Goods Producers and Their Disproportionate Value

My materials analysis laboratory, Anderson Materials Evaluation, Inc., exists to support the producers of goods in the USA.  I consider this mission to be a noble one.  To be sure, we provide research and development services to institutions other than manufacturers, provide quality control verifications of their supplies for service providers, and we provide some environmental safety evaluations as well.  However, the core of our business is assisting manufacturers with their materials problems and processing concerns and their product development.

Compared to the employment of private sector service providers and even of government employees, the number of goods producers are a beset minority.  The Federal Reserve of St. Louis provides the data:

As of December 2025, there were 21,477,000 goods-producing workers and 113,613,000 service workers in the private sector.  The total number of government "workers" was 23,359,000.  The goods-producers were outnumbered by these government employees by almost 1.9 million.  The ratio of private sector service providers to private sector goods-producers was 5.29.

Let us examine how households actually spend their money.  We will again turn to the data of the Federal Reserve of St. Louis:

The ratio of money spent on services to that spent on goods is only 2.24 as of December 2025.  This is much smaller than the ratio of service providers to goods producers of 5.29.

One cannot say that an American goods-producer is thereby 5.29/2.24 = 2.36 times more valuable than an American service provider in the economy.  Many of the goods consumed by U.S. households are produced in countries using slave labor or very low cost labor, or by heavily subsidized and little-regulated industries.  Those are advantages that my laboratory tries to help American manufacturers overcome by helping them produce superior goods at lower production costs so they can tap into this value of goods to households that is revealed by their spending choices. 

Since 2005, the number of goods-producing Americans has been relatively constant, aside from dips in and shortly after recessions.  Despite that, the value of American goods has increased.  With good energy policies that take advantage of our tremendous carbon-based fuel resources to provide low cost and highly reliable energy, with reductions in the cost (burden) of government which in 2025 was 37.7% of GDP, and with further reductions in the number of irrational government regulations, American goods-producers could grow in number and the value of American manufacturing could grow faster than it has.  The potential is there.

Let me offer you this nugget to justify my statement that there is plenty of reason to believe that reliable energy and good government policy has the power to increase the number of manufacturing employees.  Note the fact that from 2014 to 2024, the states of Florida, Texas, Georgia, Tennessee, Arizona, South Carolina, Utah, Alabama, and Missouri were able to increase the percentage of manufacturing employees by substantial percentages.  If state government policies have so much effect, then federal government policies and the improvement of other state government and local government policies must have a large effect on manufacturing employment also.  The potential is there.

Comments on Random Subjects

Iran spends about $1 billion a year to fund terrorism, making it the number 1 funding source for terrorists.

In October, there were only 3% of Americans who did not have a job and wanted a job.  This is the lowest percentage since this statistic has been determined starting in 1994.

PG&E has cut off power in large areas of California due to high winds and claims that the damage of falling trees and limbs to their power lines and equipment can start fires.  A good part of this problem is because PG&E has put so much money into other tasks dictated by the socialist government of California instead of removing trees from the vicinity of their power lines and updating their essential distribution equipment.

Wind and solar power account for about 17.9% of all electric power generation in California now. Wind generators, which operate in the wind speed range from 6 or 7 mph to about 55 mph.  A wind speed of about 30 mph is usually the optimum power generation wind speed.  The high winds that are driving the California wildfires are also causing shut-downs of wind generators or causing them to operate at higher than optimum power generation speeds.  This may well be causing the wind generator portion of the California electricity supply to be under-performing.  To be sure, under-performing wind generation is a common problem with this intermittent, unreliable power source.

Contrary to the Washington Post, a Company Should Spend its Hard-Earned Income Based on its Own Judgment

The Washington Post's top of the Business Section article on Sunday, 16 December is headlined "How have corporations spent their tax cut windfall?"  Thomas Heath, the author, notes that many experts believe that corporations should spend the money no longer taken from them by force to build new facilities, buy equipment, invest in R&D, hire more employees, and pay their employees more.  Stock buybacks and higher dividends for stockholders are rather immoral and not in the spirit of the tax cut law.

You see, the government taxes a business, forcibly depriving it of the income it worked hard to earn in a competitive global economy.  The government thereby gains the moral right to expect the company upon the government's graciously deciding to take a bit less of the company income to spend that income according to the government's wishes.  Those wishes require that the company creates more and better jobs and does so in a way that is as obvious to the voters as possible.

What has become of the money that companies are now able to keep since the tax cut last year?  Business investment by Standard & Poor's 500 largest public corporations on new equipment and factories is up 19% in the first three quarters of 2018.  Research and development spending increased by 34%.  A Federal Reserve statistic shows that independent businesses in general increased business investment by 16% so far this year, which is the highest increase since 1993.  For years, capital expenditure by business has been very weak and productivity growth has been less than 1% per year.  Private sector employee average earnings are up 2.8% in 2018, after many years of stagnation under the Obama Regime.

The 2018 increases in business capital expenditures, R&D, employee earnings, and the expected increases in productivity should make Americans very happy.  Unless you are a Democrat socialist, in which case you bemoan the fact that stock buybacks cost companies $579 billion in the first 3 quarters of 2018.  This will set a new record for a year, replacing the record of 2007, just prior to the Great Recession.  Wisconsin Senator Tammy Baldwin says "It's just wrong for big corporations to pocket massive, permanent tax breaks and reward the wealth of top executives with more corporate stock buybacks, while workers are given pink slips and face layoffs."  Never mind that unemployment is at a record low, that millions of open positions cannot be filled with qualified workers, and that average employee earnings are up 2.8% this year.  Never, ever allow the facts to get in the way of a very emotional argument for the villainy of businesses.

