That Uncertainty Word—I Don’t Think It Means What You Think It Means

January 29th, 2012 at 11:56 am

In numerous posts, I’ve argued that the evidence doesn’t come close to supporting the conservative talking point that what’s holding back hiring is Obama-driven regulatory uncertainty.

Well, here’s another data nugget: the share of layoffs, job losses, and UI claims that employers report are due to government regulations or interventions.  They are tiny—expect in one case in the table, never more than half of one percent.  And in the most recent quarter, they were all about zero (technically, the number reported was too small to meet BLS sampling criteria).

Source: BLS, Table 2

My point is not simply to dispense with an erroneous talking point, but to try to stop the key-dangling-look-over-here-not-over-there routine re the major economic problem we still face: inadequate demand.

Moreover, the policy implications of getting the diagnosis wrong are steep.  The regulatory diagnosis points toward dismantling stuff like financial and health care reform—particularly nuts, btw, since neither has really been implemented yet.  The insufficient demand diagnosis points toward stimulus.

And if we can’t read the right signs, we’re going to stay lost.

Data Note: A layoff is an event involving the filing of 50 or more initial UI claims by an employer during a 5-week period, with at least 50 workers separated from a job for more than 30 days.  Separations include job losses from such an event, whether or not the worker claimed UI.


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7 comments in reply to "That Uncertainty Word—I Don’t Think It Means What You Think It Means"

  1. Michael says:

    So is there some point at which we can say, “These people are not speaking in good faith,” and have a real discussion which involves actual facts?

  2. Geoff says:

    I see where deregulation really worked in the Financial Environment.

    Isn’t that how we got here?

    Regulation in its best, most utilitarian form should provide a framework for good practices.

  3. Greg says:

    Yet another among many great posts Dr. J, it’s cool to see you bring some data to the “uncertainty” argument by the GOP presidential hopefuls and candidates.

    Just a quick question: For future GOP presidential primary debates, it possible for you to follow up with the moderators and ask them questions about the GOP solutions to solve our economic woes?

    You articulate very well how much of what the GOPers say lacks empirical evidence, I was wondering if you could start a dialogue with Wolf Blitzer, John King, Chris Matthews and blog about their responses. I’d be interested to find out what they think their job should be this election cycle.

    Aside from Politifact which has been an epic fail, I’m interested to find out if the moderators/journalists in televised GOP debates feel obligated to correct the candidates on: the measurable success of the 2009 stimulus in preventing a deeper recession (cue Mark Zandi); the $100 billion in savings over ten years the CBO calculated America will get from President Obama’s Health Care Reform law (ACA); the cost shifting to families and federal budget busting elements of Cong. Paul Ryan’s plan to save Medicare.

    What many general observers see is the conservative media bubble on full display in these debates, but the hosts of the debate appear to have no obligation to challenge the candidates on their FOX News-Rush Limbaugh-fact free economic arguments and answers. The moderators appear to be letting the GOP spread their myths and misinformation more broadly.

    When I see the debates, I feel the need to hide the children, as the GOP has already begun to scare the horses.

  4. Tom in MN says:

    Can you explain the mechanism of how more regulations led to layoffs?

    It seems to me that adding financial regulations causes companies to need to hire more accountants, add more environmental regulations and they hire more techs to deal with them. If everyone in the industry is affected the same, they can pass the costs along as all prices rise a bit. Get rid of major regulation, suddenly you don’t need the extra accountants, etc. So I don’t get the correlation with more regulations and job losses.

  5. Jean says:

    Thanks for the link to this news release. This is fascinating. It clearly shows that demand is the primary reason for the Layoff events. It also shows that restructuring and financial issues are part of the picture — exactly the data I was hoping to know about. But the good news is that the Layoff events are beginning to decline, and business is considering a recall of their workers. Also, it appears that there was an increase in work movement toward domestic outsourcing and less out-of-country outsourcing. But those numbers are pretty small, might not mean much.

  6. Jean says:

    The amount of lying going on in the Republican Party and on Fox News is inconceivable!