Low Unemployment Rate Proves Pro-Growth Policies Work

By Tim Doescher, Associate Director, Coalition Relations at The Heritage Foundation.

The very positive April jobs report supports the idea that pro-growth policies are the best way to create more jobs, and attract more people into the workforce to fill them.

In April, the U.S. economy added 164,000 jobs (slightly lower than experts’ predictions) and the unemployment rate reached its lowest level in over 17 years, at 3.9 percent. That’s down from 4.8 percent, the rate when President Donald Trump took office. In addition to this, the U.S. is setting employment records for African-Americans, women, Hispanics, and workers without high school diplomas.

The report also touts impressive gains in sectors that have been targets of the Trump administration, including manufacturing (+24,000 jobs), construction (+17,000 jobs), and mining (+8,000 jobs). Since Trump was elected in November 2016, these sectors have seen consistent, steady growth.

Other notable gains in April occurred in professional and business services (+54,000 jobs), and in health care (+24,000 jobs). These two categories combined have created 709,000 jobs over the past 12 months.

At the end of each jobs report, the Bureau of Labor Statistics revises jobs numbers from the two months preceding, meaning these numbers have a high potential to change for the positive and the negative. Fortunately, the revisions for February and March said the economy created 30,000 more jobs than previously reported, bringing the three-month average to 208,000 jobs.

However, there is one concerning number in the jobs report: the reason the unemployment rate is dropping so low is a decline in the labor force of nearly 236,000.

The impressive unemployment number (3.9 percent) measures the people who are not employed, but still in the labor force. That means 96.1 percent of those who want a job found one.

But what about the people who are able to work but have given up looking? This is what the labor force participation rate measures.

The report notes there are 257,272,000 people that could be working in the United States. Of those, 161,527,000 people are currently in the labor force, giving us a labor force participation rate of 62.8 percent. This means there are 95,745,000 people missing from the labor force.

There are several possible reasons for this. Whether it be the baby boomers retiring, the growing workforce skills gap, or people unwilling to give up government benefits, many Americans are apparently not motivated to jump back into the workforce.

It was recently reported that there are 6.6 million open jobs in the U.S., and a similar number of people who could fill those jobs. To get these Americans back into the labor force, business owners will need to be more competitive. This could manifest itself through increased wages, offering training, and more flexibility.

What’s the government’s role in this? Get out of the way!

Pro-growth reforms like tax cuts and regulatory reforms give business the incentive to invest, and plan long-term. This means that business owners will buy new equipment that helps them run more efficiently, and more importantly, enables them to offer higher wages.

While it is a good thing that wages and earnings have steadily been increasing—average hourly earnings are up 67 cents over the last year—many able-bodied people are still on the sidelines.

The good news is that may soon change because of tax reform, a concerted effort to shrink senseless business regulation, and an improved posture from Washington to get out of the way. For instance, we are seeing small businesses flourish. With more money in their pockets, business owners will be able to do the things necessary to make them more competitive in a tight job market.

Here is the reality: We only have so many people in this country able to fill the open positions. Companies do not need a government program to fill them. Instead, they need a vibrant, growing economy with low taxes and fair regulations. So let’s make the  tax cuts stronger and permanent, and continue cutting regulations.

In pitching tax cuts as a way to stimulate economic growth, President John F. Kennedy famously said, “A rising tide lifts all boats.” Since Trump took office, we are seeing better economic growth, business confidence on the rise, and job opportunities for Americans abound. The tide is rising, and if Washington continues to get out of the way of business, the number of Americans in the workforce will rise as well.

*To read this commentary on The Daily Signal, click here.


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The Stupid Party gets smart

By Stephen Moore, Distinguished Visiting Fellow, Project for Economic Growth, Institute for Economic Freedom and Opportunity at The Heritage Foundation. Republicans have long been known as “the stupid party.” They do stupid things, like waiting until mid-November to pass a must-pass tax cut that should have been done by April.…

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Democrats in Meltdown Mode as Obamacare Individual Mandate Moves Toward Extinction

By Emily Miller, award-winning journalist and author of the book "Emily Gets Her Gun" about gun control policies. Democrats, of course, oppose the tax cuts moving through Congress. They believe government knows better how to spend your money than you do. But what has really got their goat is eliminating the Obamacare…

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Q&A: Rep. Jim Banks Talks About the Benefits of Tax Reform

Rep. Jim Banks, R-Ind., spoke to The Daily Signal’s Genevieve Wood earlier this month, before the tax reform bill passed the House, about how eliminating the state and local tax deduction will benefit middle- and working-class families. Below is a transcript of the conversation, edited for style and clarity: Wood:…

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How the GOP Tax Bill Will Affect the Economy

By Parker Sheppard, Senior Policy Analyst, Center for Data Analysis at The Heritage Foundation, and David Burton, Senior Fellow, Roe Institute for Economic Policy Studies at The Heritage Foundation. The House passed its version of the Tax Cuts and Jobs Act on Thursday, a bill that would reform the tax…

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Repeal HIT on consumers and small businesses

By David Burton, Senior Fellow in Economic Policy, Roe Institute for Economic Policy Studies, Institute for Economic Freedom and Opportunity at The Heritage Foundation. After a one-year moratorium, a new Obamacare tax will kick in this January. As a result, premiums for individual and small group health insurance plans will…