The left also complains about the fact that dividends to shareholders this year will set a record previously set in 2017. 

There is a very unrealistic expectation in the criticisms of the Democrat socialists which we are not supposed to notice.  The management of a large corporation now able to keep enough of its earnings to contemplate building a new facility first has to evaluate a number of purposes for that facility, where it will be built, design it, get building and environmental permits, find and hire the people to build it, evaluate and purchase the equipment to put into the facility, and find and hire the people to be employed in the facility.  If you have just had a substantial change in the parameters under which your business operates, you are also likely to have to hire more managers to make all of these decisions and kick this whole process into gear.  How much of this process can be accomplished in the first 3 quarters of operations under the new tax conditions?

Consider R&D.  You have long been doing less R&D than your company should have been doing because too much of your company earnings were taxed away and the regulatory environment was too expensive.  During the Great Recession and the numbingly glacial recovery, you released many company scientists and engineers or did not expand their numbers.  Your company did not invest much in analytical equipment, your laboratories, the training of your technical experts, prototyping capabilities, and your forward-looking plans for R&D were scaled to your very modest means to do R&D.  Now conditions have changed.  You want to invest in R&D, but you have to figure out what directions to explore and develop with your greater R&D effort.  You consult with your technical people, make decisions on new directions based on evaluations of markets and technical possibilities, figure out what laboratory equipment is needed, evaluate the instruments available from vendors, prepare facilities for their installation, and hire more people to operate the equipment and to solve the technical problems.  By the way, the people with the brains, the dedication, and the training for these R&D tasks are hard to find.  What fraction of this process is likely to be completed within 9 months of a changed tax environment?

So, while your company is trying to become more productive and to offer new products and services, but is limited on the rate of its spending by these limits of time and resources, what do you do with your suddenly increased available funds?  Rationally, you use it for some combination of paying back debts, buying back stock, and offering improved dividends to your shareholders.

Not only is this rational from the company viewpoint, but it is hardly bad for the economy.  Lower company debt makes companies more able to weather future downturns and to minimize the layoffs of valuable employees when a downturn occurs, as they always will.  The buyback of stock, puts more money in the hands of investors who will then either spend that money or invest it in other firms that need that investment.  The increases in dividends help many investors to be able to spend more money in the economy and helps pension funds to be less unstable, as so many of them are.  To be sure, some of this money will go to foreign investors.  Some of these foreign investors will put their money back into US investments because our economy is about the best in the world.  Some will leave our economy.  But, if we suppose that money had been left in the hands of the government, what fraction of it would have been utterly wasted and gone to not only unproductive use, but to uses that cause our national productivity to have negative components?  Yes, the Democrat socialists believe that government spending is the Gold Standard for the good use of our money.  But you have to be loony to think that is the reality.

Labor Union Membership, Right to Work, and Education

Labor unions have been having a tough time competing in the private sector for a long time and now are even shrinking as a percentage of government workers.  In 2015, union workers were 11.1% of the work force.  This fell to 10.7% in 2016 with a loss of 240,000 union members.  Only 6.4% of private sector workers are now union members.  The mainstay of the unions is in the government sector with 29.6% of state government employees being union members and 40.3% of local government employees being members.  The local government union membership is much inflated by the many teachers who pretend to manage 25 or 30 people in the classroom, but are really blue-collar workers unable to negotiate their own work compensation as individuals.  The high percentage of government workers in unions has more recently been falling so that the percentages above are 15-year lows.

Within the last year, West Virginia and Kentucky have become Right to Work states, increasing the number of Right to Work states to 27.  There is a good chance that Missouri will soon become a Right to Work state.  In the 2016 election, a Republican who championed Right to Work hard won the governorship in Missouri despite the unions supplying the Democrat who opposed Right to Work with more than $10 million of campaign funds and other support.  Missouri voters returned every one of the state legislators to office who supported Right to Work.  Missouri, like other states with forced union dues collection, has been losing jobs to states with Right to Work laws.  The bordering states of Iowa, Nebraska, Kansas, Oklahoma, Arkansas, Tennessee, and Kentucky all have Right to Work laws.  Only the basket case state of Illinois still maintains forced unionization on its borders.

You would not know it based on the recent campaign rhetoric, but manufacturing jobs increased by 236,000 in 2016.  Despite that overall growth in manufacturing jobs, union membership decreased by 74,000.  The growth in manufacturing jobs has been in Right to Work states.  In 2016, union membership in the 25 states that were Right to Work states for the full year decreased by 290,000, falling from 7.1% to 6.5%.  Membership in forced unionization states increased by 50,000, making it clear how dependent labor unions are on forced unionization.  Union membership increased in only one-quarter of the states with Right to Work laws, while increasing in 60% of those with forced unionization.  The percentage of Michigan workers in labor unions has fallen by 2.2% since Michigan became a Right to Work state in 2013.  Government worker unions lost their privileged powers in Wisconsin in 2011 and since then union membership has fallen by 136,000 workers or by 40%!

The loss of union power over the school systems in Wisconsin since 2011 and the freeing of school systems to pay teachers on their individual merit, is improving education in those school systems that have moved to the individual merit evaluation and compensation of teachers.  A Stanford University researcher, Barbara Biasi, has found that the school systems that have chosen to stick with union-favored seniority compensation programs rather than individual merit programs are falling behind the individual merit school systems.  Governor Scott Walker's Act 10 collective bargaining reform has allowed the thinking school systems to improve.  Who would think that evaluating and rewarding individual teaching ability would improve education?  Clearly the Democrats who claimed this would undermine the government-run school system would not allow this possibility.  How surprising it is that there is a correlation between being a capable teacher and classroom manager and being capable of negotiating your own working conditions and compensation!

