President Carter’s domestic policy advisor, Stuart Eizenstat, and Robert Lerman, an Urban Institute Fellow, claim there is a skills gap in manufacturing that threatens America’s manufacturing comeback (“Bring back the apprentice”, Washington Post, May 5, 2013). Readers are asked to accept a citation from an unnamed survey that claims 600,000 jobs go unfilled because the skills gap is real and America needs an apprenticeship program. The authors worry that “[we] are at risk of squandering this historic opportunity – mainly because firms interested in investing in the United States are finding too few workers with the skills needed . . .”

Really?

American manufacturing dropped 2.2 million jobs in the recession months from January 2008 until February 2010. Every single manufacturing sub-sector lost jobs. Since February 2010 the manufacturing recovery is confined to primary and fabricated metals, manufacturing for machinery, and transportation equipment but nothing else. All other sub-sectors combined had a net loss of jobs as small job gains in a few sub-sectors were not enough to offset losses in others. From February 2012 to the end of last year manufacturing is up only 491,000 jobs, less than a quarter of the recessionary losses. With 2.2 million jobs lost in the recession and 491,000 new jobs in the recovery, the difference suggests a surplus of production workers available for hire, not a shortage.

The Bureau of Labor Statistics lists just four occupations in primary and fabricated metals, machinery and transportation equipment manufacturing that require 12 months or more of on-the-job training: machinist, metal and plastic model makers, metal and plastic pattern makers, and tool and die makers.

Machinists were reported to have 388,000 jobs as of 2012, but there were 419,000 machinist jobs in 2008. The authors cite “a dearth of machinists” when 31,000 machinists laid off in the recession appear available to hire now: a surplus not a shortage.

Model makers had 5,700 jobs in 2012; pattern makers 4,130 jobs. In 2008 there were almost 9,000 jobs as model makers; over 6,000 pattern makers. These are small niche jobs but recessionary layoffs suggest a surplus available to hire, not shortage.

Tool and die makers were reported with 76,000 jobs as of 2012, but there were almost 86,000 in 2008. Tool and die maker jobs are up from 70,000 in 2011, but the increase disguises a long term decline. There were 100,000 tool and die maker jobs in 2005 and 131,000 in 2000. Bureau of Labor Statistics reported jobs suggest a surplus of tool and die makers, not a shortage.

The four occupations above that need long term on-the-job training are among 26 production occupations the Bureau of Labor Statistics includes in a category called metal and plastic workers. In 2008, 2.15 million had jobs in these 26 occupations; only 1.84 million in 2012. These 26 occupations require no more than a high school degree as defined and published in the Bureau of Labor Statistics education and training classification. An apprenticeship requirement is defined in the training classification but not necessary for any of the 26 occupations.

The other 22 metal and plastic work occupations require no more than moderate-on-the-training defined as “competency in an occupation that can be acquired during 1 to 12 months of combined on-the-job experience and informal training. The 22 include welders, cutters, solderers, and brazers, and computer numerically controlled machine tool programmers the authors cite as needing an apprentice program.

Assemblers and fabricators are another major category of production worker with 10 occupations and 1.98 million jobs in 2008 but only 1.72 million jobs in 2012. That leaves 260,000 available to hire, another surplus. None of the ten occupations require long term on-the-job training: six need moderate term on-the-job training, four need only short term on-the-job training defined as a month or less of combined on-the-job experience and informal training.

Eizenstat and Lerman make no use of Bureau of Labor Statistics data to support their claims because the data shows a surplus with no need for apprenticeship programs. When a business complains about a shortage of labor, they mean a shortage at the low wage they expect to offer. Instead of bidding up the wage to get the help they want, business moves to far off places like Bangladesh, and then finds a willing or gullible economist to blame the unemployed, who would have a job if they just had the right skills.

Alan Greenspan, the former Fed chair, perfected the “Get some training” propaganda in his capital hill testimony. He was calm and self assured when he placed the blame for unemployment on the unemployed. These guys like drama: “squandering this historic opportunity.” Oh Please! Where is Oprah when we need her?

About the author: Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com

The Obama Administration recently proposed an increase in the minimum wage to $9.00 an hour. The current minimum continues at $7.25 an hour where it has been since July 24^th 2009, the date of the last of three planned increases passed by Congress. The proposed increase is a little over 24 percent over the three years from 2009 to 2012, more than inflation but still hardly a self-supporting wage.

