The media has been happy to report to us that the unemployment rate in July 2009 was slightly improved to 9.4%, compared to a 9.5% rate in June. They also reported that the number of jobs lost was fewer than in most prior months. But this is an odd combination. For the real unemployment rate to drop, some number of net new jobs must be created, yet another 247,000 net jobs were lost in July. Some time ago, I remember that for the unemployment rate not to go up, 154,000 new net jobs had to be created in a month. So, the net number of new jobs appears to be about 401,000 jobs fewer than used to be needed to keep percent unemployed static.
Is this anything to crow about? Apparently it is not as bad as earlier in the year, but is it not awful nonetheless? Well apparently it is good if you are Obama and his Democrat Congress. It is improvement. Or maybe not. What if the recession long ago weeded out the worst employees and companies are simply reluctant to let their better employees go? And, what if the real unemployment rate is being very badly understated?
The unemployment rate does not count the underemployed or those who are involuntarily working fewer hours than they would like. It also does not count those "who have not searched for work in the last 4 weeks." In reality, no one really knows how many people want a job, but have not searched for it for 4 weeks. The government assumes that people who had been telling them they were searching for work while they were collecting unemployment benefits, but stopped doing so when their unemployment benefits ran out, are not searching for work. So they are not counted as unemployed. But, would you go down to an unemployment office looking for work for more than 26 weeks when they were not going to give you any money for doing so and when they had done nothing in 26 weeks to get you employed? Of course not. Thus, when things really get bad, the unemployment rate falls even when the number of really unemployed workers increases!
The number of people who were looking for work a while back, but have not done so recently, though they are still unemployed is estimated at 2.3 million. Adding them to the number in the official unemployment count at 9.4% unemployed, raises the real unemployment rate to 10.9%. So, Obama and the Democrat Congress now have a real unemployment rate of 10.9% and this rate is not going down!
Or, we could add in the 8.8 million workers who are on involuntary part time work. The total unemployed or underemployed would then be 16.6%. Nothing for the Democrats to crow about and hardly good evidence that the Stimulus Package is accomplishing much of anything.
In the 4th Quarter of 2008, the GDP shrank by 5.4%, in the 1st Quarter of 2009 by 6.4%, and in the 2nd Quarter of 2009 by 1.0%. Construction and manufacturing sectors have been hit very hard. They totaled 15% of jobs, but they account for 40% of the unemployment. 9.8% of adult men are unemployed, while 7.5% of adult women are unemployed. Asians are 8.3% unemployed, while whites are 8.6% unemployed, Hispanics are 12.3%, and blacks are 14.5% unemployed. All of these numbers are for the usual, under-reported statistics giving the 9.4% total unemployment rate.
Great job Obama. You really have been great at putting it to those terrible employers and wealthy investors. You scared the tar out of them even during the presidential campaign and with the known desire of the already Democrat Congress for increasing taxes and piling on regulations on businesses and investors, you made the recession worse long before you took office. Since then, your constant bad-mouthing and threats combined with those of the leadership of the House and Senate, has done a great job of keeping employers uncertain and scared. In such times, they are pulling themselves back into their shells. This is hardly surprising.
Guess what? It is all about being able to believe you will be allowed to make a reasonable profit, stupid! If you tell businessmen that they are going to taxed much more, but do not even tell them how they will be taxed, they cannot calculate whether a business operation can make money. If you tell them they will be more heavily regulated, but they do not know how they will be regulated, they cannot tell whether they can make money in those operations which may be restricted. If you tell them you will dictate management compensation, they do not know why they should bother to undertake new operations or even continue working hard on older operations. The value of the dollar is very uncertain, thanks to you. Increasing taxes and regulations are likely to make it harder for U.S. operations to make money relative to overseas operations. Besides, where will the energy come from for manufacturing and transportation and heating buildings in the U.S. with Waxman-Markey type carbon cap and trade? What on Earth are employee health insurance costs going to be when you have finished mandating many benefit additions?
It is unreasonable to expect employers and investors to hire workers under these circumstances. You must allow employers some reasonable level of certainty, but you, like FDR, love uncertainty, experimentation, and socialist redistribution and equalization. It is you who have given us 10.9% unemployment. Take credit for it and live up to it.
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