Krugman and Schramm: The Fool and the Wise Man

Paul Krugman, post-election: "It is true that we've been adding jobs at a pretty good pace and are quite close to full employment."

Prof. Carl J. Schramm, Opinion in 16 Nov 2016 Wall St. Journal:  "Despite the addition of 161,000 jobs in October, the labor-force participation rate fell to its second lowest level in nearly 40 years, according to the St. Louis Federal Reserve.... America needs at least 325,000 new jobs every month to stanch the growing numbers of discouraged workers, according to the Bureau of Labor Statistics."

How low the left sets the bar for employment!  High employment is clearly not one of their premier goals.

Prof. Schramm, of Syracuse University, once headed the Kaufmann Foundation, which promotes American entrepreneurship.  He notes that:

• Firms less than 5 years old create more than 80% of new jobs.
• Fewer than 500,000 new businesses were started in 2015, which is a 30% decrease since 2008.
• Over the last 8 years, the number of new businesses has decreased by more than 1 million.  The missing new businesses mean 7 to 10 million missing jobs, which would have been enough to provide jobs to the millions of discouraged workers.
• New businesses are more likely to be started when the economy is growing at a 4% rate than when it is growing at a 2% rate.  The faster growth rate gives consumers the confidence to buy the innovative products of start-up companies.
• Too much attention is given to Silicon Valley whose start-ups are only about 5% of all start-ups and have higher failure rates and create proportionally fewer jobs than the businesses started by franchisees, which are 40% of all new businesses.
• Dodd-Frank suppressed the financing by local banks of local businesses in their communities, whose business prospects they are best qualified to gauge.
• Municipal regulations are particularly protective of older businesses and likely to discriminate against new businesses.

Address these problems and he says we can enjoy 4% economic growth.  The first step was to remove the anti-jobs, anti-business party from the presidency.

Minnesota is Misrepresenting the Effects of Higher Taxes and Minimum Wages

It is being claimed that higher taxes on high income persons and increases in the minimum wage are the key to jobs creation and a fast-growing economy.  The example of Minnesota since Democrat Gov. Dayton took over is being used to "prove" this.

Gov. Dayton certainly benefited relative to Gov. Pawlenty in that he became Gov. in the year that the recovery from the Great Recession began, however meekly. He did not create the 172,000 jobs either. But let us note that 172,000 jobs in two years is just barely a match for an anemic population growth.

The article notes that the Minnesota median income advantage relative to the national average actually fell by $2,000 from 2012-2013 to now. It was not noted that the cost of living in Minnesota relative to the national average is going up as well. The combination of a rising cost of living and a falling median income, both relative to the nation, is not good.

While the minimum wage is to go up to $9.50/hr. for large employers by 2018, it will go up to only $7.75/hr. for small employers who employ most people. There are special provisions for a 90-day training period for workers under 20 years old and for all workers under 18 with a minimum wage of $6.50/hr. There are many states with no such provisions.

Furthermore, the private sector job growth in Minnesota from Q1 of 2013 to Q1 of 2014 showed Minnesota to be dead last in the Midwest in private sector job creation. Its 0.8% increase in private sector jobs was behind the next worst state in the Midwest, Illinois at 1.2%.

Gov. Dayton is probably not claiming that he caused a relative decrease in the median income with an increase in the relative cost of living.  And now that businesses have had time to react to his higher taxes and mandated higher wage costs, he is surely not claiming credit for Minnesota being dead last in private sector jobs creation in the Midwest.

Employment Growth or Contraction By State Since December 2007

It is very interesting that if one plots the number of jobs created in Texas since 2008 against the change in the number of jobs in all other states combined, one gets an astounding story of job creation in one state that does little to prevent the creation of jobs:

There is no contest.  Texas added jobs without ever dropping below the number of jobs in December 2007 despite the Great Recession.  It has now added 1.44 million jobs, while the remainder of the nation has yet to recover all the jobs lost since December 2007!

[The oil and gas industry in Texas, which Obama has fought and tried to suppress, is responsible for a large part of the Texas jobs creation success.]  

But some of those other states did add jobs and some lost a particularly large fraction of the jobs they had in December 2007.  Let us see which states are relative winners and which are relative losers.  I will use BLS seasonally adjusted Establishment Data on non-farm payrolls which excludes public administration.  I am going to break the states into three groups.  The first group is the one that created more jobs over the 7 year period than would be needed to keep up with the average population growth of the country over the 10-year period of the last census.  That population growth rate was about 0.9%, so 7 x 0.9% = 6.3%.  The next group of states managed some kind of job growth, though as we will see that job growth was most commonly pathetic.  The final group of states are those which still have fewer jobs now than they had in December 2007.  I have simply taken the non-farm non-public administration jobs in December 2014 and divided by the number of such jobs in December 2007.  Thus, North Dakota had 32.24% more such jobs in 2014 than in 2007.

The heroic states with more created jobs than average population growth from Dec 2007 to Dec 2014:

North Dakota, Texas, and Oklahoma certainly benefited from both business-friendly state governments and the shale oil boom.  Alaska benefited from high oil prices.  Obama did nothing but hurt the jobs creation in these states.  The District of Columbia benefited from the inexorable growth of the federal government and the many well-paid lobbyists located there.  Gov. Rick Parry of Texas has some real bragging rights in his bid for the Republican presidential nomination due to the record of Texas during his long term as governor.  Of the five states and DC which created jobs in excess of population growth, only those jobs in DC were created by Obama and his socialist cronies.