At $9.00 an hour per full-time employee, the increase converts $3,640 [$1.75 x 2,080] of profit to cost per full-time minimum wage employee. To employers of low-wage jobs like ushers, lobby attendants, ticket takers, shampooers, or childcare workers, higher wage costs bring pressure to experiment with higher prices, and fewer work hours or jobs. Raising prices might raise revenue and restore profits as long as sales don’t fall by much. Otherwise cutting jobs or hours in response to a higher minimum wage should help restore profits. 

Since everyone agrees higher wages do pressure employers to cut work hours or jobs for employees paid below the minimum wage, that part makes for easy agreement. However, it represents a small part of the minimum wage debate, unless economists and their business clients expect job losers to disappear, never to work again.

In their book Minimum Wages, economists David Neumark and William L. Wascher write on page 116, “… as we emphasized earlier in this chapter the potential for minimum wage increases to affect wages higher in the wage distribution is also important in assessing the effects of minimum wage policy.” (1)

When the minimum wage jumped by $2.10 an hour from 2006 to 2009, jobs as fast food cooks dropped from 612,000 to 539,000. (2) During the same period, there were other jobs as cashiers, retail salespersons, rental and counter clerks and others with wage ranges above the minimum. An increase in applications for these other jobs quite likely holds down wages as economists like to predict from any increase in supply, but in wage ranges above the minimum. As people find other jobs in other industries and occupations, the higher minimum wage can work to increase employment at higher wages.

In spite of their conclusions, Neumark and Wascher “… find it very difficult to see good economic rationale for continuing to seek a higher minimum wage.” In this they are like all economists who have been reciting conclusions like that for decades. Telling people they are worse off with a higher wage makes it necessary to quickly convince the public that jobs will be lost.

Neumark and Wascher and other economists try to convince people by theorizing in the specialized terminology of the economics fraternity. On page 254, they write, “In the model, an increase in the nominal wage that raises the wage rate of unskilled labor not only induces substitution of skilled for unskilled labor, it also leads to substitution of unionized skilled labor for non-unionized skilled labor because the union sector expands and the nonunion sector contracts.” Their predictions come without mention of occupations like cashier, clerk or fast food cook and lead to conclusions applied to generic markets of products and jobs. The authors might recognize the millions of opportunities to move from low wage to higher wage employment by looking at wage distributions by occupation reported by the U. S. Bureau of Labor Statistics in their Occupational Employment Survey.

Businesses predictably oppose a higher minimum wage year after year. For individual businesses, a higher minimum wage always converts profits to costs, even though the economy needs people with income to put back in the spending stream. Economists repeatedly offer theoretical support as though they are paid spokesmen or women.

Telling people they are better off with lower wages remains a tough sell among wage earners. The continued popularity of a higher minimum wage suggests there are many that work for wages who understand employers and employees have opposite economic interests. Employees outnumber employers by enough to expect a raise, but politics is a messy business. Will Congress go with the numbers?

 [1] David Neumark and William L. Wascher, Minimum Wages, (Cambridge, MA: The MIT Press, 2008), 295 pages.

[2] U. S. Bureau of Labor Statistics, Occupational Employment Survey

About the author: Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com

Recently, the Obama Administration announced the time has arrived to appoint health care experts to an Independent Payment Advisory Board as part of its duties under the Affordable Care Act. The legislation gives the advisory board authority to change Medicare reimbursements for doctors and determine new ways to deliver quality health care.

However, the flaws in health care go much deeper than reimbursements.

One of the flaws the advisory board cannot address with reimbursements comes because physician services operate as a separate component of the health care industry. Some of America’s physicians work as salaried employees. However, the Bureau of Labor Statistics reports that almost 67 percent of physicians practice medicine at over 306,000 offices of physicians, not including 123,000 offices of dentists, and still more offices of chiropractors, podiatrists, and a few others.

These offices function as independent small businesses where physicians double as doctors and entrepreneurs in a physician services industry.

Combining business and medicine not only diverts physician time and energy away from medicine, it also generates many small establishments that need a steady volume of patients to cover overhead expenses for office space, equipment and supplies, to minimize costs and to keep their business financially solvent.

A separate and decentralized physician services industry negotiates billions of transactions, first to provide necessary services and then to collect payment from patient health care plans. Patients have no incentive, or ability, to be consumers when patient charges will be small co-pays or deductibles. Physician entrepreneurs avoid quoting prices when so many payments come from billed charges to a health plan rather than patients.

