An educated workforce is crucial to jump-starting our economy and creating more jobs. Unfortunately, too many students and recent graduates in this country are tied down by cumbersome student loan debt. The House has acted to keep student loan rates from doubling on July 1, but unfortunately our bill is still stuck in the Democrat-controlled Senate.
Creating jobs and growing our economy are the top priorities of the American people, and they are the top priorities for House Republicans as well. We have a plan to create more jobs and secure the future for all Americans by expanding opportunity, not expanding government.
Last week, House Republican Conference Chair Cathy McMorris Rodgers (R-WA) and House Foreign Affairs Committee Chairman Ed Royce (R-CA) hosted a Vietnamese American Meetup at the United States Capitol. The event included over 800 Vietnamese American community leaders from across the country for an open discussion with House Republicans. Watch our highlight video below:
Last Friday, the Bureau of Labor Statistics (BLS) released its May monthly jobs report. Though nonfarm payroll employment increased by 175,000 in May, the unemployment rate slightly increased from 7.5% in April to 7.6% in May. While an overall increase in employment is a good sign, the May jobs report shows little sign that the economy is gaining any momentum. Labor force participation, the total number of unemployed persons, and job growth all point to the fact that the economy is stagnant and is showing little sign of a quick turnaround.
Facts You Need to Know:
The unemployment rate increased slightly from 7.5% in April to 7.6% in May. The number of unemployed persons increased from 11.65 million in April to 11.76 million in May.
Long-term Unemployment (those unemployed for more than 27 weeks) remained stagnant from last month at approximately 4.4 million Americans.
The Labor Force Participation Rate, which identifies the number of people who are active participants in the labor force (relative to the total population), remained nearly unchanged from April at 63.4%, an increase from 63.3% in April. The Employment-Population Ratio, a metric which establishes the raw employment rate, remained unchanged from April at 58.6%.
Average hourly earnings for all employees increased by 1 cent to $23.89. In the last year, average hourly earnings have increased by 46 cents (2.0 percent).
Why Does a “Pro-Growth” Agenda Matter?
Labor force participation remains at its lowest levels since the late 1970s. Much of the decline in the unemployment rate from the end of the recession can be attributed to a decline in labor force participation. If Labor Force Participation remained unchanged from the recession, the unemployment rate would be 10.7% instead of 7.6%. Weak labor force participation remains a significant barrier to long-term economic growth, as a smaller pool of workers available for employment limits potential business expansion in goods and services-oriented industries. Strong labor force participation as the result of economic growth would broaden the tax base and increase revenue organically.
The Employment-Population Ratio is unchanged since last month, signaling once again that job growth is barely sufficient to keep up with population growth. In fact the Employment-Population Ratio has only increased by .1 percent since the end of the recession in 2009. This further demonstrates that Americans are still not engaging the labor market to find wage-earning employment. Because a large pool of workers is necessary to facilitate economic growth in every industry, a stagnant Employment-Population Ratio should be concerning.
The number of long-term unemployed should also be of serious concern. The large number of people who have been unemployed for over six months are at risk of developing into a permanently unemployed class. The psychological and economic burden that the long-term unemployed face is the direct result of discouraging economic growth and a labor market that is insufficient in encouraging youth to enter the workforce.
Average hourly earnings increased only slightly since April, and have only increased by 2.0% in the last year. Wage growth remains far less than pre-recession levels, and can be attributed to the slower-than-average growth rate experienced during the current recovery.
In this week's address, Congressman Luke Messer (R-IN) discusses House Republicans' recent action to address the rising cost of student loans and keep rates from doubling on July 1. The House passed a long-term fix to student debt with market-based interest rates and protections for the most vulnerable young Americans. President Obama has already campaigned against this legislation, but the fact is it mirrors many of his ideas. The President and Senate Democrats should stop politicizing this issue and work with us on these smarter solutions to help our nation's students.
Congressman Luke Messer (R-IN) will deliver the Weekly Republican Address tomorrow, Saturday, June 8. Here's a behind the scenes look at Rep. Messer delivering the address, in which he's expected to discuss House Republicans' recent action to prevent student loan rates from doubling on July 1. It's time for the President and Senate Democrats to join the House and help young Americans with a meaningful fix to student debt. You can watch the address here tomorrow.
