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Grand Forks Herald: Focus should be on wages, not more jobs

U.S. employment has jumped again, according to the Bureau of Labor Statistics, and politicians are cheering.

The most recent report shows nonfarm payroll employment increased by 261,000 nationwide in October. It prompted President Donald Trump to tweet "Jobs! Jobs! Jobs!"

Jobs are great, but too much hay is being made by politicians who tout job creation over wage increases.

Of the 261,000-job increase in October, 89,000 focus on food service and related industries. According to the BLS, the jump likely can be attributed to hurricanes that hit the southern coasts earlier this year. In September, for instance, there was a 98,000 decrease in food-service and hospitality jobs.

Meanwhile, professional and business services added 50,000 jobs in October. That's in line with monthly averages over the past year, so it's really nothing new. Same goes for the health-care industry, which saw an increase of 16,000.

A real increase came in manufacturing, which saw 24,000 new jobs in October.

The problem with the most recent jobs report is twofold: First, the great growth probably is a simple process of correction in the South following hurricanes; and second, most of the new jobs are low-paying and aren't contributing to true economic growth in the United States.

Earnings are up 2.4 percent this year, but that's barely keeping up with inflation. Stagnant wages—not jobs—are the problem.

In North Dakota, there are still thousands of unfilled job openings and with unemployment at 1.9 percent, we really don't need more. Meanwhile, it's not the government's job to just declare higher wages. For example, we are against any effort to create a $15 minimum wage.

So what about a reduction in the corporate tax structure, which has been pushed by Republicans in recent weeks?

Some independent analysts — not outwardly affiliated with a political party — say reducing the corporate income tax is among the best methods available to increase individual wages for workers across all categories. It's worth listening to them.

A reduction in the corporate tax rate, now at 35 percent, has potential to increase capital investment and, in turn, production. That doesn't guarantee a wage increase—perhaps proven by Ronald Reagan's trickle-down economics—but the potential exists.

Conversely, higher taxes reduce business capital investment and thereby reduce production. With lower production, wages remain stagnant.

Republicans say the new tax structure could increase a typical household income by $2,000 to $7,000. If true — and we acknowledge that it's just hypothetical — that's a meaningful raise.

We're weary of politicians cheering about job creation and using that as a measuring stick of political success. Truth is, it's a trend that's been happening for many months, including during the Obama presidency. Bill Clinton was exceptional at it.

However, maybe Republicans are on to something with their proposal to decrease the corporate tax rate, increase capital, boost productivity and thereby create an environment in which wages can be nudged upward.

This editorial first appeared in the Grand Forks Herald Nov. 15.

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