America’s Jobs Picture Remains Poor

Member Group : Jerry Shenk

After eight years spent castigating President Barack Obama’s Republican predecessor over better than present economic conditions, it’s remarkable how far the liberal American media’s expectations have fallen during Obama’s five years of substandard economic performance and lousy jobs results.

Media breathlessly covered the Bureau of Labor Statistics’ June employment report that employers added, net, 288,000 jobs — the fifth consecutive monthly increase of 200,000 or more. The official U-3 unemployment rate dropped from 6.3 percent to 6.1 percent, the lowest rate since September 2008.

But there is also a lot of media-neglected, less-good, ignore-that-man-behind-the-curtain news in the BLS report. The U-6 unemployment rate, including part-time workers wanting full-time jobs and people who have abandoned seeking employment, dropped only slightly to 12.1 percent — still a historically high rate. The majority of June’s new jobs were part-time and/or in lower-wage job sectors.

For the third month, the labor force participation rate remained 62.8 percent – a 30-year low. Compared to last year, 2.4 million fewer Americans are working.
Wall Street Journal editor Phil Izzo observed that the best way to reduce unemployment is for more people to find jobs; the worst way is for more people to give up looking for them.

Izzo noted that, in the U-3 unemployment rate calculation, 2.15 million people gained employment in June, but 2.35 million dropped out of the labor force. "In all but two months since December 2008, more unemployed have dropped out than found jobs."

Average hourly earnings gained just 0.2 percent in June, projecting an annualized increase of 2 percent. The average workweek remained a low 34.5 hours.

The stagnant wage growth and participation rate are related. With so many employable people voluntarily on the sidelines but theoretically available, employers feel little pressure to raise wages.

A policy outcome that the Obama administration and its congressional and media allies fought to prevent explains some of the job improvements.

The drop in unemployment coincided with the end-2013 expiration of emergency unemployment benefits. By providing the unemployed with taxpayer-funded monetary resources with no work component, extended unemployment benefits – and human nature — created incentives for many unemployed to remain jobless. Expiration of the benefits finally motivated many of the employable among them to seek jobs.

Joseph Lake, an analyst for The Economist Intelligence Unit, noted that, in 2013, many economists were calling the post-recession economy a "jobless recovery." In 2014, though, Lake notes, "the riddle has been reversed; companies are creating jobs…while the economy is tanking."

In June, the Bureau of Economic Analysis released its final estimate of real gross domestic product for the first quarter of 2014 which showed output in the U.S. declining at an annual rate of 2.9 percent..

Using the Obama administration’s most optimistic estimates for the remainder of 2014 — forecasts that, in five years, they have never reached – at best, America’s gross domestic product, the total output of goods and services, can only gain an aggregate 1.5 percent.

Nonetheless — unsurprisingly — in Obama’s economy, yet another flawed jobs report is sufficient cause for media optimism.