Policy Feature Issue: Global Intellectual Property Theft
The current state of the global economy is tenuous. Global economic growth in industrially developed countries is stagnant, with high unemployment pervasive particularly among youth. Global intellectual property theft is fast becoming a silent destroyer of economic growth and a barrier to job creation, including here in the United States. Much of global IP theft originates from the People’s Republic of China, a reality that complicates our economic relationship with the rising global power.
At a time when the American economy is struggling with stagnant growth, high unemployment, and a weak recovery, intellectual property theft serves as another structural barrier to our economic recovery. In anticipation of the President’s summit with Chinese President Xi Jinping this Friday on the issues of cyber security and IP theft, it is important to understand the economic strain that IP theft really has on the economy.
Facts You Need to Know:
IP theft and counterfeiting are significant barriers to economic growth. IP-intensive industries employ approximately 18 million Americans. Every year, intellectual property theft in the United States results in the loss of $300 billion in sales and 750,000 jobs. The resulting loss of jobs and sales has a significant impact on the economy.
Intellectual property-related industries account for nearly 20 percent of American jobs and contribute to over one-third of GDP. U.S. intellectual property is currently valued at approximately $5.5 trillion, more than the gross domestic product of any other country, and accounts for more than half of all U.S. exports and drives 40% of our economic growth.
The amount of time it takes for the U.S. to respond to foreign infringement complaints is significant. Nearly 70 percent of cases submitted to the International Trade Commission take more than six months to resolve, with thirty percent taking more than one year to complete. Because intellectual property infringement costs companies billions of dollars per year in losses, some firms are forced to close before their investigation is completed. For example, despite significant improvements in patent review, complaints can take three years to resolve.
Additionally, there are structural costs to intellectual property protection that put significant strains on businesses and firms. The identification and enforcement of intellectual property rights alone on average cost businesses $1.4 million.
The production and sale of counterfeit goods in the United States is on the rise. A 2011 report showed that the U.S. Customs and Border Protection seized 24,792 counterfeit or pirated goods. This represented a 24.2 percent increase from 2010, totaling over $1.1 billion in lost sales.
Why is Global IP Theft Important?
IP Theft is potentially harmful to the physical health of consumers. The sale of counterfeit drugs totals approximately $75 billion each year worldwide, and has doubled since 2005. These drugs are sold without FDA evaluation and have the potential to be ineffective or contain toxic ingredients.
Counterfeit goods are also a primary source of funding for global organized crime. Much of the money made from counterfeit goods is used for the operation and expansion of global crime syndicates.
Most of the “developed” countries in the world have made great strides domestically to protect intellectual property through improved safeguards. However, developing countries pose the greatest risk to real global IP security. Between 50% and 80% of global IP theft originates in China. China is especially problematic because their industrial policy encourages IP Theft. The government’s prioritization of science and technology acquisition has led many Chinese businesses to engage in consistent and systemic IP Theft.
House Republicans have a plan to create more jobs and secure the future for hardworking taxpayers. The American people deserve controlled Washington spending, less regulation, a simpler tax code, and a government held accountable to its citizens.
This morning, President Obama will urge Congress to take action on student loans. The House already acted to keep rates from doubling on July 1st by passing a solution that included key parts of what the President wanted in a student loan bill.
What the President Asked for in a Student Loan Bill:
Market-Based Interest Rates
Protections for the Most Vulnerable
“The proposal in the President's FY 2014 Budget would keep rates from doubling on July 1, with a long-term solution that is deficit-neutral and offers affordable, market-based rates, particularly for those students and families who struggle most with the cost of college.”( Statement of Administration Policy, Executive Office of the President, May 22, 2013)
“We are interested in a long-term fix, we are interested in it being budget-neutral and look forward to continue conversations with you and others to find some common ground.” (Education Secretary Arne Duncan, Testimony before the House Education and the Workforce Committee, 05/21/13)
"The legislation provides stability for low- and middle-income students working to finance their postsecondary education, and prevents future uncertainty about whether Congress is going to act in time to change the interest rate." (H.R. 1911 The Smarter Solutions for Students Act, Bill Summary)
What They are Saying about the Smarter Solutions for Students Act
Echoes Obama's Plan
A Long-Term Fix
“The Republican bill echoes a plan Obama offered in April to tie interest rates to the yield on the 10-year Treasury bill, rather than setting them via an act of Congress.” (House approves Republican student loan bill, Nick Anderson, Washington Post, May 23, 2013)
“President Obama proposed pegging loan rates to the rate at which the government borrows, plus a relatively modest markup. On Thursday, the House Education and the Workforce Committee endorsed a similar policy. ... There’s no reason to delay passing such a policy.” (Reforming student loans is off to a good start, Editorial Board, Washington Post, May 20, 2013)
“The bill creates a permanent fix by setting student loan interest rates at a level equal to the 10-year Treasury note, plus 2.5 percent. Rates would be reset every year, and the bill would also cap rates at 8.5 percent.” (House passes GOP student loan bill, sets up Obama showdown, Pete Kasperowicz, May 23, 2013)
As nearly 1.8 million students graduate from American colleges and universities this year, it should be a time for celebration and excitement. Yet, most students are now saddled with extraordinary debt and are entering one of the weakest recoveries in history. For many, it is not inconceivable that they will be navigating uncharted territory as it relates to their prospects for a financially secure future. Unemployment among recent college graduates remains significantly higher than the national average. Moreover, the burden of student loan debt represents a major hurdle for recent graduates to overcome in order to achieve financial stability.