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Taxpayers shouldn’t be forced to subsidize California’s spending addiction

By Dan Holler, Vice President, Heritage Action for America. Buried within the more than 74,000 pages of our nation’s tax code lies a special tax deduction that allows state and local governments with excessively high taxes to shift part of the burden to taxpayers in other states. In other words,…

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Congress Is Putting Itself in a Straightjacket on Tax Reform

By Bill Walton, Host of "Common Ground with Bill Walton" and Trustee of The Heritage Foundation. It’s beginning to look like Republicans in Congress are going to squander yet another opportunity to do something big to boost the economy. Our pro-prosperity president wants a pro-growth tax package, but our Republicans…

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Bill Would Protect Pro-Life Nurses Like These 3 Women

By Ian Snively, Member, Young Leaders Program at The Heritage Foundation. Pro-life members of Congress have introduced legislation to protect health care providers from being compelled to provide abortions under threat of losing their jobs. Rep. Chris Smith, R-N.J., held a press conference on the House Triangle outside the U.S.…

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Congress Could Soon Face a Budget Fight. Here’s How Lawmakers Can Rein in Spending.

By Romina Boccia, Deputy Director, Thomas A. Roe Institute for Economic Policy Studies and Grover M. Hermann Research Fellow at The Heritage Foundation. Two thousand seventy-five dollars. That’s every American’s personal share of the fiscal year 2017 budget deficit. The total deficit? Six hundred sixty-six billion dollars. It’s the American people…

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The Ethanol Mandate Promotes Swamp Dominance, Not Energy Dominance

By Nicolas Loris, Herbert and Joyce Morgan Fellow in Energy and Environmental Policy, Center for Free Markets and Regulatory Reform at The Heritage Foundation, and Samantha Block, Member, Young Leaders Program at The Heritage Foundation. Washington is known for political arm-twisting. There’s a good reason for that. It too often works,…

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How Tax Reform Would Simplify Taxes for Tens of Millions

By Rachel Greszler, Research Fellow, Economics, Budget and Entitlements at The Heritage Foundation. Lawmakers have long championed a system that allows Americans to fill out their tax returns on a postcard. The Tax Cuts and Jobs Act proposed by Republicans in Congress could help turn that vision into a reality for most…

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5 Ways to Improve the Tax Cuts and Jobs Act

By Adam Michel, Policy Analyst, Thomas A. Roe Institute for Economic Policy Studies at The Heritage Foundation. The Tax Cuts and Jobs Act would provide tax relief to millions of Americans, and has the potential to facilitate significant economic growth. The proposal is pro-growth and pro-worker, but leaves much of the…

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Solid Ideas in all Three Treasury Reports — Here Are A Few More

By Norbert Michel, Director, Center for Data Analysis at The Heritage Foundation. Treasury has now released three of the four reports due under President Trump’s Executive Order on Core Principles for Regulating the United States Financial System. The first covered depository institutions. The latest reports address (1) capital markets and (2) asset management and insurance companies. The…

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PRESS RELEASE: HOUSE REPUBLICANS UNVEIL TAX REFORM PLAN

NOVEMBER 2, 2017 Washington — This morning, the House Ways and Means Committee released preliminary legislative text of a sweeping overhaul of America’s long outdated tax code. Similar to the framework announced in September, the plan would slash the corporate and pass-through rates by 15 percentage points each, simplify the individual…

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VIDEO: Dan Holler on FBN’s “Varney & Co.” talking about the GOP tax plan

Dan Holler, Vice President of Heritage Action for America, joined Fox Business Network Stewart to discuss tax reform on November 2, 2017. The House Ways and Means Committee released it's preliminary legislative text of a sweeping overhaul of America’s long outdated tax code earlier that day. *To view this video on…

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GOP’s Top Tax Writer Says Obamacare Mandate Could Be Repealed in Tax Plan

By Rachel del Guidice, Reporter for The Daily Signal. The chairman of the House Ways and Means Committee says Republican’s tax plan unveiled Thursday could potentially include a repeal of the individual health care mandate in Obamacare. “The president feels very strongly about including this at some step before the…

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The Ugly Consequences of Single-Payer Health Care

By Robert Moffit, Senior Fellow, Center for Health Policy Studies at The Heritage Foundation. The late, great Nobel Laureate economist Milton Friedman said it best: “There’s no such thing as a free lunch.” Friedman’s pithy proverb reminds us that there is also no “free health care.” It’s a timely reminder, as Sen.…

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Small Business Owner in Trump Country Explains Why Tax Reform Will Help the 99%

By Kelsey Harkness, Senior News Producer at The Daily Signal. SEDALIA, Mo.—As Republicans prepare to unveil the details of their major tax reform proposal this week, a small business owner in America’s heartland is speaking out about how her and her employees could benefit. “The 1 percent that keeps being…

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How Keeping the Property Tax Deduction Could Backfire on the Middle Class

By Rachel Greszler, Research Fellow in Economics, Budget and Entitlements at The Heritage Foundation. On the eve of the release of their tax reform proposal, GOP leaders are considering keeping the property tax portion of the state and local tax deduction as part of their plan. This “compromise” could end…

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