Brent E. Zepke
Unemployment has appeared in many aspects of my life. Being unemployed from a lay-off was rough, particularly with small children asking “What’s for dinner, Dad?”
Causing unemployment by being assigned to “re-organize” a company’s operations (reduce jobs and people) led to the perpetual question even after the 10,000th one: “Why me?” The CEO’s response to “why me?” is “Because if you prevent one legal case, it is worth it.” My unasked question became “Worth it for whom?”
The price for me and my family was many nights alone as I flew around the country sending other people home to tell their families they had lost their jobs. The reality was that I could not argue with the reasoning since I had the rare combination of having studied all the aspects of a technical manufacturing company: engineering, management and law.
Along the way, as a lawyer I had successfully defended several cases on behalf of employers, including a pro bono one for Opera Delaware, and a plaintiff’s case for myself based on correctly calculating my compensation during a baseline quarter. In 2020, I saw the impact of COVID eliminate a son’s job as a state government ordered the business to close, and the employer closed it forever. As a taxpayer, I now see that President Joe Biden is proposing that we taxpayers spend huge amounts of money to combat unemployment. Is that a wise approach?
Let’s follow Vice President Kamala Harris’ approach to the border crisis of first finding the “root causes.” For root causes the three steps are:
1. Identifying the root causes.
2. Determine how to fix the causes and learn from the underlying issues.
3. Prevent future problems.
Let’s look at each of these.
1. Identify the root causes. Using May as the month for year-to-year comparison of the unemployment rates, the history and significant events are: 2015, 5.5%; 2016, 7.8%, eighth year of President Barack Obama’s terms; 2017, 4.3%, President Donald Trump took office in January; 2018, 3.8%; 2019, 3.6%; 2020, 3.5% (February), downward trend continued; 2020, 13.2 % (May), COVID caused governments to order closures; 2021 5.8%, Republican states have permitted businesses to re-open.
The root causes of the changes are:
A. The trend changed from 2016 to 2017 because of the change in the presidency in January 2017.
B. In 2020, COVID and the states closing private businesses forced the rate to increase from 3.5% in February to 13.2% in May.
C. As indicated later in this article, the Republican states re-opening enabled the combined rate to drop to 5.8% in May.
2. Determine how to fix the causes and learn from the underlying issues. The changes in presidencies is a factor and the effect of the change to President Joe Biden remains to be seen.
COVID caused a huge increase until President Trump’s Operation Warp Speed provided a solution that enabled Republican governors to remove restrictions for businesses to open, bringing to mind the lesson from the song “If it ain’t broke, don’t fix it” by John Anderson. The difference in states is shown by the rates in the most populous states. (The overall U.S. rate was 5.8%).
Here are the unemployment rates in May 2021 in the 10 most populous states, starting from the most populous of them, California, to the least, Michigan. They’re labeled D for Democratic-controlled and R for Republican-controlled.
California-D; 7.9%; Texas-R, 6.5%; Florida-R, 4.9%; New York-D, 7.8%; Pennsylvania-D, 6.9%; Illinois-D, 7.1%; Ohio-R, 5.0%; Georgia-governor-R, 4.1%; North Carolina-R, 4.8%; Michigan-D, 5.0%.
The rates in the five Republican states, which opened quickly, averaged 5.06%, including Texas, where the rate decreased from 12.9% in April 2020 and would have been less without the open southern border.
The rates in the five Democratic states (governors slowed openings) averaged 37% higher than the Republican states at 6.94%.
The three states with the highest unemployment rates were controlled by Democrats: Hawaii (8.0%), New Mexico (8.0%) and California (7.9%). The states were Republican-controlled New Hampshire (2.5%), Republican-controlled Nebraska (2.6%) and Democratic-controlled Vermont (2.6%), with only Vermont (population 627,230) breaking into the bottom eight.
3. Prevent future problems. My experience is that being able to support yourself and family is crucial, but equally as important is the self-satisfaction of providing value as an employee rather than just receiving a government check for breathing.
A return to the pre-COVID polices of the former president will eliminate the “root causes.”
The Republican states have, and are, demonstrating that employers will hire when permitted by the states.
The caveat is all bets are off if the Biden administration continues to penalize businesses by increasing the cost of the regulations, energy and wages. Hence, the biggest risk is the federal and states failing to follow the data indicating DO NOT PASS ANY NEW LEGISLATION.
In the words of John Anderson:
“If it ain’t broke, don’t fix it. If it’s mixed, don’t try to mix it
“Think before you speak, and look before you leap.”
The author lives in Santa Barbara.