Life in the Obama Economy: Hundreds of Thousands Simply Give Up
On Friday, the Bureau of Labor Statistics announced another drop in the unemployment rate from 8.2% in March to 8.1% in April. This drop, the seventh in the last twelve months, was applauded by the Obama Administration as a sign their economic policies are working. A closer look at the numbers reveals a vastly different conclusion. With calls for higher taxes, soaring deficits, and thousands of pages of new regulations, in the Obama Economy the best bet is to simply give up.
The unemployment rate, as calculated by economists, is defined as the percentage of workers unemployed and looking for a job compared to the overall labor force. Individuals who have given up searching for a job are not even counted in the official statistic. Any decrease in the unemployment rate could be due to two factors: either people get jobs or individuals give up and leave the work force. It is primarily the second option that is responsible for the current drop in the unemployment rate.
In April, more than 342,000 individuals left the workforce. Hundreds of thousands of Americans are so discouraged by the continued lack of jobs that they are walking away from work all together. In fact, the labor force participation rate, the main measure of the size of the workforce, is at its lowest level since 1981. To be sure, part of this drop is due to demographic changes, such as baby boomers retiring. But the biggest cause is still individuals giving up on the job search entirely.
In some ways, it’s hard to blame them. According to the BLS, over 40% of the unemployed have been job-hunting for more than 27 weeks and 30% for more than a year. There are still more than 3.5 job seekers for every job opening. And few are predicting that job markets will turn around anytime soon. The Federal Reserve, for example, has projected the unemployment rate will still be above 7.5% at the end of 2013.
Even worse: economists have shown that the longer someone remains unemployed, the harder it is to land a new position. In an interview with the Washington Post’s Ezra Klein, economist Michael Reich explained “if you’ve been unemployed for a few weeks, your chance of finding a job is 30 or 40 percent. If you’ve been unemployed for six months, it’s 10 percent.”
While hurtful for job-seekers and their families, this rapid drop in the size of the labor force does some good for the President: it makes the current unemployment situation look much rosier than it really is on his watch. For comparison, if the labor force was the same size as when Obama took office, the unemployment rate would be 11%. An even broader measure of unemployment, which includes both those who are unemployed and those who are working part time involuntarily (despite seeking a full-time job), is hovering over 14%.
Instead of following the policies that truly benefit Americans like cutting taxes, eliminating bureaucracies, and fostering innovation, the President is dramatically increasing the size of government. He claims his policies are fostering a robust job market recovery, but the facts tell a different story.
Like this post? Chip in $5 to AFP.