Ed Luce wrote in the Financial Times, “According to government statistics, if the same number of people were seeking work today as in 2007, the jobless rate would be 11 percent.” Remember that the unemployment rate is not how many people don’t have jobs (the U6 rate of 15.6%), but how many people don’t have jobs and are actively looking for a job (the U3 rate of 8.6%). Luce continued, “Last month, unemployment fell from 9 percent to 8.6 percent… more than half of the fall was accounted for by a decrease in the numbers ‘actively seeking’ work. The 315,000 who dropped out of the labour market far exceeded the 120,000 new jobs.”
Since 2007, the percent of the population that either has a job or is actively looking for one has fallen from 62.7% to 58.5%, representing millions of people leaving the workforce because they can’t find a job, so they’ve stopped looking.
Democrat National Committee (DNC) chair Debbie Wasserman Schultz insisted that unemployment hasn’t go up during Barack Obama’s term of office, a hilarious argument. So let’s see just what has happened since January, 2009, (not 2007 as Luce used) when Obama took office. (Yes, I know that he inherited an economic mess, but after almost three years of his “getting Americans back to work” message, a comparison between then and now will be both entertaining and informative.)
- Unemployment rate in January, 2009: 7.8% (U3), unemployment rate in November, 2011: 8.6% (U3); increase: 10.3% from 2009 to 2011 (2009 is base for comparison)
- Unemployment level (people) in January, 2009: 11,984,000: in November, 2011: 13,303,000; increase: 11.0%
- Number of people not in labor force, not actively seeking work, January, 2009: 80,554,000, in November, 2011: 86,558,000; increase: 7.5%
- Civilian workforce participation rate in January, 2009: 65.7%, in November, 2011: 64.0%; decrease: 9.7% from 2009 to 2011 (2009 is base for comparison)
- Number of employed people in January, 2009: 133,563,000, in November, 2011: 131,708,000; decrease: 1.4%
The two numbers that really jump out are the unemployment level and the number of people not in labor force. First, the employment level: there are now (November, 2011) 1,303,000 less people working than when Obama was inaugurated. Second, the number of people not in labor force: this figure is quite interesting because it is used (by the administration) to manipulate the unemployment rate (U3) reported by the MSM. Remember, as the people not seeking work increases, the reported (U3) unemployment rate decreases. That is the “trickery” behind the unemployment rate drop of 9% in October, 2011, to 8.6% in November, 2011.
Further, economists and the Obama administration are now saying that an unemployment rate of 7% to 8% is “normal” and “acceptable.” The new normal may be more like 7% to 8%, a situation that worsens the outlook not only for job seekers but also the forecasts for public finances. Those predictions come from Joseph Stiglitz, Nobel laureate and economics professor at Columbia University. The problem, says Stiglitz, is that gross domestic product isn’t likely to grow fast enough over the next few years to create the number of jobs needed to bring down the jobless rate by much. Stiglitz advocates for large-scale fiscal stimulus (we all know how well that worked), but he acknowledges that the current political environment makes that scenario unlikely at best.
A few years ago, a jobless rate above 7% would have triggered panicked shouts for government action. If Stiglitz’s view proves correct, it may take so long for the jobless rate to carry a 7-handle that once we get there, many workers, economists and politicians will shout for joy.
I just finished reading That Used To Be Us by Thomas L. Friedman and Michael Mandelbaum. They say that the world is “flatter” (their term for a much more accessible world, particularly when it comes to labor) primarily because of ubiquitous information technology (IT). They suggest the ONLY way to stay even, much less get ahead, economically, and to keep a job, is through education. They also believe in global warming, so we have to take the good with the bad. So until this country (and the world) gets serious about education that enhances skills for which others are willing to pay, Stiglitz may be correct, or even optimistic. I just hope my children and grandchildren can survive the anarchy and riots that will result from high unemployment.
But that’s just my opinion.
Access to other articles like this one can be found at RWNO, my personal web site.