Sunday, April 7, 2013

The March 2013 Jobs Farce

The recent jobs report is another example of how much of a farce the headline unemployment is; the unemployment rate dropped to 7.6% from 7.8% despite the fact that only 88,000 jobs were created for the month of April. Remember, anything less than 250,000 jobs created per month is almost meaningless for our economy since our working age population grows about 300,000 people per month. But the most concerning aspect about the drop in the unemployment rate was that it is mostly due to a large amount of people who had dropped out of the work force because they were discouraged by not being able to find a decent job. The Wall Street Journal also reports:

“The share of the population that's either working or looking for work, a metric known as the participation rate, fell to 63.3% in March, its lowest level since 1979. Nearly half a million Americans dropped out of the labor force in March, the biggest one-month decline since December 2009…The participation rate doesn't get as much attention as the better-known unemployment rate, but many economists consider it a better gauge of the labor market's long-term health. The jobless rate only counts people who are actively looking for work; it ignores the millions of Americans who have given up looking entirely.”

I’m already hearing the Obama apologists claiming that the people that are dropping out of the work force are people (boomers) that are retiring. This is not entirely untrue but a good chunk of the discouraged workers are not retiring Boomers:

“March's labor force decline was concentrated not among retirement-age baby boomers but among those under age 25, who accounted for nearly half of all drop-outs. The participation rate among those under 25 has fallen below 55%, from just under 60% when the recession began. That reflects to some degree the long-run increase in college attendance, but the big one-month drop also suggests young people are struggling to find work in the still-shaky economy.

Among those in the middle of their working lives, the downward trend is milder but still unmistakable. The participation rate for so-called prime-age workers—those between 25 and 54—was 81.1% in March, the lowest level since 1984. There is no benign explanation for that decline: The number of prime-age workers counted as "unemployed" has fallen by 731,000 in the past year, but just 166,000 of those workers found jobs; the rest simply gave up looking.

The shrinking labor force has long-term implications for the U.S. economy. Economic research has shown that the longer people stay out of work, the harder it is for them to find jobs—thus many of the recent drop-outs will likely never return to the labor market, even as millions of baby boomers are poised to retire. Barring a rapid economic acceleration that leads to a hiring surge, that will leave a smaller share of the population supporting the economy.”

The fact is that this economy is not creating jobs despite what liberals claim. By the way, the U6 rate for March 2013 is still very high: 13.8%