The states that could not keep up with population growth, but at least did not actually lose jobs:

Massachusetts, New York, and California on this list certainly benefited from the huge out-pouring of Federal Reserve money propping up the largest financial institutions largely located in these states.  Note that the bottom 12 states in this group did not even manage a 1% growth of jobs in 7 years!  Both Virginia and Maryland, despite being benefited by the growth of the federal government by their proximity to DC, managed virtually zero private job growth at 0.6% and 0.15%, respectively.  Six of the bottom 9 states in this group voted for Obama twice, so they deserved no better.  Scott Walker, Republican governor of Wisconsin has little to brag about in terms of job creation in his state in his presidential bid.  Democrat Gov. Martin O'Malley of Maryland has still less to brag about.

Finally, we have the states that actually lost such jobs in the 7-year period of the Great Recession and its supposed recovery:

Of these 17 job losing states, 11 of them voted for Obama twice.  That is certainly a fair indicator of an anti-business mentality in those states.  Only Idaho, Florida, Arizona, and Nevada on this list appear in many lists of business-friendly states.  Republican Gov. Chris Christie of New Jersey has only a 3.06% job loss in seven years to talk about.

It is very clear that the federal government and very many of the state and local governments need very badly to become more business-friendly if Americans are ever going to be able to enjoy plentiful and good jobs again.  This does not mean doing things to favor businesses.  It just means they need to get out of the way and let free Americans in the private sector create jobs and provide great products and services.

Private Sector? Obama The Great Don't Need No Stinking Private Sector

Obama claimed that the American economy was surging into the future.  He said that 11 million jobs had been created since he became president and that the unemployment rate was the lowest in a very long time.  So how many Americans are employed full-time after six years of his regime?

Is Obama for real?  Is this the record he is claiming is so great and has established a record employment condition in America?  And surely by now most Americans know that the unemployment number is hardly meaningful, given that it is low because so many Americans have given up on finding a job.  The percentage of Americans working full-time is at a record low of 47.7%.  Median household income has fallen in each and every year of the Obama presidency from 2009 - 2012.  There was a small increase in median household income in 2013, but median income is still well below what it was prior to the Obama regime.  As of 2013, median household wealth was only 60% of what it had been in 2007.  This is the Obama legacy.

Obama claimed that energy independence is near.  He deserves credit for this in that he did not succeed in applying the brakes on fossil fuel energy development enough to prevent the private sector from this great achievement.  He did his best to prevent it, but he failed.  We are supposed to give him credit for this failure.

Obama said, "Let's put more money back in the pockets of the middle class."  I say let us leave more money in everyone's pockets and not take it in the first place!  Sending our money to Washington and allowing politicians and bureaucrats to decide who will get a fraction of that money back is hardly the way to improve the lives of most Americans.  It sure does improve the life of politicians and bureaucrats though.  It improves the lives of some special interests who have great influence in Washington also, but this is at the expense of most Americans.

Obama called for equal pay for equal work.  We really need to have government bureaucrats examining every business and determining what the work that contributes to the bottom line is and who is contributing what to that.  I can only imagine such a bureaucrat coming to my laboratory and trying to make this assessment in a rational way.  One brief visit and he will know exactly what each of my employees is worth.  Hot diggity damn.  It is so easy.  Bureaucrats must be the best managers anywhere.  They are truly a miracle.  Oh, and if women are to be paid equally to men, are short people to be paid equally to tall people also?  Are unpleasant people to be paid equally to pleasant people?  Are good analytical report writers to be paid as little as bad report writers?  Is the bureaucrat to make an accurate assessment of each employee's ability to sell our analytical services to a potential client when they call?  Mind you, this bureaucrat is probably not going to take up residence for weeks as required to do this, assuming he has the business and scientific background to do this in any amount of time.  Well, the fact that he works for government probably precludes any likelihood that he has such abilities.

Obama says that employees should have fair wages and be paid well for overtime work.  Somehow he forgot to mention that employers should have fair income and overtime.  Employees should have  paid days off he says, but he says nothing about paid days off for those who risk their investments to create jobs for those employees.  Somehow it is simply assumed that employers can both provide jobs and take on almost any costs related to employing people.  The politician decrees that which will provide him more votes and the employer must deliver.  Or, the employer shuts down his business, which is exactly why every year for the last six years more businesses have gone out of business than were started up.  Not so many people want to start businesses in this environment either.  This is a very important part of Obama's record on the state of the economy.

Obama wants to provide daycare tax credits.  Never mind the national debt and the deficit.  Never mind the fact that with so few people working full-time, many parents are home and able to care for their own children, except they have little income.  Never mind that the burden of paying for the costs of this "free" daycare benefit will fall upon the record small fraction of the people who are employed full-time.  Never mind that once government pays for daycare, it will likely want to regulate and control it even more.  Of course Obama wants to move daycare services out of the private sector into the government sector.  And we can be sure he wants it unionized.

Obama wants more Americans in unions.  Of course, union leaders provide the Democrat Socialist Party with a very large fraction of their campaign contributions.  Americans have plenty of opportunity to choose to be union members now, but in the private sector they have chosen to leave the unions in droves over the years.  But, that free vote by Americans must be overcome by the Great Socialist Leader.

