The craptastic reality that is today's jobs report
Published by: Dan Calabrese on Friday September 7th, 2012
There are some things you need to understand when you hear President Obama and other Democrats talk about "29 straight months of private-sector job growth" or whatever they say. That, in itself, is not an achievement. The economy should create new jobs every month, and lots of them, as a matter of course. That's because the population is always growing and consequently the size of the labor force - or should I say, the number of people who should be participating in the labor force - grows with it.
If you've ever wondered why we're supposedly creating all these new jobs, but the unemployment rate remains stuck at just above 8 percent, I can explain it to you very easily. Because the size of the labor force is always growing, you need to create at least 200,000 new jobs every month just to keep pace. That sounds like a lot, but it's really not when you consider it's an average of 4,000 jobs per state, and then you start breaking it down to individual communities.
If you've got 8 percent unemployment, and you keep creating 200,000 jobs per month or fewer, you will never get below 8 percent unemployment. The only thing that will get you even the slightest downtick is if massive numbers of people leave the workforce, and that's what happened in August. For every job that was created, there were nearly four other people who gave up looking for work entirely.
The August figure of 96,000 jobs created is terrible, and is only made to look a little less terrible when you compare it to the two previous months, which did not even get above 50,000 according to the latest revisions.
Now it's certainly true that the economy was actually shedding jobs when Obama first took office, and he has tried to make the case that his polices turned that around, such that now at least we are creating some jobs - and that this is better than where we were. But this argument is hogwash. A very severe downturn will see jobs lost, but this never continues in perpetuity because eventually companies find they can't cut any more and they need to start hiring some people back. It's not because of Obama's policies that we stopped losing jobs. It's because it's impossible for that to go on very long.
Typically, a sharp recession is followed by a sharp recovery, with jobs being added back at a breakneck pace once the recovery is underway. When Ronald Reagan was re-elected in 1984, unemployment was still a relatively high 7.5 percent as a remnant of the 1982 recession, but voters were confident in the direction of the economy because at that point we were adding jobs much faster than the labor force was growing. That's why Reagan won 49 states and 525 electoral votes. (That, and no one wanted to put Jimmy Carter's vice president in the White House.)
Today, we are still not even adding back jobs as fast as the labor force is growing, and that's a full three years after the recession officially ended. Plus, we face these circumstances in spite of the fact that Obama spent a gargantuan $862 billion worth of "stimulus" money in 2009, claiming it would kick-start job creation, and he has quietly added that amount to the baseline of our theoretical budget (would that we had a real one) and kept spending it every year.
We're now spending 25 percent of GDP, the most since World War II, and Obama and his Keynesian supporters still can't explain where all the "multipliers" are that should be creating new jobs.
When you add as minuscule an amount as 96,000 new jobs, and nearly four times that many people leave the work force, this needs to be understood as an absolutely horrible economic performance. Obama should be under serious fire to explain this failure, instead of people letting him get away with claiming it's yet another consecutive month of job growth.
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