Physicians decide necessary services and patients generally go along, but suspicion runs high that questionable tests and procedures might be ordered to maintain steady revenues into the firm.

The 306,000 offices of physicians had employment of 2.3 million in 2011 with almost 820,000 jobs in office and administrative support. The 820,000 are more office and administrative support jobs than those reported for the entire hospital industry, which has 5.7 million jobs; the 820,000 are more the 4 times the office and administrative support jobs for the entire nursing and residential health care industry, which has 3.1 million jobs.

Offices of physicians have 35% of staffing in office and administration support occupations, higher than any other sector or sub sector in health care. By comparison, outpatient care centers have 18.8% in office staff. With 2.3 million jobs spread among 306,000 offices, the average office has 7 or 8 staff including physicians. Out of 534,600 physicians working in the health care industry, 355,000 work in offices of physicians, suggesting the typical office has a doctor and 6 or 7 support staff. Staffing data implies a sub-sector bloated with office staff, much of it underutilized.

Physician services and all the other disparate sectors could be merged into regional or metropolitan health care providers, like we organize school districts. Combining the offices of physicians and dentists with medical laboratories, imaging centers, blood banks, dialysis centers, urgent care clinics, hospitals and other services would eliminate billions of unnecessary transactions between bureaucratic offices of strategizing adversaries.

Regional health care helps squeeze bloated overhead office staff and allows health care providers to concentrate on combining necessary services to fully utilize equipment and personal to minimize costs. Regional health care with salaried physicians and staff available to discuss medical options with other salaried physicians and staff helps reduce the incentive to over prescribe tests or treatment and makes second and third opinions readily available.

Regional health care has the potential to introduce a measure of choice like public school choice as long as residents can compare annual or monthly premiums, co-pays and deductibles with neighboring districts.

Solving America’s health care problems will require significant changes in health care delivery, such as medical school tuition at public expense, converting doctors to salaried employment and expanding regional health care into HMO style delivery systems. But if the appointed advisory board members are really experts, they will know how hard and how frustrating the job will be.

About the author: Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com

A Washington Post article (“N.C. looks to cut jobless benefits“ 2/13/13) describes cuts in unemployment benefits as a drastic proposal from North Carolina lawmakers. Under the new plan, benefits would drop from 26 weeks to 20 and the maximum benefits from $535 a week to $350.

The governor believes they have little choice because they have a budget crisis. But the quotations from business supporters give another reason: cuts are needed to improve the economic climate and rebuild unemployment insurance funds. Lew Ebert, the president of the North Carolina Chamber of Commerce, told journalist Michael Fletcher, “Everywhere I travel, there are companies that have jobs and want to hire, but I hear two things: people don’t have the skills, or that it is tough to compete with $500 plus per week in benefits.”

Unemployment benefits are always competition for employers while the unemployed receive benefits. Therefore, the duration and amount of the benefits reflect a state’s political attitude and policy toward cheap labor. If benefits are $535 per week for 26 weeks, then the unemployed have incentive to stay on unemployment for wages under $13.37 an hour and for the whole 26 weeks. They will be unlikely to become a part of the labor force until after 26 weeks unless an offer comes above $13.37, assuming a 40-hour week. If the benefits are $350 per week for 20 weeks, then the unemployed have incentive to stay on unemployment, but only for wages under $8.75 an hour for 20 weeks.

By lowering the benefits, North Carolina will, as they intend to do, increase the supply of cheap labor. However, $350 is the maximum when few make the maximum. Benefits are always scaled back for filers who had lower wages than those eligible for the maximum. The article cites $296 a week as the average benefit, which is $7.40 an hour. The Bureau of Labor Statistics reports the median wage for cashiers was $8.80 an hour in 2011.

At $7.40 an hour, we can be sure the Chamber of Commerce has jobs, as their president told the Washington Post, but only if the Legislature will help them to hire at lower wages.

About the author: Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com

In the Chicken Little folk tale, Chicken Little and his friends Henny Penny, Lucky Ducky and Foxey Loxey becomes hysterical when they all agree the sky is falling. In Virginia, delegate Robert G. Marshall believes the Federal Reserve Bank will bring financial hysteria with hyperinflation like Germany after WWI.