Obama wants to upgrade skills with 2 years of free community college.  Community colleges are nearly free now.  They are also very much like grades 13 and 14 in a government-run education system which is not providing a very good education.  The inflow of money from the federal government for this additional subsidy will surely mean more control of education by the federal government.  This is what we need, more government indoctrination of youth about how many victims we have in our society and how big government is the means to the end of their victimization as it attacks any group that is perceived as better off than some other group.

As tradition demands, the socialist called for more job training on top of the many tens of largely spectacularly unsuccessful training programs created over the years.  Obama wants companies to train employees more and to offer paid apprenticeships at the higher minimum wage he is advocating.  Obama has no concerns whatsoever for the cost of labor to businesses.  In his world, organizations just naturally operate at a deficit forever.  Never mind that the businesses in the private sector cannot do that.

Obama claimed great success in helping veterans get jobs.  The fact that veteran unemployment is much higher than the general unemployment rate was not noted.

Obama does not want a single pipeline, but he wants more infrastructure spending.  How about allowing many pipelines to be built, not just one?  Obama and the Democrats generally have been slowing down pipelines all over the country.  The Bakken shale oil and the Marcellus Shale Oil and Gas formations are supplying more fuel than they are able to transport out through pipelines.

Obama wants more trade authority, but his own party is the primary opposition to new trade agreements.

Obama wants a Precision Medicine Initiative, but I thought he would have already eliminated disease all around the world as he pledged to do in his acceptance speech of the first Democrat Party nomination to run for the presidency.  Apparently, Obama the Great Healer has not yet carried out this pledge.

Obama claimed we are a nation of laws.  He said there is one set of rules for all.  Somehow, he is not one of "the all," given his obvious violations of the ObamaCare and immigration laws.  He is an exempted individual.  The rest of us must surrender our individuality and be blanketed with smothering laws and regulations in his worldview.  But he is the exception, because he swore he do his best to improve America when he became President.  I thought he swore to uphold and defend the Constitution, which is the People's mandate for a very limited government that implicitly recognizes that there are only a few things government can do without infringing upon our individual rights and those individual goals for our personal happiness.  But no, Obama thinks that it is best for America that he ignore the Constitution's limits on his power, on the scope of government power generally, and on the separation of powers.

He claims he wants a free and open Internet, despite his Federal Communications Commission making untiring efforts to gain more control over the Internet.

Obama say that Americans do not mind paying our fair share of taxes.  We need to eliminate loopholes by keeping companies from investing abroad and rewarding those investing here he says.  Well, yes more government control over businesses and their foreign investments is really likely to simplify the tax laws and make them more friendly to business prosperity!  Never mind that much of the increased company investment in overseas operations is due to lower taxes there, less smothering regulations in many cases, no ObamaCare there, and the uncertainties to business investors of the arbitrary and capricious actions of a mad socialist in the White House.

Obama wants to tax accumulated wealth.  So, we are to increase the death tax.  Yes, no one should be able to pass the fruits of a lifetime of productive labor on to his children and grandchildren.  That is just too awful to imagine.  No, such successful businessmen should give up their wealth to politicians and bureaucrats who will, of course, spend that money more wisely than will the progeny of the wealth producer.  Obama is sure of this.  We are not to question this.  We are not to think that many a businessman not able to pass on his wealth will stop creating wealth at an earlier age.  We are not to understand that the individual right to the pursuit of happiness surely includes the right to the happiness of knowing that one has helped ease life for one's children and grandchildren.  Socialists cannot understand this.

Obama wants to eliminate worldwide poverty.  The only way we can help to do that is by creating the example of a nation that lives by the American Principle of limited government dedicated only to protecting the equal, sovereign individual rights to life, liberty, property (wealth), self-ownership (denied by ObamaCare), and the pursuit of personal happiness.  To the degree that nations do this, they prosper.

Obama claimed 14 of the 15 hottest years were in this century.  He had his NOAA and NASA GISS manufacture this data.  Even the manipulated and forged data does not show anything like the increase predicted by the climate computer models that are supposed to be the basis for the claim that mankind is threatened by catastrophic man-made global warming.  In fact, while the temperature is supposed to be rising rapidly, it is stagnant.  Flat.  Going nowhere.  Proving that the computer models based on what Obama has called the "settled science" are simply wrong.  So, the "settled science," we must conclude, is wrong.  So, the rational man does not have the concern Obama does about an impending climate catastrophe.  Unlike Obama, the rational man will not take harmful actions against fossil fuels, those same fuels that have brought us close to the energy independence that Obama claimed was a strong point in our economy in this very speech.

Obama will responsibly shut down Gitmo by sending more of the detainees back to Yemen, whose capital has just fallen to violent, Islam-spreading terrorists.

Similarly, the rest of Obama's claims of success in foreign policy and defense are just too ridiculously inflated to spend further time pricking them with needles.

Obama wants a nation with a hugely dominant and controlling government sector and a weak, groveling private sector.  He wants a nation in which no one has an individual nature.  He does not want individuals choosing their own values.  He does not want lone wolf individuals managing their own lives and pursuing their own happiness.  No, he wants politicians and bureaucrats to tell us what our values must be and to micromanage our lives.  He is sure that self-management is beyond our competence.  He is sure that he and his allied Progressive Elitists will do a better job of managing our lives than we ourselves will.  He is religiously sure of this, even though he does not know any of us.  Can you imagine the unreality that soaks the mind of someone who is sure he is smarter than anyone else and so smart that he can manage the lives of 312 million or so Americans, none of whom he even knows?

State of the Jobs Recovery -- What Recovery?

