Obama Job Converter
Posted on 07/12/2013 5:11:32 AM PDT by IbJensen
Andy Puzder is CEO of CKE Restaurants, Inc., which employs about 21,000 people at Carl’s Jr. and Hardee’s restaurants. He is co-author of “Job Creation: How it Really Works and Why the Government Doesn’t Understand it.” Puzder serves as co-chair of the American Freedom and Enterprise Foundation.
While the unemployment numbers for June contained some positive news, the coverage to date has obscured the continuing negative trends and ObamaCare’s increasing impact. It’s time to take a realistic look at how the fragility of our economy and the specter of big government are restricting both growth and job creation. The actual state of our labor market is a good place to start.
The “official” unemployment rate held steady at 7.6%. The economy created 195,000 jobs in June. The BLS revised payrolls for the last three months upwards and the labor participation rate (the percentage of the total population over the age of 16 in the labor force) improved slightly moving from 63.4% to 63.5%.
However, there were several very troubling indicators. The number of people who gave up looking for work because they believe no jobs were available increased by 206,000 from a year earlier to 1 million. The number of individuals who were working part time increased by 432,000, twice the number of jobs created. Full time jobs actually declined by 272,000.
In part, this increase in part time jobs and decline in full time jobs reflects a change in hiring practices in anticipation of ObamaCare taking effect. The new law substantially increases the cost of businesses providing employees health insurance but only requires that they provide coverage to full time employees. As result, employers are dividing available hours of work among more jobs, creating more part time employees and reducing the number of full time jobs. This actually reduces the official unemployment rate which counts part time jobs as equal to full time jobs.
Not surprisingly, many of the jobs the economy created last month were service jobs such as restaurant employees and store clerks that are easily converted from full to part time. The official unemployment rate may consider part time and full time jobs as equal, but American workers do not. Of the 432,000 part time jobs created last month, 322,000 went to Americans who wanted full time work but could only find part time work (increasing the total number of people working part time but wanting full time work to 8.3 million).
The BLS also calculates an unemployment rate that includes all persons who have searched for work during the prior twelve months (as opposed to the official rate’s 30 day cut off), plus all people who want a full-time job but are employed part-time for “economic reasons,” such as reduced hours or an inability to find a full-time job. This is known as the U6 unemployment rate and it is the widest measure the government calculates.
While, the impact of ObamaCare turning full time jobs into part time jobs decreases the official unemployment rate, it increases the U6 rate to the extent that people working part time jobs are doing so because they are unable to find full time jobs. As noted above, that number increased by 322,000 people in June to 8.3 million. Not surprisingly then, the U6 measure of unemployment significantly increased rising from 13.8% in May to 14.3% in June, clear evidence that the labor market is getting worse for people who want a full time job, probably because of Obamacare
The decline in the labor participation rate also hides the labor market’s anemic state. The recession’s unemployment rate peaked in October of 2009 at 10% when the labor participation rate was 65%. Had the participation rate continued at 65%, the “official” unemployment rate in June would have been 9.7% rather than 7.6%. In other words, the labor market hasn’t materially improved in the nearly four years since unemployment peaked in October of 2009; rather the unemployment rate has declined because a smaller percentage of the total population is now in the labor force. The question is then: Why has the labor participation rate declined?
Some claim that as baby boomers are retiring and leaving the labor force, the participation rate will naturally decline. But the Boston Federal Reserve published a study recently finding that the bulk of the decline in labor-force-participation is due to economic factors (a declining economy) rather than demographic ones (an increase in retirees). The BLS reports a number each month which it labels “Not in the Labor Force – Want a Job Now” that seems to confirm this study’s conclusion.
According to the BLS, in June there were 6,580,000 people out of work who “want a job now” but who BLS excluded from the ranks of the officially unemployed, including those who were too discouraged to look for a job in the past 30 days. Adding these people back into the labor force produces an unemployment rate of 11.3%, again well in excess of the “official” 7.6%.
Michael Talent and I have previously written about the unreliability of the “official” unemployment rate and the significance of a labor force that has dwindled to Carter era lows as a percentage of the total population. We have advocated a new and more reliable metric to measure the labor market’s performance that we call the “Growth Ratio”. We publish the Growth Ratio each month on line. http://growthratio.com/.