He wants to protect Virginians by having a new Virginia currency. He got the Virginia legislature to allocate $17,440 to study a metallic-based currency for Virginia. He was quoted as saying, “This is a serious study about a serious topic. We’re not completely powerless.”

Every good capitalist knows the value of money is determined by the supply of it relative to its demand for needed transactions. Obsessive worriers like Delegate Marshall think money has to be a supply of something they can pick up and store: commodity money. In this worry, Delegate Marshall acts like everyone else: the worriers all want their metallic base to be gold.

To protect themselves from inflation and rising prices with a metallic-based currency, Virginians will need to be able to exchange their inflation devalued currency for gold at a fixed price. If Delegate Marshall could exchange a unit of Virginia currency for an ounce of gold at a known price, he would have gold that might hold its value, or rise in value, to protect from the rising price of cars, clothes and corn flakes that devalues his currency.

If Delegate Marshall was a little more curious he would ask himself how the Virginia treasurer happens to have an inventory of gold ready to exchange with a line up of worried citizens. If Delegate Marshall would ask himself how Virginia could remain ready to exchange gold at a fixed price if the market price of gold goes up, he might notice a problem with a metallic standard. After all, gold is a commodity like cars, clothes and corn flakes – all subject to rising prices.

If the market price of gold starts to rise, there might be someone who would show up at the Virginia treasury to exchange their currency for an ounce of gold to resell it for a profit at the higher market price. The line might be long and drain the gold out of the Virginia treasury, ending the metallic-based standard.

I wonder why Delegate Marshall wants to worry so much about something that is not happening. Inflation rates are low – generally below two percent – where they have been for over a decade. I wonder why Delegate Marshall wants to worry about the Federal Reserve Bank when it bailed out the rogues and scoundrels who engineered the financial collapse of 2008.

I am certain, though, this piece qualifies as a study of the metallic based standard, which is why I expect to receive that $17,440. My bill will be in the mail shortly.

About the author: Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com

The Bureau of Labor Statistics published its January report showing a seasonally adjusted December increase of 155,000 jobs. The increase for the 12 months ending December 2012 is 1.836 million jobs, a respectable – but hardly spectacular – increase for the year. The job totals for 2012 will be subject to review and possible revision next month, but the end of the year totals gives an opportunity to make an assessment of job growth for the future.

During the recession, jobs declined 8.78 million from January 2008 until February of 2010. After the turnaround beginning March 2010, jobs are up 4.78 million to just over 134 million for December 2012. If we have 26 months in a row with 155,000 new jobs, America will have just over 138 million jobs, which will bring jobs in March 2015 up to jobs in January 2008.

Through the recession months, government employment and the share of government employment in total employment continued to rise while manufacturing employment and the share of manufacturing employment in total employment continued to fall. Manufacturing had its highest employment in 1979 followed by nearly unbroken decline until the end of February 2010.

After March 2010, when jobs started to recover, manufacturing and government service reversed their long-term employment trends. Government, including education, lost 546,000 jobs, while manufacturing gained 526,000. In 2012, manufacturing gained 180,000 jobs, while government lost 68,000 jobs.

The unexpected increase in manufacturing helped provide a higher job total for the year ending December 2012. The increase in manufacturing gives a reason to be optimistic for 2013, but unfortunately much of the other 2012 gains came in service sectors that also did much better than their long term trends. For example, wholesale and retail trade added 260,000 jobs for the 12 months ending December 2012, but their average annual increase for the last 22 years including 2012 is 94,000. The last 12 years, including 2012, did not have job gains, but losses that averaged 65,100 a year.

Trade uses computing technology that holds down job growth, but other service sectors like finance, insurance and real estate also have long-term trends with slow growth as a result of computing technology. In the process of recovery from the 2008 recession, all of them did much better in 2012 than their long-term growth rates. Finance, insurance and real estate gained 80,000 more jobs than their long-term trends would suggest.

If all sectors of the economy in goods production, private service providing industries, and government return to growth at their long term trends, then 2013 job growth will have only 1.475 million more jobs, 360,000 below the gains for 2012. It will be a slow year for jobs if that happens.

If manufacturing repeats last year’s gain and adds 180,000 jobs and government does not decline further, while the rest of goods production and service industries grow at their long-term trend, then 2013 with have 1.691 million more jobs; better, but still 144,000 jobs below the 2012 gains.

