Does Falling Unemployment Herald Success, or Failure?
Friday, December 2, 2011, shall be remembered as a landmark day in the history of the Obama presidency. That was the day that his economic policies caused unemployment to plummet almost a half-percent in a single month, to its lowest level since March, 2009.
John Ryding, Chief Economist of RDQ Economics and former Chief U.S. Economist at Bear Stearns, commented, “You’ve got a picture of an economy that’s getting stronger as we’re going into the end of the year.” But that picture is heavily photoshopped.
The deception is most apparent in the numbers used to produce the sharply lower rate. The unemployment rate is calculated by dividing the number of unemployed workers into the total population of the workforce. For instance, if 5,000,000 workers are unemployed out of a population of 50,000,000 workers, unemployment is 10.0%. Reduce the number of unemployed by adding jobs, and the rate will go down; in this case, creating 500,000 jobs in this population gives a rate of 9.0%. But reduce both the unemployed and the total workforce, and the rate is even lower.
That’s what happened in November. While 120,000 new jobs were created, 315,000 unemployed workers were removed from the workforce by the Bureau of Labor Statistics because either they gave up looking, or their benefits ran out. Either way, they no longer exist for unemployment rate purposes.
The workforce fluctuates from month to month. But a drop of this magnitude, while not without precedent in the Obama presidency, is severe. Adding those 315,000 workers back into both the unemployed and the total workforce shows that, all else being equal, this statistical chicanery had the effect of roughly doubling the overall drop in the rate.
Even if the 8.6% rate were not contrived by dismissing a third of a million unemployed workers from the labor force, it is still hardly a triumph. It remains well over the 8.0% ceiling that was promised if the Porkulus was passed, a ceiling we have yet to even approach. Neither have we come close to the 500,000 jobs created a month that Vice President Biden promised post-Porkulus.
More to the point: After peaking at 5.8% in March, 2004, unemployment descended into the 4% and 5% range until the summer of 2008, including 24 straight months below 5.0% from December, 2005 through November, 2007. The same people who consider a decline to 8.6% unemployment a hallmark of Obama’s success regarded those historic lows as evidence of George W. Bush’s abject failure.
There’s another, less-known unfavorable comparison to the Bush years. In 2005, 2006 and 2007, construction industry unemployment averaged 7.4%, 6.7% and 7.4% respectively, bottoming at 4.5% in October, 2006. Many construction workers voted Democrat in 2006 and 2008. Their reward? An approximate quadrupling of their industry’s jobless rate under Democrat power. It peaked at a ghastly 27.1% in February, 2010, and didn’t even get below 17% until this May. It fell from 13.7% in October to 13.1% last month, but those numbers are cooked as well because the industry lost 12,000 jobs last month. “Shovel-ready projects,” my foot.
Such fraud is no surprise from this administration. After all, in the weird world of Obama math, ten thousand people died in the Greensburg, Kansas, tornado of 2007, “$700 billion is potentially a lot of money” (from the September 26, 2008, presidential debate), and “Fifty hedge fund managers made $29 billion last year, $29 billion for fifty individuals” (quoted on www.taxfoundation.org). (I won’t count the infamous “57 states” quote; in fairness, I suspect he merely lost his train of thought midsentence, as opposed to his never even having it on the rails in the first three.)
The true unemployment rate, which takes into account those who are no longer seeking work, are not receiving benefits, or are underemployed in part-time or low-paying positions, is still over 15%. There are also far more people looking for work than there are jobs for them, plus a corollary: Many high-paying jobs that are available, such as skilled manufacturing trades, are going unfilled because of a lack of qualified workers. One can thank our progressive education system for that.
Presidents Reagan and George W. Bush are typically regarded as idiots and dunces by the progressives. But it is we who are the dunces and idiots if we blindly accept the numbers being bandied about by the Obamacracy in these efforts to claim success for itself.