Any time a new Bureau of Labor Statistics (BLS) report comes out with a positive number of people hired, Democrat Socialists cheer and proclaim Obama a wise and great socialist leader.  Let us put some perspective on the current state of employment in the USA:

The percentage of the population 16 and over employed according to the BLS is:

Yes, the average slope from the bottom of the recession unemployment well is positive.  But the extent of the recovery is still, after 8 years, very small.  Years ago, without very detrimental federal government policies, we would have recovered to the point of returning to employment rates close to those established in the 2004 through 2006 period.  The employment rate is now more than 4% lower than in late 2006 and more than 3% lower than early 2004.  But the never-to-be-detered Progressive Elitist only sees the data from the bottom of the dip in October 2013 to the small peak in November 2014 and attributes that increase in employment to their man Obama.

A sane man asks, "What change of Obama's policies do they imagine might have caused about a 1% improvement over that one year period?"  I do not see that he has accomplished anything that would help the economy, except having lost Democrat control of the House of Representatives in the 2010 election and then for most of this year looking as though he was going to lose control of the Senate in the 2014 election as well.  The looming loss and then the loss itself of the Democrat Socialist Senate surely did something positive to fuel the increasing optimism of the many small businessmen polled by the NFIB.

Let us look at the BLS data on the Labor Participation Rate for those 16 and older:

It sure is hard to find any good news here.  The labor participation rate is doing nothing but going downhill.

Let us look at the full-time employment rate and the under-employed rates for Americans 18 and over according to Gallup:

Payroll to population percentage counts those who are employed at least 30 hours a week.  Gallup uses the entire population, not just that part of a certain working age range population to calculate the percentage.  The 30 hour or more percentage has remained remarkably flat from the depths of the employment recession in 2010.  The percentage of people underemployed includes those who are part-time or unemployed.  These are all people who want to and can work more.  These underemployed people have been decreasing somewhat, but since the percentage with full-time employment has not increased, this means that more and more of them have simply dropped out of the labor force, consistent with the Labor Force Participation graph of the BLS shown above.  Their numbers are decreasing only because they are losing their desire to work.

People lose their desire to work when they see no hope for a decent job.  They lose their desire to work when they see that being on welfare provides them with more benefits than working does.  This removal of Americans from the working force is the one and only accomplishment of Obama.  It works for him and the many Progressive Elitists who want more and more people dependent upon the mercies of Big Government for their survival and therefore eager to vote for more socialism.

Debunking the Progressive Elitist Claim that Minimum Wage Laws Increase Employment

Back during the Great Depression, the Progressive Elitist mantra was that if only companies would pay their employees more, all would be well in the economy.  FDR pressed businessmen on this over and over, while many unemployed people would have been eager to work for less.  Record unemployment lasted for a decade due to this wrongheaded Progressive policy, along with a host of other economically illiterate Progressive policies.

Recently, there have been a host of Progressive Elitist claims that raising the minimum wage results in more employment and an improved economy.  I will address that claim, but first it is important to realize that minimum wage laws are an immoral deprivation of very fundamental and essential individual rights.  Everyone owns their own mind and body.  They have the right to associate with others according to their own choice in the very broadest sense.  Specifically, the right to cooperate with others for economic purposes and to earn a living is a very broad right.  The employer has a right to hire and others have a right to provide their labor under a voluntary agreement between the employer and the employee.  It is this panoply of rights and voluntary choices to cooperate between individuals that the Progressive Elitists want to trample.  They are determined to use force to impose their own imperious will upon others.

A great many Americans believe that it is not practical to be a man of principle, so the moral argument holds no sway with them.  They are determined to march out into a complex world as unprincipled as they can be, but for some vague notion that they want to help the underdog or the greatest number of people.  Now this means they are perfectly willing to hurt many other people and they are willing to substitute their judgment for that of others, even though they may not know those whose judgment is over-ridden and do not know the circumstances that might affect their choices.  As though not knowing the people affected by their directives to the government is not enough, they have to understand the many results set in motion by their directives without the aid of principles.  The simplifying and integrating functions of principles having been given up, the Progressive Elitists are without sufficient rational tools to understand reality and the consequences of their tyranny over others.  The chaotic results seldom match their intentions and are generally harmful to those whose individual rights and choices have been trampled.

 The Democrat Party is on a campaign to see the minimum wage raised in as many locales and states as possible.  They would also like to see the federal minimum wage increased.  There are more and more columns and articles about how some community raised the minimum wage and there was no local economic disaster in this or that town.  More recently, two University of Delaware economists, Saul W. Hoffman and Wai-Kit (Ricky) Shum have claimed there were no negative effects due to increases in the minimum wage in 13 states between 1 January 2011 and 1 January 2014.  This recent study, actually not even complete yet, is supposed to make us forget the history of the last staged increase in the federal minimum wage in 2007, 2008, and 2009.  See Democrats Eat the Young: Minimum Wage Case in Point, where I agree with the old Economics 101 viewpoint that higher wages mean fewer jobs, just as higher prices mean fewer sales.  Joe Conason wrote a recent column calling this a myth and citing the work of Hoffman and Shum as his proof.

Apparently, Conason not only does not know economics, but he does not read very well.  He claims that 13 states raised their minimum wage above the federal minimum wage earlier this year.  This is not true.  Hoffman and Shum looked at the 13 states that raised their minimum wage from 1 January 2011 to 1 January 2014 as noted above and Conason apparently did not even take note of that.

