The Real Jobs Situation in July 2010

As I have noted a number of times in the course of the last year, the usual unemployment rate becomes rather meaningless in a long and deep recession.  People become discouraged and stop looking for a job, or the situation being bleak, they decide to go back to school for a degree or training, or some young people currently facing unemployment rates as high as 24.8% for 16 to 19 year olds simply do not look for their first job or do so obscurely.  I believe it makes more sense to compare the number of jobs available now to those available in a time when employment was enticing enough to induce many people to work or search for work.  In January 2000, the first month of this century, the economy was robust and 67.49% of the work age population was working or looking for work.  Only 4.04% were unemployed.  At the end of the first half of the first decade of the century, the jobs situation had worsened somewhat.  4.91% were unemployed, which does not seem too bad relative to the 4.04% five years earlier, but the situation was actually far worse than that would make it seem.  The number of jobs required for the economy to be as robust as it had been in January 2000 was in shortage by 6.98%, not 4.91%.  That situation was static through December 2007, but began to worsen again in the current recession in 2008.  The worst month of job shortage was January 2010, when we had a job shortfall of 14.41%.

So far this year, the real job situation has improved slowly.  Glacially slowly, but it is improving.  The new job statistics for July 2010 show that the unadjusted unemployment rate is 9.75%.  The adjusted rate is given as 9.5% for the second month in a row, if you have faith in the adjustments just prior to an election.  I do not, so I use the unadjusted rates.  By March, the job shortfall was 13.79% and in July it is now 12.72%.  The job shortfall is more than three times worse still than it was in January 2000 for perspective.  The shortfall is 20,418,000 jobs.  Note that the adjusted July jobs numbers imply a loss of jobs, since a greater increase in the number of jobs than occurred is generally expected in July.  Thus, the slow improvement in the actual job numbers may reverse soon as colder weather cuts back the number of outdoors jobs.  See the table below:

Way back in 2007 oil prices spiked upward and this strained economies around the world.  Contrary to the popular myth, many economies went into recession well before the U.S. economy did.  Those economies in recession coupled with the effects of the oil price spike burst our housing and credit bubble.  That bubble was inflated primarily and most enthusiastically by our Democrat Congress in 2007 and 2008, though its origins go back further by many years.  Legislation in the Clinton administration made home mortgage creditors take on riskier and riskier borrowers.  Progressive socialist groups such as ACORN threatened lawsuits against mortgage lenders who did not grant many risky mortgage loans.  Law firms, such as the one Obama and his wife worked for, managed the lawsuits brought against banks reluctant to make many risky loans.

The corrective response by the private sector this far into most recessions would have led to rapid, not glacial, improvements in the economy and in many more jobs.  We are not seeing that because the Democrat Congress and Obama are beating up the private sector with deadly laws, poisonous regulations and many more promised regulations to be created by many known to be committed socialists, and much rhetoric and prosecution aimed at making entrepreneurs and business owners look like villains.  With the huge costs of ObamaCare, EPA regulations on CO2 emissions, ethanol and other alternative energy mandates, the financial reform, the interest on government debt, the end of the Bush tax cuts, oil and gas drilling moratoriums, and the massive business uncertainty delightedly promulgated by the Democrats, businessmen cannot rationally plan investments and returns on them.  This prevents them from hiring.  So, we have a glacially slow recovery of the economy and particularly of job creation.

Nonetheless, business is doing what it can under the circumstances and has, against all odds, managed to create some jobs.  Atlas struggles on with the world weighing frightfully heavily upon his shoulders.  Despite the jeers of the many socialists, he carries on and carries them.  But, clearly he is staggering.  Usually his stride is stronger and steadier after he shakes off a recession.  As yet, it is not clear whether Atlas will slowly regain his stride or he will stumble and drop his burden.  We can help him by turning the bums out of Congress in record numbers in the November elections.