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Home Publications Blogs Beat the Press Republicans Are Not Being Truthful When They Blame "Uncertainty" for Lack of Hiring

Republicans Are Not Being Truthful When They Blame "Uncertainty" for Lack of Hiring

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Monday, 19 September 2011 03:11

The Washington Post has a front page article outlining President Obama's plans for deficit reduction. It then quotes Representative Paul Ryan blaming "uncertainty" for slow growth and high unemployment.

If it were the case that firms would actually be hiring except for uncertainty then we would expect to see firms increasing the average number of hours worked per workers and also turning to temporary workers. The argument here is that firms are seeing demand for labor, but they are scared to take on the commitment of hiring another worker because they think that President Obama would regulate them to death. This means that they would seek to fill this demand through alternative routes.

The data contradict the uncertainty story. Average weekly hours worked is still about 1 percent below its pre-recession level when firms presumably did not suffer from uncertainty.

avg.hours

Source: Bureau of Labor Statistics.

The data on temp employment is even less friendly to the uncertainty story. Temp employment is still down more than 15 percent from its pre-recession level.

temp_emp

Source: Bureau of Labor Statistics.

In short, the evidence does not support Representative Ryan's assertion that uncertainty is a major obstacle to hiring and recovery. It would have been appropriate to call readers attention to the fact that the data contradicts Ryan's assertions. Post reporters have the time to evaluate the evidence, the vast majority of its readers do not.

Serious news stories, unlike this one, do not include in their first sentence a reference to "the nation’s rocketing federal debt." Such phrases are best left for the opinion pages.

Comments (7)Add Comment
Paul Ryan Certaintly is Certain About Uncertainty
written by izzatzo, September 19, 2011 10:31
Paul Ryan is obviously a student of Frank Knight who demonstrated long ago that uncertainty and risk are not the same thing. Uncertainty is binary and discrete meaning the direction itself is not known. Risk is infinitely quantitative based on probability.

While Ryan may not know the quantified risks that have caused firms not to hire, at least he is certain that they are uncertain about whether an additional hire at the margin produces net positive marginal revenue product given rumors that open carry guns may no longer be allowed in day care centers.

Stupid liberals.
...
written by joe, September 19, 2011 12:12
It's funny the stuff they come up with so they don't have to use the word 'demand'.

Private sector employment:
Jan 2001 111.634 million
March 2001 111.555 million (recession starts)
Nov 2001 109.575 million (recession ends)
Oct 2003: Jerry Bowyers publishes "The Bush Boom: How a Misunderestimated President Fixed a Broken Economy"
Nov 2003 108.611 million (900,000 fewer private sector jobs 2 years after end of the recession.)
Jan 2004: 108.882 million (2.7 million private sector jobs lost during first three years of Bush and Republican Congress.)

What was the story between 2001 and 2003? Was uncertainty keeping the private sector from adding jobs for 2 years after the recession ended?

Compare the recent recession.
June 2009 - 107.936 million (recession ends)
Aug 2011 - 109.170 million (1.2 million private sector jobs added 2.16 years after recession ends)

Here we actually have jobs added to the private sector. But Republicans instead of announcing the Obama Boom we have a claim that there is no hiring and it's caused by over regulation.
The only "uncertainty" businesses are worried about
written by Matt, September 19, 2011 12:26
The only "uncertainty" I could see most businesses worrying about is "will the GOP actually blow up the economy just to make the President look bad". Sadly, Rep. Eddie Munster is exceptionally unlikely to have anything meaningful to offer regarding THAT, unless to affirm it...
Consider it more a hope
written by Lord, September 19, 2011 1:45
Republicans hope and are determined to create as much uncertainty as possible to win the next election. They have to repeat it a lot to get through to business.
...
written by fuller schmidt, September 19, 2011 3:30
Let us here start a campaign to have debate moderators ask the candidates to explain the hours worked numbers. One simple question. Can we get it widespread enough via blogs? Can we make hipsters David Gregory and Brian Williams be forced to ask? And have Jon stewart pick up on it?
...
written by Jay, September 19, 2011 4:50
Taxing millionaires is class warfare. What do you call allowing over 1 trillion in housing wealth for the middle class to evaporate and 10% unemployment? Poor financial responsibility and lack of a good work ethic. Sheesh. Unbelievable.
Not
written by Theo, September 20, 2011 3:18
Dr. B,
Your argument doesn't make sense - and is contradicted by statements by business people. Macro policy arguments are largely garbage anyway. It is all about rent-seeking. It is certainly not science.

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Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.

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