Health care has been a mainstay of job growth for two decades, but last year’s increase of 391,000 new jobs was below long term trends. Health care will add 477,000 new jobs by December 2013 if health care industry jobs grow at their 1990 to 2012 growth rate of 2.78 percent. Lately, though, health care has slowed down and last year jobs were up only 2.15 percent for the year. The time to assume health care will contribute the largest share of replacement jobs may be coming to an end. Other sectors like manufacturing and professional services will need to play a bigger role in job growth if America can meet the job needs of the future.

The recent decision on federal taxes that was part of the fiscal cliff negotiations will not help job growth. The two percent reduction in social security taxes ends. Social security taxes go up 2 percent, but the new rate schedule for the personal income tax does not reduce rates enough for a reduction in combined federal taxes. Based on the tax rate changes published in the Washington Post, wage earners earning up to $60,000 will pay as much as $1,000 more in 2013 than they did in 2012.

The fiscal cliff solution makes another year with 1.836 million new jobs a doubtful forecast. Americans will need more buying power to keep the job mill going another year. To match last year’s performance for 2013 will be problematic without a continuing recovery in manufacturing, and without an unexpected boost from another service sector or sectors. Expect less.

About the author: Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com

During the Presidential campaign, candidate Mitt Romney had a speech secretly recorded where he told listeners that he could not expect to get votes from the 47 percent of tax payers who do not pay federal income taxes. In the speech, Romney characterized that group of income-tax-free Americans as being “dependent on the government” and feeling “entitled to health care, to food, to housing, to you-name-it.”

Americans have often worried about people who do not support themselves working. Back in the Great Depression, after unemployment peaked at 25 percent, President Franklin Roosevelt said in a speech of October 1934, “Continued dependence upon relief induces a spiritual and moral disintegration fundamentally destructive to the national fiber. …. We must preserve not only the bodies of the unemployed from destitution but also their self-respect, their self-reliance and courage and determination. ….The Federal Government must quit this business of relief.” [quoted from The Crisis of the Old Order, 1919-1933, Arthur Schlesinger, 1957, p 267-268]

It sounds to me like Mr. Roosevelt worried that Americans getting governmental assistance would become dependent on the government whereas Mr. Romney worries that Americans getting governmental assistance are already dependent on the government. Otherwise they sound like identical statements reflecting the cultural notion that work is uplifting and makes us free and independent.

Mr. Romney’s statements generated many comments. I am sure I read only a fraction of them, but most of the comments I read assumed the 47 percent of filers who pay no income tax are low paid or unemployed people of modest means. Other comments discussed the matter in general terms without actually going to last year’s tax Form 1040 and doing some calculations.

When I did that, I found a single person with one $3,700 exemption and a $5,800 standard deduction could earn up to $9,500 in 2011 with no income tax liability. A married couple with no children, two exemptions totaling $7,400 and an $11,600 standard deduction could have $19,000 of untaxed income. If the $9,500 or $19,000 earned was wage income, then both single people and married couples would owe social security taxes.

I am not sure what share of the 47 percent include people with wages too low to tax, but many with higher incomes pay no tax because dividends and capital gains get special tax treatment not available to wage earners. In 2011, income composed of dividends and capital gains up to $88,000 for a married couple pay no federal tax at all assuming those who file take the standard deduction. For those who have itemized deductions above $11,600, untaxed dividends and capital gain can range much higher.

The exact same income earned as wages would pay $9,500 of personal income tax and $4,972 of payroll tax for a total tax of $14,472, and the payroll tax is 2 percent less than normal. Any combination of income with wages, dividends and capital gains pays less tax than the same income earned as wages.

Government programs that aid the poor and the poorly paid are now almost universally referred to as entitlements in the popular media and by politicians, but always in negative terms, as something to get rid of or cut back. Get a job; work and be independent that is the message from Mr. Roosevelt to Mr. Romney. It might work better if wage earners were entitled to equal treatment in taxation.

About the author: Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com

In this week’s column, Fred Siegmund reviews “The Benefit and The Burden: Tax Reform, Why We Need It and What it Will Take” by Bruce Bartlett.

In the opening sentences of the Introduction, author Bruce Bartlett tells readers the Federal tax code needs regular attention like a garden needs weeding. Even though the present weedy tangle can only be changed by Congress, Bartlett hopes his book on “the fundamentals of taxation at the simplest level” will help inform the public in the debate.

