Fatal Conceit

The Fatal Conceit

Only 120,000 Jobs Created in March as 164,000 Leave Labor Force, Total Employment Drops by 31,000

Posted by Zachary Woodman on April 6, 2012 at 10:45 PM

The Bureau of Labor Statistics have released a report which shows that 120,000 jobs were created last month, missing estimates of well over 200,000, and the unemployment rate has dropped slightly to 8.2%. However, the reason the unemployment rate has dipped is because the number of people in the labor force has dropped by 164,000 as the unemployed give up looking for work and have their unemployment benefits stop. The total number of employed people has fell by 31,000 as 42.5% of those unemployed have been long-termed unemployed. 2.4 million People remain marginally attached to the labor force, meaning they have given up looking for work, which is almost the same amount as a year ago.

If labor force participation rates were at the pre-recession levels of 66.3% (as in August of 2007), we would have 160.84 million people in the labor force. With current employment rates, that would mean 11.7% unemployment. To get unemployment down to pre-recession levels of between 4% and 5% assuming a pre-recession labor force, we would need to have 153.6 million people employed, that would mean 11.57 million jobs would need to be created. Eleven million jobs are needed still to get unemployment back to pre-recession levels. That means, created 250,000 jobs per month, it would take four years to recover. Creating 120,000 jobs per month as this month’s job creation was, eight years of recovery.

Despite the fact the fact that we still need 11.56 million jobs to restore the labor market back to pre-recession levels, President Obama claims that he’s created jobs and this is good. “Our economy's now created more than 4 million private sector jobs over the past 2 years,” Obama said in a speech to women today. “And more than 600,000 in the past 3 months alone.” That’s fascinating because we’ve had a net loss of 740,000 jobs since Obama came into office, and that’s not counting the number of unemployed who’ve dropped out of the labor force. Yet somehow the fact that it would take eight years to recover under Obama’s policies is sign of improvement?

As for President Obama’s performance, if labor participation rates were at January 2009, the month Obama was sworn in, levels of 65.5%, 158.9 million people would need to be in the labor force, 4.2 million less than really are. The unemployment rate would be 10.62% assuming constant pre-Obama labor force levels. Why exactly are we celebrating over unemployment that, when taken account for workers who have withdrawn from the labor force, is at 10.62%?

On this chart, “Real Unemployment” is assuming a constant labor participation rate of pre-Obama levels of 65.5%, meaning it takes into account workers who’ve left the work force due to discouragement. “BLS Unemployment” is unemployment using Bureau of Labor Statistics numbers which do not take into account the terminally unemployed not in labor markets. Meanwhile, the Labor Participation Rate, which is almost at a constant downward trend, is the actual labor participation rate the BLS numbers are based off of. Numbers are seasonally adjusted:

 

Note how the real unemployment is consistently higher than BLS as it takes into account those who have left the workforce. It also coincides with the labor participation rate’s plummet, and has skyrocketed under President Obama as the labor participation rate has plummeted.

President Obama promised that, had his stimulus passed, unemployment would not increase above ten percent. The result? Unemployment has, in actuality, yet to dip below 10%. We’ve lost almost a million jobs net and need 11.56 million to get back to prerecession levels. Meanwhile, growth has slowed to nothing to the point that, for there to be a genuine labor recovery, it would take 4-8 years under current rates.

Meanwhile, the human suffering has extended and Obama despicably takes this painfully slow growth, calls it a “recovery” and uses this human suffering as a political ploy? He says he just needs more time? They didn’t need more time in the 1920’s when, after cutting the budget and the debt, they had unemployment plummet from 12% in 1920 to 2% in 1923. Where are we three years later under Obama? Unemployment consistently remains above 8% using numbers which don’t count for quite a significant number of unemployed people not in the labor force, and we have real unemployment at 10.6%

The facts don’t lie: Obama’s economic policy has failed. It is clear that the expansion of government into people’s lives, the expansion of debt via increased spending, constant threats of increased taxation on the producers, and high inflation have not yielded economic growth.

 

References:

Bureau of Labor Statistics. “Current Edition of Employment Situation.” BLS.gov. United States Department of Labor: 6 April 2012. http://bls.gov/schedule/archives/empsit_nr.htm. 6 April 2012.

Daly, Corbett B. “Obama says still more work to do to create jobs.” CBSNews.com. CBS Interactive: 6 April 2012. http://www.cbsnews.com/8301-503544_162-57410503-503544/obama-says-still-more-work-to-do-to-create-jobs/. 6 April 2012.

Woods, Thomas E. “The Forgotten Depression of 1920.” Mises.org. Ludwig von Mises Institute: 27 February 2009. http://mises.org/daily/3788. 6 April 2012.

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