Obama's DOL Gives Away $100 Million to Stop State Layoffs

Mike Shedlock
Posted: Aug 17, 2012 12:01 AM

$100 million sounds like a lot of money, but it does not go very far these days. It is less than .01% of the deficit.

The problem with such thinking is government programs start out "small" then end up costing tens of billions of dollars as each party tries to outdo the other in an attempt to buy voters.

Please consider Labor Dept. Attempts to Stop Layoffs by Giving $100 Million to States to Subsidize Payrolls

The Labor Department announced on Monday that it will be awarding almost $100 million in grant funding to states to prevent layoffs by allowing businesses to pay employees as part-time workers and the federal government will pick up the tab for the cost of a full-time paycheck.

The “work-sharing” program was passed as part of a Republican-led bill in the House, H.R. 3630, and Senate Amendment 1465 to extend the payroll tax deduction and unemployment benefits. In February 2012, President Barack Obama signed the bill into law, which included the $100 million in funding.

The work-sharing programs “allows employees to keep their jobs and helps employers to avoid laying off their trained workforces during economic downturns by reducing the hours of work for an entire group of affected workers,” according to the Labor Department.

The grants will be given to states that apply and meet certain requirements, including having short-term compensation programs in place that meet federal guidelines. Workers will have “wages compensated with a portion of their weekly unemployment compensation payments,” according to the Labor Department.

The largest pot is available to California, with $11,593,587 in grant funding listed. New York and Florida can get around $6 million, with Illinois and Pennsylvania eligible for more than $4 million each.

Reader Andrew who sent me the link, writes ...

  1. A $100 million program for all 50 states is clearly just a political token to say that they have done something about the problem.
  2. The money will probably go to those companies that have close connections to the politicians in power (i.e., those who make sizable campaign contributions).

Andrew is correct on both counts. The problem with #1 is politicians are likely to want to do "more" as soon as this program kicks off.

The idea that government should be supplementing anyone this way is of course ludicrous.

Percentage Growth in Government Jobs vs. Private Jobs vs. Population Growth; Facts and Consequences

Keynesian clowns are concerned about the decline in government jobs in the past few years. They want the government to step up spending and hire more workers to make up for the loss of jobs in the private sector.

Here is a chart from reader Tim Wallace that will help put the recent loss of government jobs in a better perspective.

Percentage Job Growth vs. Population Growth

click on any chart for sharper image

The growth in government jobs is not sustainable nor is there any genuine excuse for it other than political pandering and vote-buying operations.

The deviance between private bobs and population growth is easily explained by the entry of women in the workforce.

Percentage Male and Female Job Growth vs. Population Growth

Note how the percentage growth of men in the labor force closely tracks population growth the percentage growth of women in the workforce has skyrocketed.

Employment in Millions

Entry of women in the workforce allowed much higher household debt levels than ever before.

Now what?

I'll tell you what. Ability of households to take on more debt has peaked. There are no more female workers to add to the pool. Everyone male or female is working (or is looking for work) whether they really want to or not.

Women actually overtook men in the work force way back in 1990.

Percentage of Total Workforce That is Female

Unfortunate Facts

    1. The unfortunate fact of the matter is everyone needs to work to pay off accumulated debts and meet living expenses, but the jobs are not there.  
    2. The second unfortunate fact is we cannot afford and do not need all of the existing government jobs.
    3. The third unfortunate fact is demographics are no longer favorable. Indeed, there are too few jobs, too much student debt, and too few workers supporting too many retirees on Social Security.

      Those unfortunate facts happen to be highly deflationary.

      Demographic Time Bomb

      For a graphical representation of point number three above, please see Demographic Time Bomb in Pictures and Dollar Amounts; Ratio of Social Security Beneficiaries to Private Employment Now Exceeds 50%


      1. Much pain awaits the US. 
      2. Public worker pension promises have been made that cannot possibly be delivered.
      3. The US simply cannot afford to be world's policeman. Military spending must come down or it will destroy us.
      4. Medicare and Social Security problems must be addressed as well.
      5. Upcoming generations are highly likely to see a drop in standard of living vs. the baby boomers. This has never happened in US history.

      Heartaches by the Number

      Please consider Heartaches by the Number
      • Just 14% expect today’s children to be better off than their parents
      • Just 31% believe the U.S. economy will be stronger in one year
      • Just 27% think the country is heading in the right direction. 
      • Just 24% of American Adults believe the job market is better than a year ago
      • 44% think the job market is worse, up 15 points from June

      Demographics Suggest Majority is Right

      I happen to agree with the majority who think those now graduating from high school will not be better off than their parents.

      There are too few jobs, too much student debt, and too few workers supporting too many retirees on Social Security.

      Who Will Address the Problems?

      As I look out on the political landscape, I see little hope that either Republicans or Democrats will address these problems.

      Republicans refuse to address the income side of the balance sheet, and Democrats refuse to address the spending side.

      Neither party is willing to tackle military spending.

      How long the market lets these can-kicking exercises continue is anyone's guess, but the longer this goes on, the more pain there will be.

      The culmination will be a currency crisis at some point down the road. Timing is very problematic. Japan proves debt-to-GDP ratios may go on much further than anyone thinks possible.

      Mike "Mish" Shedlock