Bartlett uses the introduction to tell readers he wants to be fair and so confesses a short list of biases. He accepts the need for Federal taxes to take a higher share of GDP and recommends taxing consumption to get it. He believes tax expenditures to be the equivalent of spending. He supports a Value Added Tax but not the Alternative Minimum Tax.

The book has 24 chapters, none of them long and each confined to a single topic or focus. Bartlett labels the first nine chapters, the Basics, and starts with a brief history of federal income taxes and the legislative process of getting a tax bill through Congress.

Chapter 3 reviews many definitions of income that sometimes include and sometimes exclude capital gains, rents, dividends and interest. Bartlett cites economist Irving Fisher who believed interest was not income but the discounted value between present and future consumption. Others have argued it should be consumption and change in net worth, meaning taxes on unrealized capital gains.

Chapters 4 through 8 explain the mechanics of marginal, average and effective tax rates and their affect on tax revenue, economic growth and the business cycle. While explaining the mechanics he finds the wealthy have low average tax rates and then contradicts Senator McConnell and others who claim that tax cuts raise revenue in the long run. The Bush tax cuts reduced federal revenues $2.8 trillion from 2002 to 2011.

Bartlett turns a dubious eye on tax incentives promoting saving and growth, which he suggests do not guarantee more savings, especially if the government has to use them to pay for deficits. The question of progressive taxes gets a 6 page review where he shows progressive rates schedules do not guarantee progressive taxes when there are many exemptions and deductions.

Chapter 9 compares U.S. taxes to other countries. Many other countries have a higher ratio of taxes to Gross Domestic Product than the U.S. He provides tables to compare growth rates with the ratio of taxes to GDP, which also demonstrates that low taxes do not necessarily mean high growth and vice versa. He chides Americans for their provincial views on taxes. Other countries tax consumption more than the U.S. and make use of wealth taxes and environmental taxes that Americans refuse to consider.

The second section of eight chapters identifies and reviews problems of United States taxes: tax expenditures and tax treatment of health care, housing, state taxes, charitable contributions, capital gains, corporations, and tax administration. The tax expenditure chapters take on a disgusted tone describing how current practice erodes the tax base and primarily helps the well to do who save more with deductions from income in high tax brackets.

Bartlett cites health care as the biggest tax expenditure that treats employer sponsored health care as a business expense but not taxable for employees. Where other countries tax their citizens to provide health care, our Federal government disguises their spending through a tax deduction to business. He gives a federal income tax loss of $184 billion and another $250 billion of loss in payroll taxes, although he does not cite his numbers.

Bartlett reminds readers that tax expenditures make things like health care and housing artificially cheap and encourage over use. Deductions for mortgage interest and property taxes do so twice by encouraging more home building and then encouraging local governments to pad local projects paid with property taxes home owners can deduct from their federal taxes, but no benefit to renters.

The last section of seven chapters looks at the future. Bartlett does some review of previous tax reform and reform proposals like the flat tax, a national sales tax proposal, the Herman Cain nine-nine-nine and a few more, but reminds readers that tax cuts alone are not reform. A whole chapter makes the case for more federal revenue, but readers get a big dose of pessimism and a summary of views on the consequences of unsustainable debt.

Two chapters outline the case for and against the Value added tax, but the material includes so many political objections along with a variety of pros and cons these pages reads like a digression or a diversion. Finally, it is on to the Bush Tax cuts and what to do. He gives a listing of the many Bush tax cuts and some archival background before totaling $3 trillion added to Federal debt and declaring the failure of the Bush tax cut policy. Bartlett also gives an unfavorable review of the anti-tax Republicans and Grover Norquist before declaring they will probably be able to prevent tax reform. He gets more pessimistic by suggesting tax reform will be delayed until we have a Republican president and a Democratic Congress.

The book provides basic information to understand taxes and the larger economic issues they raise, but the book is not elementary. Previous effort working and experimenting with the arithmetic of tax calculations for a variety of personal income situations should be considered a minimum prerequisite. All his chapters end with a long list of further reading that allow advanced study for those with the interest.

Bartlett has had a long career in taxes, especially in Congress where he helped draft the Kemp-Roth tax reform back in 1986, but his knowledge and experience do not make him optimistic. He makes recommendations to expand the tax base and raise revenue to meet the needs of spending that “can’t be cut,” but tells readers how and why entrenched political attitudes will prevent them. The book feels sour in a way that befits the public mood for a book published in the year of the fiscal cliff. The fiscal cliff will pass but for better or for worse I am certain the Benefit and the Burden will continue to be relevant, I’m afraid for quite a few years. In that we can be sure Mr. Bartlett will agree.