Facts You Need to Know:
Students in the Class of 2013 will graduate with an average of $30,000 in debt, the most debt of any graduating class in history. However, 2013 graduates will not hold this record for long: rapidly rising tuition nationwide will burden each subsequent class with more debt than previous classes.
In addition to being saddled with significant debt, recent college graduates experience a comparatively higher rate of unemployment. According to a Bureau of Labor Statistics (BLS) report, 12.6% of recent college graduates are unemployed in the United States. For unemployed college graduates, the burden of debt has an even greater effect on their financial well-being.
Another major problem is the issue of underemployment among recent college graduates. According to a 2013 poll conducted by Accenture, 41% of recent college graduates said that they were underemployed relative to their education. 284,000 recent college graduates hold jobs that pay minimum wage or less. Many of these graduates are simply unable to pay off their debt.
Why is Student Loan Debt Important?
Student loan debt has the potential to undermine economic growth. This year, collective student loan debt topped $1 trillion. More troubling, however, is the fact that wage growth has virtually stagnated despite an increase in average student debt.
The burden of student loan debt is also affecting borrowing in other markets. Students who borrow and accumulate debt are far less likely to take the financial risks and spend the money necessary to spur economic growth, including the purchase of cars and homes. According to a recent report, for the first time in ten years, 30-year-olds without a history of loans are more likely to have a mortgage than those with a history of student debt. Large student debts are seen as a primary factor in this trend.
An increasing debt-to-salary ratio affects the amount of disposable income available to college graduates. According to calculations from the Pew Research Center, the debt-to-salary ratio has increased from 1:1 in 2001 to 1.5:1 in 2010. Disposable income is necessary to promote economic growth and create jobs. Debt repayment will crowd out consumer spending, further contributing to stagnant growth.
Policy Feature Facts: Energy Policy under President Obama
The President has touted an “all-of-the-above” Energy Policy, which promises to put the United States on the pathway to domestic energy independence, economic growth, and job creation. But once again, the facts do not support the rhetoric.
What You Really Need to Know:
While oil and natural gas production has boomed in the United States, production on federal lands has fallen by 33% since 2007. In addition, the average time to process an Application for Permits to Drill (APD) has increased 41% from 2006 to 2011. Although the administration claims credit for the expansion of domestic oil and natural gas production, it has actually grown in spite of the President’s policies, not because of them.
While green, renewable energy is necessary to create a comprehensive energy portfolio, the administration’s efforts to fund green energy projects have largely failed. A study from the American Enterprise Institute (AEI) found that green energy projects started by the President have cost American taxpayers $26 billion while only creating 2,300 permanent jobs, an average cost of $11.5 million per job.
Due to the recent domestic natural gas boom, there has been increasing demand from U.S. companies to be able to export Liquid Natural Gas (LNG) to non-free trade countries. Exporting LNG has the potential to create between 73,000 and 452,000 jobs between 2016 and 2035. Since the President took office, only two petitions for LNG export facilities have been approved, and nineteen petitions remain pending.
In 2007, the Bureau of Land Management (BLM) approved 7,124 drilling permits with an average time of 196 days. In 2012, the BLM approved 4,256 permits with an average time of 226 days. This means that the BLM is taking 16% longer to do 60% of the work.
