trenton [the state capital]," Jim Leonard, senior vice president with the New Jersey Chamber of Commerce, said. "We are about to place a mandate on our struggling employers that does not exist in 48 other states. This is not a welcoming message to companies looking to expand here or explore New Jersey as a place of investment."
Unfortunately, Mr. Leonard is absolutely correct.
The state assembly is expected to pass the measure, and Governor Jon Corzine said he would sign it. And so goes the continuing decline of New Jersey.
Monday, March 03, 2008
Housing and Small Bank Woes
Just how far will the fallout from the mortgage mess reach?
The March 3 Wall Street Journal offers a look at the potential trouble for small banks. The following points are worth noting:
• “Cash-strapped, heavily leveraged builders are falling behind on interest payments as the housing downturn drags on and dwellings sit unsold. Now, many of the small banks that financed builders are caught with accumulating portfolios of delinquent loans and face increased pressure from banking regulators to reassess and hedge these troubled loans.”
• At least one estimates pointed to perhaps as many as 150 small banks failing in the next few years.
• Foresight Analytics estimated that in the fourth quarter of 2007, “loans from all federally insured banks and thrifts to builders of single-family houses that were 30 days or more past due hit 7.5%, up from 2.1% a year ago,” while delinquencies from condo construction loans hit 10.1% versus 2.6% a year ago.
Is there a bright spot here? Well, it’s relative. It also was reported that that in 1988 and 1989, the number of banks that went under due to bad commercial real estate loans was more than 1,000.
The March 3 Wall Street Journal offers a look at the potential trouble for small banks. The following points are worth noting:
• “Cash-strapped, heavily leveraged builders are falling behind on interest payments as the housing downturn drags on and dwellings sit unsold. Now, many of the small banks that financed builders are caught with accumulating portfolios of delinquent loans and face increased pressure from banking regulators to reassess and hedge these troubled loans.”
• At least one estimates pointed to perhaps as many as 150 small banks failing in the next few years.
• Foresight Analytics estimated that in the fourth quarter of 2007, “loans from all federally insured banks and thrifts to builders of single-family houses that were 30 days or more past due hit 7.5%, up from 2.1% a year ago,” while delinquencies from condo construction loans hit 10.1% versus 2.6% a year ago.
Is there a bright spot here? Well, it’s relative. It also was reported that that in 1988 and 1989, the number of banks that went under due to bad commercial real estate loans was more than 1,000.
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