But first, here are the numbers we need to gain that understanding:
These are not the seasonally adjusted employment numbers. I do not use them. The Bureau of Labor Statistics announced with the October Report that they had revised the number of employed people for the months of August and September. They were talking about the seasonally adjusted number. The September number of those actually employed in September in the October Report is the same as the number from the September Report and the same as in my table of a month ago. Apparently the formula for making the seasonal adjustments is what changed! Frankly, any such formula this far into a recession is likely to be meaningless.
It does not mean much if a few jobs are added, when the number is much, much smaller than the increase in adults of working age. The number of non-institutionalized Americans of working age increased by 208,000 from September to October. Some 67.49% of these potential new workers would want jobs if employment were as available and desirable as it was in January 2000. 140,379 additional jobs would be needed to provide the jobs they would want. But, note that the actual number of net additional jobs was only about 31,000. This is bad, bad news. Not only have none of the many previously unemployed been put back to work, but few of the additional people of working age have prospects of getting jobs either.
This is such a discouraging situation that the number of people reported as unemployed went down by 237,000 people when the number of employed went up by only 31,000! 206,000 more people gave up looking for work in October. Despite the loss of 204,000 jobs in September, 619,000 people gave up looking in September. One would think the 204,000 newly unemployed would have been added to the 619,000 to make an unemployed number in September of 823,000! Similarly, 378,000 fewer people were looking for work in August than in July, despite there being 215,000 fewer jobs in August. Clearly the August report should have had 593,000 more people looking for work. This is just one disaster after another.
Using the employment level of January 2000 as a benchmark for the number of jobs needed to give everyone who would want a reasonable job such a job, we are lacking 21,235,000 jobs now. At the time when the Great Socialist Recession started in December 2007 or just after, we already had a shortfall in jobs compared to January 2000 of 5,334,000. From December 2007 to now, the number of full-time missing jobs has increased by another 10,212,000 jobs. The 6-7 November 2010 Wall Street Journal front page article incorrectly reports a smaller number of lost jobs, namely 8.4 million. Perhaps they are only counting people put out of a job and not counting those who have had no opportunity to ever hold a job. To understand the weakness of the economy, we have to understand that the massive growth of governments throughout the last decade has transferred massive wealth from the private sector that creates jobs to the governments, which do not create jobs. The economy had already suffered one-third of the decade's total job loss in December 2007. The Great Socialist Recession then caused the other two-thirds of the huge total job loss of about 15,546,000 in the decade.
The Wall Street Journal article notes that at the "job creation" rate of October, it would take 50 months to replace the lost 8.4 million positions. Well let's see. 8.4 million divided by 31,000 is 271 months! What are they talking about? Probably some phantom seasonally adjusted job growth. As we noted above, the one month increase in the job age population should require another 140,000 or so jobs to accommodate the population growth. An infinite amount of time will never provide those jobs at a rate of 31,000 new jobs in a month. Meanwhile, the Federal Reserve Chairman told college students in Jacksonville, Florida that
And as a result, the unemployment rate, if at all, is coming down very, very slowly."I sure am happy he put in that "if at all" qualifier, but one can clearly see that he was creating a very rosy picture compared to the reality. He should have said that it is a good thing many of you will have college degrees, because those who do not will never get a job and even many of you with college degrees will not.
Of course many of those jobs are missing because of the minimum wage laws. Many more are missing because ObamaCare has convinced many employers not to hire due to its costs and the fact that it is not an intelligible law. It is too complicated to deal with if you employ 45, 55, 100, or 200 people. Only the multinational corporations may have the manpower to deal with it and to apply, as McDonald's and Boeing have, to be exempted from its provisions. Other large corporations are applying for exemptions from the high costs of ObamaCare already, but how can a corporation know if such exemptions will be granted? Smaller companies have no idea how to apply and have less hope of having the clout to be given exemptions. Many companies will just decide to sub-contract tasks or do without manpower. Sometimes they can substitute machines for people. Sometimes they just decide to have a widget made in China or India instead of hiring a new employee who will force them into the ObamaCare morass.
The costs of financial businesses are up due to Dodd-Franks regulations, so we can hardly expect them to hire. The EPA is promising draconian fossil fuel cost increases following their insane ruling that carbon dioxide is a pollutant, so power companies, industries using power, and transportation companies are going to see their costs go up. They do not know how much. The EPA was waiting until after the elections to fry them with those costs. The People will have much less money to spend too, because the costs of almost all goods and services will go up when the cost of using energy goes up. Then there is the fact that businessmen still do not know what their tax rates will be in January, unless they are a corporation. The corporations do know that their 2nd highest in the OECD tax rate of 35% will be the highest rate in the OECD in 2011. Investors face many new problems in 2011 with capital gains taxes going up by one-third and interest and dividends being taxed at the individual marginal tax rates of up to 39.6%. This will be a strong disincentive for job creating investments this year and thereafter.
Since the Democrats took control of both houses of Congress in 2007, there has been no sign of tax sanity at all in the federal government. If Obama is yanked from office in the 2012 elections and the Senate is controlled by the Republicans, there will finally be a chance that our very excessive taxes can be brought under control, so jobs can once again be created. The ObamaCare and EPA carbon dioxide threats will have to be dealt with as well. Critically, the federal, state, and local governments will all have to reign in their profligate spending. The deficits and the printing of about $1.75 trillion to add to the pre-recession $0.8 trillion cannot go on. Jobs are not created in a world gone insane. Of course, the USA has gone more insane than most of the OECD nations, so most of the job growth will occur in other nations until we address our many problems.
Meanwhile, blacks, most of whom are ever so loyal to Obama, are suffering an unemployment rate of 15.7% compared to a white unemployment rate of 8.8%. Hispanics, more commonly Democrats also, are enjoying the Obama unemployment rate of 12.6%. Some blacks and some Hispanics must be starting to think about where their allegiance should lie. Perhaps it should be with the party more friendly to the job-creating private sector.
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