I am going to present some data dealing with the factors that affect the minimum wage impact on a state by state basis and the resulting employment of young people between the ages of 16 and 24 in the table that follows.  One very important point is that the minimum wage impact on a local economy is going to be proportionate to the cost of living in that local economy.  For this reason, as I have often argued, the policy of setting a federal minimum wage is very foolish.  The following table will provide an effective comparative minimum wage adjusted for the differing costs of living on a state by state basis.  One of the things you will see is that many of the states that have increased their minimum wage above the federal minimum wage are actually on an adjusted basis below most of the states whose minimum wage is the federal minimum wage.  If their cost of living adjusted minimum wage is below that of other states who use the federal minimum wage, then they actually have an effectively cheaper youth labor force and the employment of such young people should actually benefit from that cost advantage.

State	Cost of Living Q2 - 2013	Minimum Wage 2012 ($)	Minimum Wage Adjusted for Cost of Living ($)	Unemployment Ages 16-24 2012 (%)	Mercatus Economic Freedom Score For 2011
Alabama	92.4	7.25	7.85	16.3	31.33
Alaska	131.1	7.75	5.91	14.8	7.21
Arizona	100.8	7.65	7.59	17.6	34.35
Arkansas	91.0	7.25	7.97	17.7	-8.56
California	128.6	8.00	6.22	20.2	-71.82
Colorado	99.7	7.64	7.66	16.7	11.56
Connecticut	133.8	8.25	6.17	17.0	-21.17
Delaware	106.9	7.25	6.78	15.2	24.43
Florida	97.8	7.67	7.84	16.4	21.67
Georgia	92.0	7.25	7.88	20.6	31.89
Hawaii	161.7	7.25	4.48	13.5	-56.36
Idaho	89.4	7.25	8.11	17.3	51.82
Illinois	94.9	8.25	8.69	18.5	-13.19
Indiana	90.0	7.25	8.06	14.9	14.62
Iowa	91.3	7.25	7.94	11.0	18.66
Kansas	91.8	7.25	7.90	13.2	9.03
Kentucky	90.1	7.25	8.05	16.9	5.05
Louisiana	94.2	7.25	7.70	16.7	-7.74
Maine	109.0	7.50	6.88	16.6	-35.51
Maryland	122.3	7.25	5.93	13.4	-17.31
Massachusetts	121.2	8.00	6.60	12.2	-7.03
Michigan	94.4	7.40	7.84	16.9	-5.36
Minnesota	100.9	7.25	7.19	11.0	-7.79
Mississippi	88.7	7.25	8.17	23.0	-19.25
Missouri	92.9	7.35	7.91	16.1	30.64
Montana	98.4	7.65	7.77	11.1	30.53
Nebraska	88.9	7.25	8.16	8.9	17.35
Nevada	94.9	8.25	8.69	17.6	1.68
New Hampshire	120.2	7.25	6.03	13.4	41.17
New Jersey	129.5	7.25	5.60	18.2	-69.19
New Mexico	92.5	7.50	8.11	12.6	3.50
New York	134.5	7.25	5.39	18.0	-133.59
North Carolina	95.6	7.25	7.58	18.8	12.80
North Dakota	99.7	7.25	7.27	7.2	65.72
Ohio	92.3	7.70	8.34	12.6	-2.54
Oklahoma	90.0	7.25	8.06	10.8	50.10
Oregon	106.9	8.80	8.23	17.9	5.62
Pennsylvania	101.1	7.25	7.17	13.4	0.75
Rhode Island	125.8	7.75	6.16	17.2	-35.89
South Carolina	95.0	7.25	7.63	22.9	22.45
South Dakota	99.7	7.25	7.27	9.9	72.76
Tennessee	89.7	7.25	8.08	13.5	62.12
Texas	91.4	7.25	7.93	13.5	30.52
Utah	93.0	7.25	7.80	11.9	37.72
Vermont	118.3	8.46	7.15	13.1	-39.39
Virginia	95.9	7.25	7.56	16.8	45.10
Washington	101.6	9.04	8.90	16.7	2.69
West Virginia	96.6	7.25	7.51	15.7	-35.97
Wisconsin	95.1	7.25	7.62	12.9	-13.33
Wyoming	99.5	7.25	7.29	12.7	-16.35

Because Democrats are more eager than Republicans generally to raise the minimum wage and Democrat-controlled states are usually higher cost of living states, the small increases in the minimum wage in those Democrat states do not usually make them expensive states in which to hire young people.

Now let us compare the results for those states with an adjusted minimum wage under $6.90 with those having an adjusted minimum wage greater than $7.60:

These states have an adjusted minimum wage under $6.90:

State	COL Adj Min Wage ($)	Unemployment Ages 16-24 in 2012 (%)	Mercatus Economic Freedom Score
Alaska	5.91	14.8	7.21
California	6.22	20.2	-71.82
Connecticut	6.17	17.0	-21.17
Delaware	6.78	15.2	24.43
Hawaii	4.48	13.5	-56.36
Maine	6.88	16.6	-35.51
Maryland	5.93	13.4	-17.31
Massachusetts	6.60	12.2	-7.03
New Hampshire	6.03	13.4	41.17
New Jersey	5.60	18.2	-69.19
New York	5.39	18.0	-133.59
Rhode Island	6.16	17.2	-35.89
Average	6.01	15.81	-31.26

The states in blue above have a state minimum wage greater than the federal minimum wage.  Six of the twelve states, or exactly 0.50 of these cheap youth labor states have minimum wages higher than the federal minimum wage.

