Jobs, Jobs, Jobs?
Topic: Decline of the West
The December 2011 jobs report, showing that the economy added some 200,000 jobs while unemployment dropped by a tenth of a percentage point, was greeted by many Democrats and progressives with cheers and applause. Finally, they cried in glad accents, the Obama Administration’s economic policies are beating fruit! The recovery is gathering steam! Let the good times roll!
Who can blame them for their giddiness? Up to this point, Obama's management of the economy—if a president can be said to "manage the economy," a dubious proposition—has been something less than stellar. In fact it’s been dismal. Trillions have been blown on fancy schemes like “green jobs” to little discernable effect. Things got so bad that Democratic Party grandees were reduced to arguing that extending unemployment benefits would create jobs—600,000 according to House Minority Leader Nancy Pelosi. They were desperate for good news, and now it looks like they’ve gotten it.
But not so fast. Though 200,000 jobs sounds like a big number, it’s actually no big deal. As Jay Cost explains in this article for the Weekly Standard, overall job growth in 2011 failed to keep pace with the growth of the labor force. In round numbers, the economy must generate 140,000 jobs per month to cover labor force growth. At best, as the year ended, the job market was bumping along the bottom of the deep chasm into which it plummeted in 2008. In 2011, the average monthly job growth figure was 137,000. As for the December number, it includes anywhere from 40,000 to 100,000 temporary holiday jobs. Some of these will convert to full-time employment, but most will not. In other words, the economy isn’t creating enough jobs to lower the unemployment rate.
But wait—the unemployment rate did drop in December! Well, yes it did, but this was due largely to the fact that the workforce—the percentage of adults either employed or actively seeking unemployment—has hit a 30-year low. Since Obama took office, it’s declined from 65.7% to 64%. Why? Because people are giving up looking for work and dropping out of the labor force altogether. The unemployment rate doesn’t count these people. It’s based solely on workforce participation: those employed versus those unemployed but still in the labor force. Those who’ve dropped out become unpersons so far as the unemployment rate is concerned. And perversely, the more dropouts, the better the unofficial unemployment rate looks. But if they were counted—by calculating unemployment based on the 2009 workforce participation number—the unemployment rate would be 11%.
Finally, as Cost points out, the prospects for 2012 are not very bright. Most economists expect growth to remain anemic: in the vicinity of 2%. that’s nowhere near enough to generate real job growth, boost incomes, etc. Moreover, there are significant threats to the US economy out there, particularly the prospect of a deep recession in the Eurozone.
Of course, the spin doctors of the Democratic Party will do what they can with every particle of seemingly good news. But there’s nothing they can do, really, to spin away the millions of Americans who feel so pessimistic about the economy that they’ve dropped out of the jobs market. Indeed, too much giddiness about tenth-of-a-percent declines in the unemployment rate could even be counterproductive. People who’ve been unemployed or under-employed for years may not appreciate being told that prosperity is just around the corner.
Posted by tmg110
at 12:24 PM EST