August 3, 2012 by econsforromney
Jobs: Once again, a bad jobs report comes out, and both the White House and the media trumpet it as “good” news and a sign the economy’s turning around. It is in fact a dismal jobs report, as the numbers clearly show.
On the surface, the headline numbers don’t look so bad. The Labor Department reported that U.S. businesses created 163,000 net new payroll jobs in July, while the unemployment rate was “essentially unchanged” at 8.3%.
No sooner had the numbers come out than President Obama was standing at a podium before the cameras, claiming credit for the job growth and again blaming former President Bush for the bad state of the economy.
“This morning we learned that our businesses created 172,000 new jobs in the month of July,” he said. “That means that we’ve now created 4.5 million over the last 29 months and 1.1 million new jobs so far this year.”
But “we” haven’t in fact created any jobs. As a matter of fact, since Obama has entered office, some 1.1 million payroll jobs have disappeared.
This year, businesses have created 151,000 new jobs a month on average — way below the 300,000-plus per month job creation in a typical recovery-expansion.
If that still sounds good, understand this: Just to keep up with the natural rate of growth in the workforce, the economy has to create about 130,000 new jobs a month. So at this rate, it’ll take us four years and four months just to get back to the number of jobs we had in 2007.
Sound like progress to you?
We had to look twice at Obama’s comments to make sure they weren’t cribbed from Jon Stewart or some other late-night-TV jokester, because in truth, the real jobs economy is imploding in an unprecedented way.
Take the 163,000 “new” jobs Obama took credit for. That number comes from a monthly survey of businesses. But it’s not a pure number. To get it, the government has to estimate the number of jobs created by new businesses. It also adds seasonal adjustment factors.
The 163,000 figure becomes even more suspect when you consider that 150,000 people left the workforce in July — something that almost never happens when the economy is expanding and creating new jobs. In short, the 163,000 “new” jobs is a mirage due mostly to seasonal adjustments — not real jobs.
Nor is this a one-month phenomenon. Since Obama stepped into office, 7.5 million people have left the workforce — calling all the administration’s claims of job “gains” into question.
Yes, some of those people have retired. But the vast majority has become so disgruntled with their job prospects that they’ve quit looking.
What Obama didn’t mention was that the monthly employment survey of households — which is used to create the unemployment rate — shows a stunningly different picture than the business payroll data.
By this household measure, the number of jobs plunged by 195,000, pushing the unemployment rate up to 8.3% from 8.2%. So talk of job gains is deceptive.
And, indeed, alternative measures of the unemployment rate show far worse problems. The so-called U3 measure of unemployment is the one most people know. It shows 8.3% joblessness, and 12.9 million people with no job.
But the government also releases what it calls the U6 measure — one that takes into account discouraged workers and those who, as the Labor Department puts it, are “marginally attached” to the labor force.
What does U6 show? It shows an alarming 15% unemployment rate — with 23 million people having no job. Worse, the U6 measure of unemployment is rising as the economy slows down.
We’ve concocted our own separate measure of unemployment, as you can see in the chart below.
As we noted, there’s been a decline in labor force participation under President Obama — a decline that isn’t adequately accounted for in the official data.
What would happen if the labor participation rate remained at 65.7% — its level when Obama entered office — instead of the 64.3% currently?
It may sound like a small difference, but just this tiny change pushes the real unemployment rate under Obama to 11% — not 8.3%.
This is Obama’s hidden unemployment crisis. It won’t go away as long as the president continues to threaten the top 2% of income earners — the nation’s entrepreneurs and job creators — with higher taxes.
Nor will it disappear if Obama continues his regulatory siege, which now taxes the economy with $1.7 trillion in added costs a year, or if he continues to demonize those who create small businesses and jobs by telling them, “You didn’t build that.”
The jobs crisis is real. For it to end, we need a president who cuts spending, lowers taxes and loosens the regulatory stranglehold on business. Only one candidate proposes that, and it’s not Barack Obama.