Unemployment: Barack Obama's recession grinds on and on
By Ron Cooke
The National Association for Business Economics (NABE) has predicted a painfully slow recovery in the jobs market. Payrolls will increase by an average 150,000 persons per month through the first half of 2011, then gradually increase to ~ 170,000 per month. These economists believe the jobless rate will be stuck at around 9.5% through much of 2011, before declining to 9.2% by the beginning of 2012.
More than half (55%) of all adults in the labor force have suffered a spell of unemployment, missed mortgage or rent payments, shrinking paychecks and shattered household budgets, according to a recent survey by the Pew Research Center's Social & Demographic Trends project. In another survey, Pew found that 62% of Americans have been forced to cut back on household spending.
For most of us, the Obama Recession has become very personal. Our kids and some of our neighbors are struggling to survive. No politician has come forward with a credible plan to get us out of this mess.
In the meantime, however, the Obama Administration is telling us it can fix America's economic problems by taking us all deeper into debt. In my opinion, that will only serve to make the unemployment situation worse. Apparently Obama, Pelosi and Reid either don't understand - or don't care - about one simple fact: Our economy will not turn around until America gets back to work.
Look at the numbers. On October 8, 2010, the Bureau Of Labor Statistics (BLS) reported that the unemployment rate for August and September was 9.6%. That's the number you hear on the radio and see on TV. That's the number politicians like to quote when they are trying to tell us everything is OK. But, the BLS also reported that a broader measure of unemployment, U-6, stood at 17.1%. That's up from 16.1% for September of 2009, and significantly higher than the often quoted base unemployment number.
Millions of Americans have dropped out of the labor force, or are counted as employed even though they have seen a reduction of income. We need a better measure of income loss.
We can start with BLS statistics for September, 2010. You can find this data by reviewing the BLS tables shown in the parenthesis.
The unemployment rate is:
However, the BLS does not count people who have not looked for work in the prior 4 weeks as unemployed, even though they have looked for work in the prior 12 months. In a full employment economy, these people could find a job.
Now let's calculate the rate of underemployment. We want to include the people who have dropped out of the labor force, and thus have no income, as well as the people who are working, but have reduced income because they are working less than 35 hours per week, and an estimate of self-employed individuals living on reduced income.
Obama's recession has caused economic deprivation for at least 41.5 million Americans. Over 26% of America's workforce either has no income or is struggling to survive on reduced income. And things are not getting better. The Misery Index is up more than 7% over the same data for September 2009, and the BLS has indicated it underestimated the number of jobs lost this year.
Why is the Misery Index important? Aside from its use as a measure of human deprivation, it also gives us an indication of how many consumers are being forced to curtail their spending. Over 41 million workers, and their families, are living on a restricted budget. And... if the Pew data is anywhere near correct, the Employment Misery Index is much higher than my estimate of 41.5 million persons.
I close with this quote from the analysis of unemployment and underemployment I did in the fall of 2009. Nothing has changed.
"Looking ahead, it would appear the number of workers who will be forced to curtail their spending will increase. We are in danger of experiencing a situation where growing unemployment feeds on itself. .... Earning power continues to erode.
"Unlike prior recessions, Americans will have a tougher time financing any increase in spending by borrowing against their home equity or credit cards. We may have to wait for solid gains in the job market before prosperity returns to America. Bottom line: job growth must be the number one priority for Congress and the Obama Administration.
But it is not. Perhaps we should be asking these people in Washington: Why aren't you focusing your attention on (free enterprise) job growth?"
Barack Hussein Obama, Nancy Pelosi, Harry Reid and the rest of you elitist politicians in Washington. You own this recession. Either fix the problem or get out of the way.
Ron Cooke is the proprietor of The Cultural Economist. © 2010, Ron Cooke