About the author: Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com

Post-election analysis has started to turn to discussion of economic issues put off before the election. Health care expansion will go forward and tax and budget disputes will be settled by default with the fiscal cliff or by compromise in the Congress.

A recent article by Robert J. Samuelson [“It’s the Welfare State, Stupid,” Washington Post, November 12, 2012] includes the claim that Social Security and Medicare are part of the welfare state that undermines incentives to work and devalues “earned success.” He thinks these shortcomings justify using Social Security as a target for cut backs in the fiscal cliff settlement.

In spite of the fact that all of us working for a living have to pay social security taxes under threat of IRS reprisal, the claim that Social Security recipients receive welfare subsidies requires explanation in light of the many changes to Social Security passed by Congress. Start with the steep Social Security tax increases Congress passed during the early Reagan years. Along the way, the retirement age was raised and two full years of benefits were canceled, and then Congress started to force Social Security recipients to pay taxes on their benefits.

In 2011, taxes start for single people who earn other income greater than just $25,000, and for joint filers at just $32,000. Recently, there were unfavorable adjustments to the cost of living formula. The idea Social Security recipients receive welfare subsidies after as many as 50 years (50=67-17) of payroll taxes require financial examples and documented proof that Samuelson fails to give.

We might also remind Mr. Samuelson that the Social Security tax has an income cap at $110,100, meaning that those with very high wages have a tax preference: their tax rate drops to zero after the cap. While the rest of us pay 7.65 percent on all our wage income, the wealthy get all wages over the cap exempted. If he thinks this preference should be eliminated as an unjustifiable subsidy to the wealthy, he did not say.

Medicare and Medicare payroll taxes were added to Social Security in the Johnson Administration because more and more private insurance companies refused to insure retired people who lost their tax-subsidized employer health care benefits. Now Samuelson suggests Medicare recipients are getting a subsidy they don’t deserve when all those receiving employer-sponsored health care share in tax subsidized health care they do deserve.

After attacking Social Security and Medicare, Samuelson concludes Social Security benefits undermine work incentives that “devalue” the work ethic. He tells readers, “If eligibility were higher, people would work longer.” What Mr. Samuelson would find if he bothered to look at the U.S. Bureau of Labor Statistics’ Current Population Survey is that older people are already working longer – much longer – and they have been doing so for two decades.

Americans over the age of 55 entered the labor force at a growth rate of 3.49 percent per year over the years 1990 to 2011, a rate one and half percent above their population growth rate in the same years. Those from the ages of 25 to 54 entered the labor force looking for work at a growth rate of .68 percent per year for the years 1990 to 2011, a rate more than two percent below their population growth rate in the same years.

People entering the labor force at any age have no guarantee of finding work: they could find employment or be unemployed. Unemployed Americans over the age of 55 had an annual growth rate of 7.03 percent in the years 1990 to 2011, more than double the growth rate of those aged 25 to 54. If Americans at or near retirement age lack incentives to work because the benefits of Social Security make life so easy, then Mr. Samuelson needs to tell us why so many people at or near retirement age keep working (or looking for work).

Mr. Samuelson did not question if those over age 55, but not eligible for Medicare, keep working because they can only get affordable health through a job. He did not question if the gradual end of defined benefits pension plans and replacement with defined contribution pension plans makes it harder to retire and gives incentives to work longer. He did not question why older Americans need incentives to work longer when younger Americans struggle to find self supporting jobs. The rest of us should question whether Mr. Samuelson wants to make excuses to cut Social Security or find solutions that work for everybody.

About the author: Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com

There were 693,025 MA degree graduates for the year ending June 2010, the last year of complete data.  The MA is still relatively small compared to 1.6 million BA degree candidates, but the MA degree has the highest growth rate of degrees including the AA, BA and Ph.D. From 1990 to 2010, that growth was 3.87% a year, compared to the average for all degrees at 2.78%.

Completing a master’s degree can be a smart choice, but it is a different choice than entering and completing a BA degree. There are general benefits for the BA degree for all degree programs, but much less so for a master’s degree. The benefit of a master’s degree tends to be specific and attached to a career, and typically after a career is underway.

