Friday, June 17, 2011

President Obama: An Economic Reality Fact Check

In an interview this week on the Today show, Ann Curry asked President Obama why he hasn’t been able to convince businesses to hire more people. She cited a New York Times article which stated that since the recovery, companies have spent only 2 percent on hiring, but 26 percent on equipment.

Here is the president’s answer:

"There are some structural issues with our economy where a lot of businesses have learned to become much more efficient with a lot fewer workers. You see it when you go to a bank and you use an ATM, you don't go to a bank teller, or you go to the airport and you're using a kiosk instead of checking in at the gate. All these things have created changes in the economy…."
The way I hear him, self-service convenience devices are a reason we have fewer jobs.
A casual survey of the real world reveals that there are thousands of people who have jobs today because of the existence of ATMs and kiosks.

When you look at the entire industry chain – the manufacturers, processors, networks, financial institutions, deployers, cash providers, servicers, refurbishers, software providers, content creators, accessory sellers, and yes, even the regulators – we have created the equivalent of a small city of jobs.

Since when did the installation of airport check-in kiosks cause a ripple effect of layoffs? On the contrary, these machines have improved service, created a more efficient boarding process and provided a better overall customer experience. All good for business. Not to mention, a cause to hire people to support the machines and spend money with vendors.

The statement that struck me as the most uninformed was the president’s implication that ATMs have caused a loss of teller jobs.

According to the U.S. Bureau of Labor Statistics, the number of tellers employed by banks has grown from 453,150 in 1999 to 556,320 in 2010. That’s more than 100,000 new teller jobs in the past 11 years.

The FDIC reports that U.S. bank branches grew from 81,444 in 1992 to 99,109 in late 2010. While many bankers in the late '60s feared they would have to lay off tellers and close branches because of this new-fangled self-service machine, the opposite has in fact happened.
This has created more than just teller jobs – FDIC data states there were 1.8 million full-time bank employees (not to mention those in credit unions) in 1992. That number grew to more than two million in 2010, even with the layoffs during the financial crisis of the past few years.
The approximately 400,000 ATMs in the U.S. have further fueled economic growth by giving people access to their cash in the places where they spend it. What would happen to the retail industry – and the economy – if all the ATMs were pulled out of U.S. stores?

If we are to blame job loss on technological advancement, we must blame the mobile phone for a loss of jobs in the payphone industry. But I’m sure the 40,000 attendees and several thousand exhibitors at the CTIA Wireless show in Orlando earlier this year weren’t longing for the good old days.

Tom Harper


Anonymous said...

Business is buying capital equipment to take advantage of the 100% bonus depreciation.

The new equipment (esp info tech) increases productivity which negates the need for additional hiring.

Anonymous said...

It does not "negate" employment from a macro perspective regarding the unemployment rate.

It shift low paying jobs; ie ticket takers hiring paying information technology and content jobs.

Ask yourself; who is hiring other than government? Look at the rates of growth in employment at Google, LinkedIN,Facebook and the engineering technolgy compnaies that support their technology driven innovations.

Not only does Obama want to provide money to business through a flawed stimulus plan that did not really even accomplish i=his goal; he wants to tell the companies who get federal money (through the sba for example) how to spend it. Ie, green technology etc.

Anonymous said...

See the article in the6/19 RTD bus. section about the spike in office furniture sales. Small business is purchasing IT equipment, vehicles, restaurant, equip, and specialty mfg equip. We get a 100% write off this year. Much of the expenditures will negate the need for more people.

We do not have the advavtages the large corporations have. They shift much income overseas and use tax shelters so their effective tax rate is close to 0. Their executives are able to convert most of their compensation to capital gains and dividends which are taxed at 15%. They own the Congress which will bail them out and provide regulations to crush any threat to their monolpies. They extort tax money from states to make movies and not move offices. Professional sports owners get rich by playing in rent free stadiums paid by taxes on people unable to afford the tickets.

Small business and professional practice owners are paying the largest percentage of taxes. All of our income is taxed as ordinary income+ FICA and Medicare. We cannot offshore our tax burden. We do not have economies of scale to pay compliance costs. No one is going to bail me out. Heck I even make too much to go to the VA for a knee gone from wear and tear in the Marine Corps. That gets covered in my 17,800 health insurance plus another 3,000 out of pocket. At least I get to write it off but not against my SE tax.

I am still grateful I am a real American. I have created a few jobs and WIIL NEVER offshore any job. Unlike the large Corporations that will sell out to a foreign countrty for a few pieces of silver.

Anonymous said...

I wish more people would be as engaged in the whole process at the local level. There have been alot of promises made and broken by both Boards and it does not help matters to have them at odds over every detail.

I find it ironic the very critics of the School Board are the same ones that create the environment by which the result is over capacity in the first place. The schools have no direct voice regarding new communities and must allocate space in the classroom based on what the BOS approves for development. The BOS acts like an innocent party and then is publically critical of the SB for its efforts to address its capacity concerns.

The current Board under the leadership(?) of people like Warren and Gecker have not been honest with citizens in their criticisms. These are the two people pushing to have the Comprehensive Plan pushed back beyond this years election cycle so they are not on record until after the votes are counted in November. Not what I call leadership.

Anonymous said...

I agree there is lack of leadership in Chesterfield County elected officals.

The mere fact the School Board beleives they have a great leader is rubbish. Dr. Newsome is never available to the media or parents. He hids behind his high priced PR dept. There is a total lack of accountability.

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