The American Spectator
Thirty-one months after the start of the recession, last week’s jobs report for July was a fiasco. The Labor Department reported yet another 131,000 jobs lost in July. The Department also revised the June report downward to show 221,000 jobs lost that month from 125,000. The unemployment rate remained at 9.5% only because 181,000 additional discouraged workers left the work force, and so were not counted as unemployed. That makes one million who have fled the work force since April.
As this column has repeatedly noted, the historic data recorded by the National Bureau of Economic Research shows that the average recession since World War II has lasted 10 months, with the longest previously being 16 months. What is President Obama’s excuse for still losing hundreds of thousands of jobs 31 months after the recession began?
The July labor report records the army of the unemployed at nearly 15 million. The long-term unemployed, defined as those unemployed for more than 6 months, remained stuck at nearly 7 million, the highest since the Great Depression. The number of additional workers employed part time for economic reasons stood at 8.5 million. The Bureau of Labor Statistics (BLS) defines these workers as those who “were working part-time because their hours had been cut back or because they were unable to find a full time job.”
Another 2.6 million were defined as marginally attached to the labor force, including discouraged workers who had given up looking for work. The BLS explains that these individuals “wanted and were available for work, and had looked for a job in the prior 12 months.” But they were not counted as unemployed because they had given up looking for work during the prior 4 weeks.
The army of the unemployed and underemployed consequently totals nearly 26 million. This would add up to an unemployed and underemployed rate of 16.5%, more than 2 ½ years after the recession started.
Moreover, major components of the Obama/Democrat political base are getting whacked hard. The African-American community is suffering a depression, with unemployment stuck over 15% for over a year now (15.6% in July). Obamanomics is proving to be the most effective anti-immigration policy in history, with Hispanic unemployment stuck at 12.1% in July. Young voters are particularly suffering as well, with teenage unemployment at 26.1% in July.
The Collapsing Work Force
But the headline jobs and unemployment numbers don’t give a complete picture of America’s suffering under President Obama’s neo-socialism. In yesterday’s Wall Street Journal, AEI Vice-President Henry Olsen examined the complete revelations provided by the civilian-employment population ratio.
As Olsen explains, while the unemployment rate measures the percentage of working age Americans who are actively seeking jobs but do not have one, “the civilian-employment population ratio measures the percentage of working age Americans who have a job, whether they are seeking one or not.” The trend of this ratio reflects the full extent of the missing discouraged workers who the agent of hope and change has left hopeless, the full jobs gap that has to be made up, and how far we are falling behind in terms of jobs that need to be created. Olsen reports:
Looking at this ratio, America is suffering its largest drop since World War II. When the economy was at its Bush-era height, in 2007, a little over 63% of adult Americans had jobs. Friday’s [July jobs] report shows that only about 58.4% [now] do, a decline of nearly 5 percentage points. While the unemployment rate remains steady at 9.5%, the employment-population ratio continues to fall each month. In April it was 58.8%, in May 58.7%, and in June 58.5%.
Olsen’s analysis is reflected in the accompanying graph, which shows how many jobs we have lost from where we should be with full recovery.
The Failure of Keynesian Economics
The economy is stuck in record postwar stagnation because since the beginning of this recession it has been addressed with throwback Keynesian economics, proven to fail long ago, rather than the more modern supply-side economics that proved so successful in leading to a 25 year economic boom starting in 1982. President Bush joined with the Democrat Congress to enact a Keynesian stimulus package in February, 2008 that had no discernable beneficial effect on the economy. President Obama, elected promising change, passed another Keynesian stimulus package a year later, only 6 times larger, which has again failed to generate any real recovery.
A stimulus package is “Keynesian” when it is focused on increasing demand, either by increasing government spending and deficits, or by “putting money in people’s pockets” to spend, through tax rebates or tax credits. (This is why Obama’s repeated claim that one third of his stimulus package was tax cuts is inapposite. They were all tax credits, and refundable to boot, which means they mostly involved checks going to people who had no further income tax liability to reduce.). The Bush/Pelosi February 2008 stimulus, and the Obama/Pelosi February, 2009 stimulus, were almost entirely composed of such Keynesian policy initiatives.