Education may be the best example because elementary and secondary teachers can begin a career with a BA degree, but most school districts publish pay schedules with step increases that depend on years of experience and education. Finishing an MA degree moves teachers to a higher pay scale and makes it easy to compare financial benefits with tuition. A master’s degree typically opens up other positions in education administration, counseling and curriculum development. These advantages help explain why more than 26.3% of the 693,000 master’s degrees for 2010 are in education.

The Masters in Business Administration ranks second with 25.6% of 2010 master’s degrees, just behind education. The MBA degree will surpass education in the near future because MBA growth rates exceed the master’s in education by a wide margin. The average annual increase reached 7,013 for the five years from 2005-2010, the highest increase for major degree categories.

Many start a career with a BA in business or in professions like engineering, information systems, architecture and design, but return for an MBA degree after getting some on-the-job experience.  However, part of the growth in the MBA results from the growth of the business BA degree itself, which reached 358,000 in 2010. With so many BA business candidates compared to new jobs, finishing an MBA has become a strategy for narrowing the field of job applicants in the corporate job market.

Allied health professions hold third place with 69,000 master’s degrees, 10% of the master’s total. A master’s degree in any health profession assures benefits in a health care career, but even more than most master’s degrees the benefits do not transfer to careers outside the health care industry.

Master’s degrees in advanced nursing specialties had over 20,000 master’s degrees in 2010, more than any other health profession. Nursing does not require a master’s degree, but nursing has a long career ladder with nursing specialties to pursue with master’s training: maternal nurse, pediatric nurse, critical care nurse, geriatric nurse and quite a few more. Other popular master’s degrees in allied health are 5,687 MA degrees in public health, 5,293 in health care administration and management, 4,244 in occupational therapy, 2,437 in audiology, and 2,056 in speech pathology.

Combined counseling and social work have just fewer than 50,000 master’s degrees, equal to 6.7% of the 2010 total. A career in a counseling specialty like mental health, education or family counseling requires a master’s degree and state license, which makes the master’s an entry degree. There were almost 24,000 master’s degrees in psychology including over 7,000 in just the counseling psychology specialty. Mental health counseling offered as part of allied health programs have another 6,000 degrees.

Counseling work overlaps some with social work, an area where there were more social work master’s degrees than BA degrees: 19,600 master’s degrees to 14,600 BA degrees. Social workers provide support and assistance obtaining aid more than therapy or counseling, which lets the states be more flexible about license and credentials, but those planning a career in social work should expect to finish a master’s degree.

The four degree fields mentioned so far – education, business, allied health, counseling and social work – account for just over 68% of the master’s degrees in 2010. For people with careers in these fields, a master’s degree will almost certainly be a smart choice.

Not all of the remaining 32% of degrees are as obviously connected to a career. These include 45,000 master’s degrees in area, ethnic and cultural studies, multidisciplinary science, philosophy, history, social science, and visual and performing arts. There are another 17,000 MAs in English language and literature, foreign languages and literatures, liberal arts and sciences, general studies and humanities.

The 85,000 master’s degrees in the sciences – biology, life science, natural science, chemistry, physics – and in the professions – architecture, engineering, information systems – need the basic knowledge implied by a BA degree to enter these programs. For example, someone pursuing a master’s degree in engineering probably already has a BA in engineering and some work experience, which suggests they know what an MA can do for them.

A few master’s degree programs are tailored to those switching careers. Library science had 85 BA degrees and 7,448 master’s degrees for 2010, which makes it ideal for people from many other careers to start another.  Public administration with almost 36,000 MA degrees and theology with almost 13 thousand MA degrees have more master’s degrees than BA degrees, also suggesting people enter these programs from other careers and backgrounds.

In the last few years, many have finished BA degrees only to be plagued by delays moving into career employment. Some decide, “I might as well go on for a master’s degree now while I wait to start a career.” That has a high risk to be a bad choice. It is not only expensive and diverts time and energy away from a job search, but also the many specialties and sub-specialties in master’s programs make it less likely that degree skills will match job needs or advance a career to come in the future. To make a master’s degree pay and advance a career, the evidence suggests the best choice is a career first, and a master’s degree later, whether it be an MBA, Masters in HR, or Masters in education.

About the author: Fred Siegmund covers America's jobs as part of work doing labor market analysis and projections for a client base of recruiters, trainers and counselors. Visit him at www.americanjobmarket.blogspot.com