Biden Admin's Regulations, Taxes Cause Unemployment

Biden Admin's Regulations, Taxes Cause Unemployment
A customer looks at a display of board games while shopping at a Target store in San Francisco on Dec. 15, 2022. (Justin Sullivan/Getty Images)
Antonio Graceffo

The Biden administration wants to force wage hikes and increase regulations and taxes, which the White House claims will help workers. In reality, however, such moves will result in increased unemployment, offshoring, and outsourcing, as well as automation.

Since coming to office, President Joe Biden has urged Congress to pass a law raising the federal minimum wage to $15 an hour. On Aug. 30, the administration announced new legislation that would force employers to pay overtime rates to salaried employees who earn $55,000 or less. The White House claims that this would increase the earnings of low-income families. But this legislation will accelerate a trend that, for the past 40 years, has seen the elimination of full-time jobs with benefits as employees are shifted to part-time and 1099 (independent) contractor positions.
The term “gig” is often used to put a positive spin on the loss of real, full-time jobs, but gigging results from increased employment costs caused by legislation and regulation. Some examples of companies with a predominantly part-time or 1099 contractor model are Airbnb, Amazon Flex, DoorDash, Fiverr, Instacart, Lyft, TaskRabbit, Uber, and Upwork.

When labor costs increase, demand for workers decreases. Most people know that supply and demand are regulated by price in every other product category: We buy more shoes, more food, a new car, and even borrow more money when cheaper. But many people would have you believe that labor is the one product for which demand remains constant despite price increases. American supermarkets are proof that when employment becomes more costly, the demand for workers decreases. Most supermarkets now have self-checkout, and each self-checkout kiosk represents multiple jobs that were eliminated.

In July, the Environmental Protection Agency (EPA) proposed legislation to reduce hydrofluorocarbon emissions by 40 percent by 2028. Earlier in the year, the EPA recommended carbon pollution standards for fossil fuel-fired power plants, which the Biden administration claimed would bring $85 billion in climate and public health benefits over two decades. The legislation has faced fierce opposition, however, because it would force plants to either shut down or switch to renewable power sources, which would increase the cost of energy, negatively affecting every U.S. business and American person.
Increasing the regulatory burden on businesses drains resources from innovative manufacturers, discouraging investment in research and development. EPA regulations and other legislative restrictions damage the ability of U.S. companies to compete with companies from countries where salaries, taxes, and regulatory costs are lower. This means lower profitability for U.S. firms, resulting in fewer jobs. To remain competitive, U.S. firms offshore and outsource work overseas. And it isn't just manufacturing jobs being sent abroad but also everything from information technology to medical records, call centers, and data entry.
During his Labor Day speech, President Biden claimed that the United States was no longer exporting jobs under his watch. But this statement is a bit misleading. When a U.S. company decides to open a new operation abroad instead of in the United States, it creates jobs in a foreign country. But because those jobs never existed in the United States, the unemployment statistics don't change, so the administration can claim a victory.
President Biden also claims that he has encouraged companies to return to the United States. While it's true that some factories are reshoring, they're also increasing automation. Over the years, robots have become cheaper. Every time the cost of employing workers becomes more expensive, the viability of robots increases. It would be accurate to say that President Biden has done a lot to advance the interests of robots.
The White House’s business tax provisions in the fiscal year 2024 (FY24) budget call for a 33.33 percent increase in the corporate income tax rate to 28 percent from 21 percent. There are three ways corporations can deal with such a large increase in cost. The first is to pass it on to consumers in the form of higher prices. Another option is to shut down, causing unemployment. A third option is to cut costs.
For most businesses, labor costs are about 30 percent of total costs, so this is often the first category of spending that companies cut when faced with difficulties. Consequently, unemployment will rise.
The House Ways and Means Committee estimates that the Biden administration’s FY24 budget would destroy 335,000 jobs, cut workers’ wages by 1 percent, and reduce GDP growth by 1.3 percent. At the same time, Vice President Kamala Harris has promised to increase the pay for workers on federal projects, a pay raise that will come from tax dollars.

This is a classic example of robbing Peter to pay Paul. Ms. Harris will take money from people who don't work for the government to pay those who do. There's no accompanying legislation demanding that the workers increase their productivity. The increased taxes will benefit government employees while hurting U.S. companies and their workers.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times.
Antonio Graceffo, Ph.D., is a China economic analyst who has spent more than 20 years in Asia. Mr. Graceffo is a graduate of the Shanghai University of Sport, holds a China-MBA from Shanghai Jiaotong University, and currently studies national defense at American Military University. He is the author of “Beyond the Belt and Road: China’s Global Economic Expansion” (2019).