The Growth Ratio is the year-over-year growth in the number of jobs (measured through the BLS’s household survey) divided by the year-over-year growth in the civilian non-institutional population (the number of people who could be in the labor force). This fraction tells us whether job creation is keeping pace with, running ahead of, or falling behind population growth. Like the official rate, the Growth Ratio considers full and part time work equally. As such, it may actually overstate the strength of the labor market but is nonetheless an effective measure of the relationship between job creation and population growth.
A growth ratio equal to one indicates that employment grew as fast as the population; in that case, the real unemployment rate should remain unchanged. A growth ratio above one indicates job growth in excess of population growth, which should reduce the number of unemployed people and result in a lower unemployment rate. A ratio lower than one indicates that employment either fell or grew but failed to keep pace with population growth; in that case, an honest assessment of labor market health should show that unemployment has gone up.
In June, the growth ratio clocked in at 1.15%, indicating that employment growth over the previous twelve months was slightly greater than population growth. The average for the recovery to date is a dismal 0.97%. In other words, the labor market has actually gotten slightly worse since the recovery began. Yet the early years of a recovery should be its most robust, especially where a recession was severe. Considering the loss in employment during the last recession, the growth ratio should be consistently hitting 1.5% or better, as it did following prior recoveries once the Growth Ratio went positive.
In short, real unemployment is well above the “official” 7.6%. The official rate has only declined because of a very disturbing decline in the number of people the BLS considers in the labor force. In addition, as employers divide the number of available full time work hours among a larger group of part time workers, the official unemployment rate makes it appear as though our economy is growing and creating more jobs than it is. Dividing full time jobs into more numerous part time jobs is not an indication of economic growth. Yet, even with this false positive, job creation is barely exceeding population growth.
What misleadingly appears to be an improvement in the labor market is actually stagnation at best. This is not a labor market in recovery. It’s an economy in serious trouble and disturbingly unprepared for any future crises. Big government as a solution has failed. It’s time to re-energize the private sector with tax and regulatory policies that make sense.
I think this is hugely scandalous for a few reasons.
For one thing, it shows the extent to which the news media will mislead Americans. The common knowledge, as disseminated by most news media companies, is that the US economy has recovered or is recovering from the recession. It hasn't, and proof that it hasn't isn't hard to find.
Obama and others in his administration have shown many times over that they're willing to present a false, rosier-than-real picture of their performance. This is bad enough. But people in politics commonly lie, and we rely on news media companies to provide accurate information. In this case, the news media companies have failed.
That's scandal number one: the news media's complicity. Obama has lied about so much (including the PPACA's intent). He has lied--he has planned to lie--even as he pointed his finger at others, accused them of lying, and promised to tell the truth. But rather than hold him accountable, the news media have helped him lie.
Scandal number two is the way this information belies Obama's presidency on a much broader scale. He campaigned hard on his promise to "create jobs" and, as a leftist democrat, he's always presented himself as an advocate for the poor and the working class. In reality, he's acted against those people's interests, finding excuse after excuse to avoid doing whatever's necessary to improve the job market and working conditions; and, once again, the news media are complicit.
Scandal number three is Obama's apparent eagerness to import a huge new population of poor laborers who are willing to take lower-paying jobs: the only kind his administration can create.
But this scandal is even wider because many employers have exploited the weak job market by increasing workloads and decreasing compensation. Not only have jobs become scarcer; available jobs are of lower quality: this in the face of rising prices.
In other words, the standard of living among working-class Americans has been visibly and deliberatly reduced.
The Obama administration's response: partner with congressional democrats and republicans to simply bring in a new population of people who, because they comeThe Obama administration's response: partner with congressional democrats and republicans to simply bring in a new population of people who, because they come from extreme poverty, are willing to work in worsening conditions.
The standard of living for working-class Americans, i.e. most Americans, is under attack, and Obama, rather than standing up for those who voted for him, is leading the charge against them. The single greatest bargaining leverage workers have, in their contracts with employers, is to quit lousy jobs and find better ones. Obama has worked to remove that leverage. He's proved himself to be an enemy of those to whom he said he was a friend: not just by deliberately weakening the economy, but in many other ways as well.
Obama as president is a walking, talking falsehood, and the news media have complied in this creation.
That, to me, is the worst of it: the news media's complicity. It's one thing when politicians lie. But when the news media comply . . .. That causes people everywhere to lose hope. We're at the mercy of unethical, dishonest people, and our primary source of protection--the "watch-dog" media--have turned against us as well.
