Last week (11-16-2010) Glen Beck was complaining about Obama and the Democrats fixing the unemployment numbers. Yes and? Of course they do. Hoover did it. Roosevelt, Nixon and? Why would Hope and Change be any different? None the less it intrigued me so let’s have a look at how bad employment is now.
First I will limit the time frame to 10 years. That’s manageable and what people can comprehend. Needless to say 1929 to 1940 and 1979 to 1983 were just as bad as or worse than today. But I will ignore looking at those years and focus on just the latest decade.
Glen Beck accused the White House of fudging with the unemployment numbers. It wouldn’t be the first time.
The first thing that pops out about employment today is non farm payroll numbers are close to a decade low. After trillions of TARP money and “stimulus” shovel ready jobs have increased in this sector a whooping 0.67% from the low of 129,588 in December of 2009 (thousands, monthly, seasonally adjusted) to 130,462 for October of 2010. Not a lot of bang for the buck. With the same growth rate as 2007 the number would be about 141,388. 10,926,000 jobs short of a well run moderate growth economy.
Now let’s see what happened from August of 2003 to December of 2007 when coincidently the second of Bush’s tax cuts were passed in 2003. Non farm payrolls went up from a low of 129,822 in 2003 to a peak for the decade at 137,951. A growth rate of 6.3%. During that same time the population grew 4.2% so there was a net positive affect on employment during the Bush years after the tax cuts.
Contrast that with a population growth rate of 0.71% and a 0.67% increase in nonfarm payroll and one could conclude Obamanomics is at best a break even jobs growth plan. Nonfarm payrolls are important because 80% of our GDP comes from these workers.
If we look at the decade low of 129,588 as 0% and the high of 137,951 at 100% we are currently at 10.5% of potential employment for the decade. Pretty abysmal by any standards. Not completely in the ditch but way below the economic potential for America.
Now the Obots will say Bush drove the car into the ditch. I would say economic policies have a lag time of 6 to 9 months. Obama has had plenty of time to turn the economy around. Let me put it this way. If you put me, Dan Mitchell, Arthur Laffer, Peter Schiff or any economist that is not a Keynesian and understands production and the economy (Paul Krugman need not apply) would be booming in 6 to 9 months money back guaranteed. A year at the most. The problem would not be the booming economy but all that inflation unleashed from the trillions hidden away waiting for a better day.
Nonfarm payroll numbers for the last decade.
A second indicator of our employment situation is the manufacturing jobs. This is broken up into durable and non durable goods. Let’s look at durable goods. These goods are what we as a nation produce for our and the worlds consumption. When the dollar collapses these will be the industries that will be able to produce what we need to survive and trade for with other countries. If you destroy the manufacturing capacity of a country the country becomes a tourist destination and little else. Certainly not a superpower.
Manufacturing employment peaked at 12,320 (thousands of jobs) in June of 1979. The decade started off with 10,873 in October of 2000 and dropped to 8,856 in October of 2003. From that point there was a increase of 2% to 9,031 in June of 2006 and then a drop of 22.1% to 7,036 in December of 2009. Since then there has been a increase of 2% to 7,183 but 20.5% below the Bush years peak and 41.7% below 1979 levels.
A country cannot sustain itself on imported manufactured goods indefinitely. Tax policy should encourage manufacturing not drive it overseas to China. Non durable goods show a similar decline down from 6,301 (thousands) to 4,486 down 28.8% since Bush was inaugurated.
Durable goods employment steadily declining. When the dollar is worthless the people and politicians will realize how important this sector of the economy is.
The third number that is very disturbing is civilian employment which peaked at 146,368 (thousands, monthly, seasonally adjusted) to a low of 137,792 in December of 2009 and now 139,061. A loss of 7,307,000 jobs according to the US Department of Labor. 7,307,000, did you get that?
So what is the bottom line? According to the White House the unemployment rate is 9.6%. Glen Beck stated that this is bogus. So what is the real unemployment rate?
If we compare the pool of workers with jobs over the last decade, excluding institutional and military, employment peaked out at 63.4% in 2007. It dropped to 58.2% in 2009 and currently stands at 58.3%.
If we look at population growth from March of 2007 to December of 2009 there was a increase of 2.5% and a drop of jobs by 6.2%. The labor force participation rate reflects this as well dropping from 67.2% in March of 2001 to a decade low of 64.5% today. Simply put the unemployment rate is artificially low if you compare it to the employment enjoyed for the decade.
The population has increased 6% since 2004 but job growth is 0%.
Today’s worker has much more competition and fewer jobs than just four years ago. The unemployment calculation drops those who quit or do not find employment within a defined number of weeks. Exceed the designated number of weeks and workers disappear from the calculations.
Basically we have taken a giant leap backwards to June of 2004 with our employment including the massive increases in government jobs. The population has increased 6% since then from 293 million to 310 million. A lot more people looking for the same jobs.
Think about it. We have added 17 million more mouths to feed, cloth and shelter and not created one new job.
The first rule of economic policies no matter who you are is to grow the economy faster than the population growth. Both Obama and Bush with their Keynesian economic policies have failed miserably. This isn’t stagnation this is negative economic job growth when population is taken into consideration. Liberals can hem and haw all they want to about “saving” jobs but when the amount of money is taken into consideration, the added debt, the inflation coming our way just to stay even it simply wasn’t worth the negatives.
Yes Glen Beck does have a legitimate beef with the unemployment numbers. My unofficial guess? About 16% to 17.5% if all the workers (including illegals) who wanted work or were employed during the boom years are counted and excluding part timers. Part timers would shoot the number even higher to over 20%. Make no mistake these are hard economic times and unfortunately history shows us with economic incompetents in the Federal Reserve and White House it can and will get much worse. Unemployment went up to 24.9% in 1933 and stayed in double digits for the rest of the decade.
The only answer is to fire Obama and Bernanke and replace them with capitalist and monetarist who understand the value of a dollar.
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