These states have an adjusted minimum wage over $7.60:

State	COL Adj Min Wage ($)	Unemployment Ages 16-24 in 2012 (%)	Mercatus Economic Freedom Score
Arkansas	7.97	17.7	-8.56
Colorado	7.66	16.7	11.56
Florida	7.84	16.4	21.67
Georgia	7.88	20.6	31.89
Idaho	8.11	17.3	51.82
Illinois	8.69	18.5	-13.19
Indiana	8.06	14.9	14.62
Iowa	7.94	11.0	18.66
Kansas	7.90	13.2	9.03
Kentucky	8.05	16.9	5.05
Louisiana	7.70	16.7	-7.74
Michigan	7.84	16.9	-5.36
Mississippi	8.17	23.0	-19.25
Missouri	7.91	16.1	30.64
Montana	7.77	11.1	30.53
Nebraska	8.16	8.9	17.35
Nevada	8.69	17.6	1.68
New Mexico	8.11	12.6	3.50
Ohio	8.34	12.6	-2.54
Oklahoma	8.06	10.8	50.10
Oregon	8.23	17.9	5.62
South Carolina	7.63	22.9	22.45
Tennessee	8.08	13.5	62.12
Texas	7.93	13.5	30.52
Utah	7.80	11.9	37.72
Washington	8.90	16.7	2.69
Wisconsin	7.62	12.9	-13.33
Average	8.04	15.51	14.42

In these expensive adjusted minimum wage states, 11 of the 27 states or 0.41 of them have minimum wages set higher than the federal minimum wage.  So, in 2012 a larger fraction of the actually inexpensive states had a minimum higher than the federal minimum wage compared to the expensive adjusted minimum wage states.  Despite having the advantage of a slightly cheaper effective minimum wage, the states with an adjusted minimum below $6.90 had a slightly higher youth unemployment rate of 15.81% compared to the effectively more expensive youth wage states with an unemployment rate of 15.51%.

Why were these inexpensive youth wage states not better at employing youth?  The answer lies in the last column in which I have provided the Mercatus Center state economic freedom rating for 2011 from their Freedom in the 50 States, 2013 Edition.   All of the inexpensive states have costs of living greater than the national average.  This is usually associated with a dense population and/or with Democrat Party control.  The average Mercatus Center economic freedom rating of -31.26 is very low compared to that of the expensive youth wage state freedom rating of 14.42.  Youth employment tends to be better when businesses thrive and businesses definitely thrive better with greater economic freedom.  People at the minimum wage level are the least productive workers in the economy, so their effect on how the economy flourishes is rather small.  The effect of a flourishing economy on them is much greater!

Now let us examine the list of 13 states that increased their minimum wage between 1 January 2011 and 1 January 2014.  These were the states examined by Hoffman and Shum.  The average cost of living index in these states is 110.2 and the adjusted minimum wage is just $7.55.

State	Min. Wage($) 1 Jan 2014	Cost of Living Index 2013	Adjusted Min. ($) Wage for COL	Mercatus Center Economic Freedom
Arizona	7.90	100.8	7.84	34.35
Colorado	8.00	99.7	8.02	11.56
Connecticut	8.70	133.8	6.50	-21.17
Florida	7.93	97.8	8.11	21.67
Missouri	7.50	92.9	8.07	30.64
Montana	7.90	98.4	8.03	30.53
New Jersey	8.25	129.5	6.37	-69.19
New York	8.00	134.5	5.95	-133.59
Ohio	7.95	92.3	8.61	-2.54
Oregon	9.10	106.9	8.51	5.62
Rhode Island	8.00	125.8	6.36	-35.89
Vermont	8.73	118.3	7.38	-39.39
Washington	9.32	101.6	8.46	2.69
Average	8.25	110.2	7.55	-12.67

These 13 states were compared to the remaining 37 states.  Seven of those remaining states had state minimum wages that were higher than the federal minimum wage.  What is more, since the states with changes had an average cost of living index of 110.2, the 37 remaining states had to have an average cost of living index of 96.4.  If we assume that each of these states had a minimum wage at the federal level of $7.25, the cost of living adjusted average would be $7.52.  This is almost equal to the $7.55 adjusted minimum wage to which Hoffman and Shum are comparing these states.  In fact, the seven states with higher than the federal minimum wage who did not raise their rate in the time-frame of the Hoffman and Shum study more than make up the difference.  Taking their rates into account yields an average adjusted minimum wage for the non-raising set of 37 states to $7.64.

So, Hoffman and Shum are trying to claim that a higher minimum wage does not hurt those states which actually have a slightly lower adjusted minimum wage when you compare them to states with a higher effective minimum wage!  Well, surprise, surprise.  How wrongheaded can you be Hoffman and Shum?

On average, the states that have raised their minimum wage rates above the federal level have done so because of the high cost of living in their state.  This is most definitely not an argument for raising the national minimum wage rate, which would only hurt the lower cost of living states to the advantage of the higher cost of living states.  This would also have the moral effect of hurting the freer states to the advantage of the more enslaved states.

Neither does the Hoffman and Shum comparison tell us anything about whether the increases in the minimum wage in the 13 states they compared to the non-raising 37 states gained or lost relative to the economic results they would have had without raising the minimum wage.  The study is useless on that question.

But from the above table we do see that these minimum wage raising states suffer with low economic freedom ratings.  Their attempt to interfere with voluntary employer-employee cooperation is consistent with that low regard for individual freedom.  We know for sure that the states with more economic freedom do out-perform those states with less economic freedom in terms of job growth and goods and services production growth.

The Hoffman and Shum and the Conason arguments for raising the minimum wage are here shown to leak like a sieve.