This is such a huge source of my personal dismay: the way the news media have allowed and even enabled the Obama administration to run rough shod over the law, people's rights, and the truth.
How many jobs have gone to non-citizens during this time? I think I read somewhere that it just about equals the number of created jobs.
Obama Job Converter
Markets create Jobs and the policies of this president have, by design, put a stop to it.
This a balancing act by the president. Can he make more people dependent on the government quicker than he can piss of the masses dues to high unemployment? I thought he would be thrown out of office last November over high unemployment, but no. He won. He has tipped the scales. Now, he has no fear. Amnesty is the big objective for his second term.
This is a very serious issue, and we need to speak of it.
Millions of US jobs have been sent to China.
Millions of US employees have been unemployed.
Bring back American jobs. Now.
We need an American industrial policy which actually makes America strong.
We do not have that now.
Very true, but it's worse than many people think. Not only do these non-citizens make less, don't forget they come from third world hell-holes and in their mind making $15.00/hr roofing or doing drywall is like heaven. The employers (many of them former illegals themselves) know this so if they "forget" to provide safety equipment, or don't pay overtime, who's going to complain? The illegal?
Along with that, if you're an illegal working for cash, why would you become a citizen? For the "privilege" of paying taxes? Which is why the GOP are being profoundly stupid. Once an illegal becomes a citizen (if he does) the contractor now sees his costs go up, and the "new citizen" will start complaining about working conditions. Guess who gets laid off and replaced by another illegal who won't complain.
What our so called representatives are doing is insuring an endless stream of illegals into this country. Then again what can you expect from the party who represented slave owners in the 19th century.
‘many employers have exploited the weak job market’
I wouldn’t say ‘many’. I’d call it a ‘few’. Folks need to understand that employers are subjected to higher input costs that cannot be passed on to customers at this time.
I know some small business operators that haven’t had a profit (real profit, not the QE type) in the past years. They stay in business for their employees, which the Administration believes is THEIR job. A paradigm shift or fundamental transformation?
The problem is, who is voting for America?
The Democrats aren’t doing it, but the GOP is out to lunch.
For 30 years, American businesses have been going overseas. A LOT of Republicans have been moving American businesses out of our very own country.
30 years is a very, very long time.
We need to bring back American businesses.
Now.
You just can’t understand that the world has changed and is no longer a world where America had advantages that no longer exist.
What you think of as normal was anomaly. Change lessened and eliminated the anomaly. America must compete and has. America has a powerful export engine that powers the economy. Were We to become isolationist as you insist, the economy would collapse.
Powerful export engine?
Have you been shopping recently?
Everything is made in China. China is totally obliterating America’s export engine.
Completely.
You are confusing exports with imports. They are different transactions
Look all I know is what I read.
A couple months ago, I read that China is now the world’s #1 exporter. And growing.
We meanwhile, are the world’s #1 importer. We used to be the world’s #1 exporter. That has changed.
A lot of our imports are from ... China.
It seems to me, we are a major problem now. We are building China up, very very quickly.
We need to bring our own industry back to America.
America needs to build things.
In any case, modern technology has drastically cut the number of workers required. Just as 50 million farmers can produce all the food that the world requires, now 50 million manufacturing workers can produce all the goods that the world requires.
This was masked for about 10 years by incredibly low wages in China. Now the truth is becoming clear. Even if we had those factories in the US, they would each have a couple of dozen workers, not thousands.
What the hell are you taking about. A patriotic Congress and president would keep jobs here like Korea or Japan does and would not allow this 3rd world invasion via open borders.
A real nation delays and ameliorates the downside of globalization which might be inevitable but it is retarded to accelerate and promote it the way the rats in DC do. We just lay our ourselves open to be raped by the mercantilist nations of Asia. America still has plenty of advantages to play off of but instead the economic-traitors in DC make globalization happen quicker because they have ways of personally profiting from it. It is the people of the in United States versus them
I have said my piece, now slip back into your coma
Drivel.....
We are not talking about patriotism, we are tlking about business.
The business of America is business and there is a decision to not to adhere to the backward isolationist views that misunderstand global commerce.
Pro-American bump. :D
Of course government understands job creation. They’re just not that into it. They have other priorities, otherwise they wouldn’t be in government.
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