sgs-emp.gif

Steady Abandonment of Work

If you follow the mainstream press, you can’t help but notice the headlines this weekend spinning our current languid business climate as ”steady economic growth.” 

The statistic of the hour is the Labor Department’s report that 157,000 domestic jobs were created in January, with the uptick in the official U3 unemployment rate from 7.8 to 7.9 percent (red line above) explained away as eager workers rejoining the improving job market. 

But what about the recent Commerce Department report that gross domestic product contracted in the last quarter of 2012, for the first GDP loss since Q1 2009?

Not to worry, things are looking so strong that President Obama has decided to disband his Council on Jobs and Competitiveness. Press secretary Jay Carney, defending the president’s decision on Thursday:

Q    But isn’t it also, Jay, a little ironic to say, in the context of the economy having contracted, that the Jobs Council was a success?

MR. CARNEY:  We have had sustained economic growth now for three years.  We have had 54 months 34 months, I believe it is, of job creation; 2 million jobs in the last year alone.*  We have a lot of work to do.  But if the comparison — and I encourage it, those who are inclined, to go back and look at the history of the policies supported by the critics and what they resulted in compared to the policies pushed by this President when it comes to job growth and broader economic growth.  The comparison does not favor the critics, I think it’s fair to say.

Well let’s look at “the history of the policies supported by the critics.” The chart above, produced by John Williams, proprietor of the Shadow Government Statistics website, tells the tale. The headline U3 unemployment number measures active job-seekers, while U6 includes short-term discouraged and marginally-attached workers. For Williams’s proprietary statistic (blue line), he adds back long-term discouraged workers dropped from the official labor statistics.

The ShadowStats line depicts the economy most of us encounter in our day-to-day lives. Since President Obama took office, attractive employment opportunities have steadily dwindled in number, leading to a steadily growing number of citizens abandoning the labor force. This is why the job market feels so grim, despite all of officialdom and the mainstream media chorus arguing the contrary.

Consider that all this has been accomplished with just $6 trillion in deficit spending over the first Obama term. Just think of how great things are going to look another $6 or $7 trillion down the road.

  1. Paul Stinchfield
    George Savage

    raycon and lindacon: What do the numbers mean? · 8 minutes ago

    Ray and Linda, you bring up a good point…And as the overall population ages with the graying of the baby boom generation, we can expect this trend to accelerate.  However, the natural process is gradual and fairly modest, nothing like the dramatic shift seen in the ShadowStats chart.

    Can the data be broken out into separate charts for each age cohort? That ought to be very revealing.

  2. George Savage
    Paul Stinchfield

    George Savage

    raycon and lindacon: What do the numbers mean? · 8 minutes ago

    Ray and Linda, you bring up a good point…And as the overall population ages with the graying of the baby boom generation, we can expect this trend to accelerate.  However, the natural process is gradual and fairly modest, nothing like the dramatic shift seen in the ShadowStats chart.

    Can the data be broken out into separate charts for each age cohort? That ought to be very revealing. · 30 minutes ago

    Paul, that is an excellent question.  I have not seen such data, but I would like to find it.

  3. CitizenOfTheRepublic

    Russ Robert’s November interview of Casey Mulligan speaks to the disincentives to work:  http://www.econtalk.org/archives/2012/12/mulligan_on_red.html

    Casey Mulligan of the University of Chicago and the author of The Redistribution Recession, talks with EconTalk host Russ Roberts about the ideas in the book. Mulligan argues that increases in the benefits available to unemployed workers explains the depth of the Great Recession that began in 2007 and the slowness of the recovery particularly in the labor market. Mulligan argues that other macroeconomic explanations ignore the microeconomic incentives facing workers and employers.”

  4. Whiskey Sam

    The shadow line is much closer to what I hear from friends and family.  I’m still surprised more people aren’t getting fed up with the obvious dishonesty of this administration and their mishandling of economic policy.

  5. raycon and lindacon

    Ray is now 70 years old.  Linda is 65.  Our income is mostly Social Security retirement, and Ray is my paid Medicaid caregiver.  We are not part of the workforce, and do not collect any form of unemployment payments or other ‘benefits’.

    How are we reflected in the statistics.  The baby boomers are just now leaving the workforce, and there will be many millions of them dropping out.  How will they be reflected in the stats?

    The ‘workforce’ is contracting, but that is a reasonable expectation for many of us.

    What do the numbers mean?

  6. George Savage
    raycon and lindacon: What do the numbers mean? · 8 minutes ago

    Ray and Linda, you bring up a good point.  There are people leaving the labor force naturally, due to age and other factors.  And as the overall population ages with the graying of the baby boom generation, we can expect this trend to accelerate.  However, the natural process is gradual and fairly modest, nothing like the dramatic shift seen in the ShadowStats chart.

    When you compare the trend line between 2005 and 2007 to that from 2010 to 2012, what you see is the difference between the policies of the president’s critics, as Mr. Carney put it, and Obamanomics in full flower.

  7. Steven Jones

    If the economy contracted in Q4, that should be especially grim news. Sales over the holiday season account for a large percentage of income for many businesses, and yet there was economic downturn despite Christmas sales.

  8. Sisyphus

    The incredible shrinking workforce goes hand in hand with the brutal poisoning of small business with higher taxes and harsh penalties for growth. ObamaCare is just the worst and most visible example, and the cronies in big business are laughing all the way to the bank.

    It is telling that when Obama met with tech firms, the real entrepreneur in the room, Steve Jobs, who grew a legendary company from a garage startup, gave him what for with both barrels. 

    ObamaCare: bad for the economy, bad for the healthcare market, bad for doctors, bad for patients, but good for graft happy happy politicians and only horrible extremists seek its repeal.

  9. Mr. Dart

    Of the 157K net growth in employees reported last Friday  32,600 were in retail.  (Obviously retail doesn’t really add employees after Christmas– it’s a “seasonally adjusted” number which basically means retailers didn’t lay-off as many workers as expected.) 

    So, what’s really happening?  Because of The Obamacare Effect  retailers and food service employers are cutting hours for most of their non-salaried workers to under 30 hrs/ week so they won’t qualify for health insurance.  To cover their work more part-time employees– which get counted as “employed” in the monthly non-farm payroll report– are being added.  Employers know that the feds will use their 2013 stats when they levy Obamacare fines/ fees in 2014 so they’re radically changing their workforce now. 

    I know several people working in retail who have had hours cut and lost their health insurance already.  Some have found second jobs at retail to make enough to pay their premiums. 

    Some call this an unfortunate unintended consequence of Obamacare. I think it’s actually by design.  When it fails during the 2nd term he’ll push single-payer as the only way out of the mess.

Want to comment on stories like these? Become a member today!

You'll have access to:

  • All Ricochet articles, posts and podcasts.
  • The conversation amongst our members.
  • The opportunity share your Ricochet experiences.

Join Today!

Already a Member? Sign In