Wednesday, October 17, 2012

Unemployment: the Numbers behind the Numbers

Jobs growth has not even kept pace with growth in the working-age population, much less restored jobs lost in the recession. The working-age population increased by 206,000 in September while new jobs grew by 114, 000, and that's down from 141,000 in August. This isn't just a one month phenomenon. Job growth has failed to keep up with population growth throughout Obama's term in office. Since he became president, the working-age population has grown by 8.4 million, far short of even Obama's exaggerated claim to have created 5.2 million new jobs. If one measures from the lowest jobs point, in February 2010, there has been an increase of just 4.3 million. And the economy is still 4.5 million jobs short of where it was in 2007. For all of 2012, job growth has averaged 146,000 per month, down from 153,000 in 2011. The labor force participation rate for men is now the lowest on record, going all the way back to 1948.

Since Obama took office, the greatest government stimulus spending and monetary intervention in world history has produced negative results. GDP growth slowed from 2.4% in 2010 to 2.0% in 2011, to l.6% in the first half of 2012. We are going in the wrong direction. Obama's policies aren't working. They have produced effects opposite from what he promised, and a second term for him won't have a different outcome because his methods are fundamentally wrong. And the Fed has announced unlimited purchases of government debt ($40 billion per month in the mortgage market) for as long as job growth remains weak. That, too, will be repetition of a policy that has failed to produce economic growth and reduce unemployment.

The decline in unemployment in September to 7.8% from 8.1%, which broke the string of 43 consecutive months above 8%, is touted as evidence of success. But despite the 0.3% decline in the unemployment rate, there was a loss of 216,000 full time jobs. How can there be fewer full time jobs when the unemployment rate has gone down? For one thing, many people gave up looking for work and thus are no longer counted as part of the work force. Second, the 114,000-job increase includes individuals “working part time because their hours had been cut back or because they were unable to find a full-time job,” explains the Bureau of Labor Statistics report. The BLS report of 114,000 jobs gained includes those part-timers in the BLS U-3 classification. However, if you look at the BLS U-6 classification, which the BLS calls “Actual Unemployed,” it includes “total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons,” you see that the unemployment rate remained unchanged at 14.7%. That's still above the 14.2% rate when Obama became president.

The high unemployment and loss of 216,000 higher-paying full-time jobs are major factors in declining real income. Economist John Lott reports: “Mid-range occupations accounted for 60% of jobs lost during the recession, but low-wage occupations accounted for 58% of hiring during the recovery.” As a result, says Peter Ferrara, writing in Forbes, “Since President Obama entered office, annual median income has declined by $4,019.... Moreover, the decline has been greater since the recession supposedly ended in June, 2009, than it was during the recession.” (Underlining added.)

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