The BLM under President Obama has made a concerted effort to regulate fracking at the federal level in order to curtail its use. The BLM’s new revised rule for federal fracking permits will only serve to add more bureaucracy to the permitting process, further contributing to the underutilization of federal lands for fracking.
EPA regulations have led to the closure of 205 coal units representing more than 31,000 megawatts of power costing as many as 17,000 jobs. The EPA’s plan to regulate coal ash under the Resource Conservation and Recovery act is estimated to cost over 300,000 jobs and drive up the price of electricity.
Three weeks ago, the April monthly jobs report indicated signs of improvement. The Bureau of Labor Statistics reported that unemployment rate decreased from 7.6 percent in March to 7.5 percent in April. However, as referenced in previous issues, the drop in the unemployment rate is deceiving. April’s labor force participation rate (LFPR) and employment-population ratio (EPR) reveal a much different picture of the economy’s strength. Another key indicator determining the strength of the current economic recovery is the number of individuals who are considered “long-term unemployed”. Analyzed together with the LFPR and the EPR, long-term unemployment is important in understanding exactly how frail the current recovery is.
What is Long-term Unemployment?
The Bureau of Labor Statistics defines the “long-term unemployed” as active participants in the labor force who have been unemployed for more than 27 weeks. This number does not take into account those workers who have dropped out of the labor force and stopped looking for work. The current size of the long-term unemployed population is attributable to a weak economic recovery. Low aggregate demand for goods and services has resulted in reduced hiring. There are also structural factors that contribute to long-term unemployment, including a population that does not have the skills necessary to transition to available jobs and geographic immobility.
Facts You Need to Know:
Though the unemployment rate dropped between March and April, approximately 4.4 million Americans have been without a job for 27 weeks or longer, representing 37.4 percent of the total unemployed population. This is down only slightly from March when they accounted for 39.6 percent of the populations. This number is still more than triple the 1.3 million long-term unemployed at the start of the recession in December, 2007.
Over the past 12 months, the number of long-term unemployed has decreased by 687,000, but their share of the unemployed has decreased by only 3.1 percent.
The average unemployed person has been out of work for 36.5 weeks, down from 40.7 weeks in December, 2011. At the beginning of the recession, the average duration of unemployment was 16.6 weeks. The peak average duration of unemployment (40.7 weeks in December 2011) has been 20 weeks longer than the most recent recovery.
According to Generation Opportunity, a non-partisan youth advocacy organization, unemployment among youth (aged 18-29) stands at 11.1 percent. However, when adjusted for a declining labor force participation rate, the effective unemployment rate among young people is 16.1 percent. This means that nearly 1.7 million young adults who were once considered long-term unemployed have given up looking for work due to a lack of economic opportunity. This is the highest sustained rate since World War II.
Why Does a “Pro-Growth” Agenda Matter?
Economic growth is the primary driver of job creation and employment in the United States. Though the administration points to decreasing unemployment as a sign of economic strength, it fails to recognize the unprecedented weakness of the current recovery and the current disincentive to reentering the workforce. Current economic growth and job creation are barely sufficient to sustain normal population growth. Moreover, slow economic growth has also hindered the creation of millions of jobs necessary to combat long-term employment. It is only through real economic growth that the jobs necessary to speed the recovery, broaden the tax base, and instill confidence in labor market will be created.
It is also important to mention that many of the long-term unemployed lack the skills necessary to transition back into the workforce particularly in emerging industries like information technology, engineering, and other skilled trades. This adds additional economic costs for the unemployed who need to learn the necessary skills for growing industries as well as for companies who will need to use additional resources to train new employees. Long-term unemployed also suffer from institutional barriers due to their status. A study from the Boston Federal Reserve showed that candidates who recently lost a job were more likely to be called for interviews than those who had been out of work long-term, further contributing to the economic and psychological burdens of the long-term unemployed. This further increases the risk of a permanently unemployed class developing in the United States.
Simply put, the current rate of economic growth is insufficient in encouraging willing workers to enter the workforce. Implementing an agenda which focuses on reinvigorating anemic economic growth is extremely important in reducing long-term unemployment and ensuring stable long-term job growth.
Congressman Andy Harris, M.D., delivers this week's address on the devastating effects of Obamacare. Labeled a "train wreck" by one of its authors, this legislation will raise health care insurance premiums, stifle medical innovation, and cost jobs across the country - not to mention the thousands of pages in new regulations, as shown by the "Red Tape Tower." That's why the House voted and passed legislation to repeal Obamacare.