The latest jobs report shows that the hot economy is finally addressing one of the most stubborn labor market problems: labor force participation. This is one of the few economic indicators that has not recovered to its pre-recession levels. Millions of Americans, including prime-age men and women, have mysteriously dropped out of the labor force over the last several years.
Until now. People are returning to the workforce in droves — more than 600,000 new workers last month alone — to take advantage of this historic job market. The unemployment rate continues to pivot around a 21st century low of 4 percent — less than half the rate of six years ago.
In Arizona, we’re also hitting a sweet spot of low unemployment and big new jobs gains. Bedrock state industries are thriving, pushing our own unemployment rate down to just 4.7 percent. Construction jobs are up 9 percent higher than this time last year; manufacturing in the state has grown 5.5 percent, the most in almost 20 years. Electronic parts fabrication is up nearly 10 percent.
Notably, we’re tallying these gains despite record population growth. Phoenix is the second fastest growing city in America, and it’s seen manufacturing jobs rise just about every month for more than a year. Outcomes like these explain Arizona’s ranking as the 13th best economy in the US and 11th best in economic activity, according to a new report issued by WalletHub.
What’s driving these historic labor market gains? The new tax code, which is adding fuel to this firing economy.
Consider: For businesses like my seniors-oriented consultancy and the small-to-midsize firms we work with, there is a new 20 percent small business tax deduction that passed as part of broader reform. That means we can protect one-fifth of our income from tax. No longer are we subject to a marginal tax rate of 40 percent.
According to a recent Bank of America small business survey, most respondents described these new tax provisions as a “game changer.” According to a poll by the Job Creators Network, small businesses support the new tax code by a margin of 10-to-1.
Small business tax relief strengthens the economic backbone of the state. Here in Arizona, more than two in five people employed in the private sector work for small businesses. In-state, small firms make up more than 99 percent of all businesses.
And when small businesses win, so does the whole economy. With more money protected from taxes, small business can raise wages, hire, and expand. My business is raising wages for its top performers and looking to hire new talent as a direct result of the new tax code.
More money on Main Streets and less sent off to the federal government means more vibrancy, opportunity, and economic growth. As a result, the economy is poised to return to its historic three percent growth rate. Wages are growing at their fastest pace in a decade.
While the latest polls shows the public is still divided over tax cuts, two-thirds understand these positive economic implications, according to a national survey by Luntz Global Research.
When you see the stubborn labor force participation rate finally increase, you’d have to have blinders on not to understand these economic benefits. Voters shouldn’t take them for granted.
Tony Siebers is President of Steep Solutions, a Phoenix-area Project Management firm and founder of SeniorMoves.org.
The views expressed in guest commentaries are those of the author and are not the views of the Arizona Capitol Times.