U.S. Federal Reserve Chairman Jerome Powell highlighted during a recent Senate Banking Committee hearing that the “best way the Federal Reserve can help reduce racial inequality is to return the U.S. labor market to its pre-coronavirus strength.”
Indeed, ensuring a thriving job market by advancing economic freedom is the key fundamental element of reducing poverty, dependence on government, and other social illnesses.
Prior to the current coronavirus pandemic, the U.S. economy had been in the midst of the longest economic expansion in recorded history, benefiting and empowering many, most of all lower-income and less-skilled Americans.
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Measurable increases in investment, job openings, and economic confidence had markedly taken place following the 2017 Tax Cuts and Jobs Act and a dramatic reorientation of the U.S. administrative state away from increasing regulatory burdens.
The U.S. economy added 2.5 million jobs in May, reversing the disheartening trend of the previous three months’ job-market situation caused by the coronavirus outbreak. Additionally, the unemployment rate fell by more than a full percentage point to 13.3%.
The quicker-than-expected rebound is likely driven by Americans who are ready to reengage in their communities and commercial life. Despite the welcome surprise, it is undeniable that more than 20 million Americans still remain unemployed, and the government can’t sustain their economic livelihoods indefinitely.
Along with the evolving labor market that changed trends earlier than predicted, much remains to be seen and done. Policy makers now have the unique opportunity and obligation to ensure the recovery will also be faster than anticipated. America’s entrepreneurial private sector must drive economic recovery, unshackled from obstacles to investment, work, rehiring, production, and trade.
One of the immediate and impactful starting points is to make the Tax Cuts and Jobs Act permanent. Raising taxes will hurt workers and consumers. Higher taxes cause people to work less, consume less, and save less, which means a less dynamic economy.
Keeping taxes low is an important component of encouraging innovation and entrepreneurship, and it is the primary way to promote worker freedom and prosperity.
Equally important is to further scale back the growth of regulations over the past decades that hinder new investment. Eliminating costly, ineffectual regulations is needed more than ever as it would lower the costs of new investment, providing much needed business certainty and efficiency.
According to the annual Index of Economic Freedom, America’s lost economic freedom has been somewhat regained due to the pro-growth policies of recent years. However, as Heritage Foundation president Kay James reminds us in the recent special report, “Restoring America as the Land of the Free,”
Americans are so very fortunate to live in a country where the Founders understood the importance of liberty and unparalleled economic freedom. American society and Americans’ standard of living have flourished because of it. However, liberty and economic freedom are always at risk, whether through massive government spending bills that drive the country and citizens deeper into debt; or through small, seemingly innocuous regulations like efficiency mandates for lightbulbs.
Working to advance America’s economic freedom means working to safeguard those precious freedoms and swiftly revitalize the extraordinary dynamism America enjoyed so recently.