Tag: jobs

A Decent but Underwhelming Jobs Report

The headlines from today’s employment report certainly seem positive.

The unemployment rate has dropped to 6.3 percent and there are about 280,000 new jobs.*

But if you dig into the details of the latest numbers from the Bureau of Labor Statistics, you find some less-than-exciting data.

First, here is the chart showing total employment over the past 10 years.

Total Employment

This shows a positive trend, and it is good that the number of jobs is climbing rather than falling.

But it’s disappointing that we still haven’t passed where we were in 2008.

Indeed, the current recovery is miserable and lags way behind the average of previous recoveries.

But the really disappointing news can be found by examining the data on how many working-age people are productively employed.

The Bureau of Labor Statistics has two different data sets that measure the number of people working as a share of the population.

Here are the numbers on the labor force participation rate.

Labor Force Participation

As you can see, we fell down a hill back in 2008 and there’s been no recovery.

The same is true for the employment-population ratio, which is the data I prefer for boring, technical reasons.

Emplyment Population Ratio

Though I should acknowledge that the employment-population ratio does show a modest uptick, so perhaps there is a glimmer of good news over the past few years.

But it’s still very disappointing that this number hasn’t bounced back since our economic output is a function of how much labor and capital are productively utilized.

In other words, the official unemployment rate could drop to 4 percent and the economy would be dismal if that number improved for the wrong reason.

* Perhaps the semi-decent numbers from last month are tied to the fact that Congress finally stopped extending subsidies paid to people for staying unemployed?

Four Charts Showing How Obama’s Statist Agenda Is Hurting Jobs and Growth

President Obama made a much-hyped pivot-to-the-economy speech yesterday in Chattanooga, Tennessee.

I already explained, immediately following the speech, why his “grand bargain” on corporate taxes was not a good deal because of all the hidden taxes on new investment and international competitiveness.

But I also had a chance to dissect the President’s overall track record on the economy for today’s Chattanooga Times Free Press.

Here’s some of what I wrote.

…he didn’t say anything new or different. His audience was treated to the same tax-spend-and-regulate boilerplate that the President has been dispensing ever since he entered political life. …with Obamanomics, not only has America failed to enjoy the traditional period of four-to-five percent growth at the start of a recovery, the economy hasn’t even gotten close to the long-run average of 3 percent. That’s a damning indictment. But it gets worse. The data on employment is downright depressing. A look at the numbers reveals that the nation is suffering from the worst period of job creation since the Great Depression. Most startling, we still haven’t recovered the jobs we lost during the recession.

That’s some strong rhetoric, but there are plenty of numbers to back up my assertions.

Let’s take a look at the interactive website maintained by the Minneapolis Federal Reserve Bank. This site allows users to compare all business cycles since World War II.

Let’s start by comparing the current business cycle to what happened under Reaganomics.

AFP Reagan v Obama GDP

As you can see, we’ve had a very sluggish recovery compared to the boom we enjoyed in the 1980s.

Not all of this is Obama’s fault, by the way. Here’s some more of what I wrote for the Chattanooga Times Free Press.

…all of these problems started before President Obama ever got to the White House. President Bush also was guilty of too much spending and excessive regulation, and his policies helped push the economy into a ditch. Unfortunately, even though he promised “change,” President Obama has been adding to Bush’s mistakes — and also raising taxes.

Some people may be wondering whether it’s fair to compare Reaganomics to Obamanomics. Maybe I’m cherry-picking data to make Obama (and Bush) look bad.

Trade-Skeptical Harold Meyerson Makes One Valid Point

Harold Meyerson, with whom I’ve rarely found occasion to agree, makes one point in today’s column (“Go Slower on Free Trade”) that didn’t cause my eyes to roll: that the Obama administration has been relentlessly secretive about the goings-on in the Trans-Pacific Partnership trade negotiations.

I cannot corroborate Meyerson’s claim that the administration has granted access to the negotiators and the negotiating text to “roughly 600 trade ‘advisers’ from big businesses,” but has excluded everyone else, including Congress. It may be true, but then again… Certainly, Congress (by which I mean Congress, and not just a few Senate Democrats) is very much in the dark about the details of these negotiations, and that presents an enormous logistical problem.

Article I, Section 8 of the Constitution vests power in the Congress “To regulate Commerce with foreign Nations,” which covers trade agreements. Traditionally, Congress has temporarily extended that authority to the executive branch, given the impracticability of having 535 trade representatives with 535 different agendas negotiating with foreign governments. That temporary grant of “fast track” or “trade promotion” authority is not a blank check. It comes with a list of congressional demands – items that can, cannot, must, and must not be included in the agreement. It is like doing the legislative process in reverse in the sense that amendments are articulated as conditions BEFORE the agreement is reached. Ideally, those congressional demands would be formalized before the negotiations BEGIN so that there are no false starts.

But with the administration still aiming to conclude negotiations in October, no fast track legislation in sight, and anti-trade legislation metastasizing in a Congress that has largely been excluded from shaping the deal’s terms, there are long battles ahead.  Meyerson’s counsel that we “go slower on free trade” is probably already a done deal.

As to the rest of Meyerson’s claims that trade is a boon for big business, which comes at the expense of workers and consumers, we have harvested countless forests here at Cato explaining why that is just false. The most persistent U.S. trade barriers are imposed on food (tariffs and tariff-rate quotas), clothing (tariffs), and shelter (trade remedies restrictions on lumber, steel, cement, paint, nails, appliances, flooring, furniture, etc.), making them the most regressive taxes in the U.S. system.  Lower-income Americans (those for whom Meyerson claims to speak) devote larger shares of their budgets to these basic necessities than do white-collar fat cats.

I’ll leave you with these three charts, which demonstrate positive relationships between import and jobs, price decreases over time for heavily traded items, and price increases over time for less frequently traded services, all exposing the errors of Meyerson’s claims.

Immigrants Are Attracted to Jobs, Not Welfare

Unauthorized and low skilled immigrants are attracted to America’s labor markets, not the size of welfare benefits.  From 2003 through 2012, many unauthorized immigrants were attracted to work in the housing market.  Housing starts demanded a large number of workers fill those jobs.  As many as 27 percent of them were unauthorized immigrants in some states.  Additionally, jobs that indirectly supported the construction of new houses also attracted many lower skilled immigrant workers.

Apprehensions of illegal crossers on the Southwest border (SWB) is a good indication of the size of the unauthorized immigrant flow into the United States.  The chart below shows apprehensions on the SWB and housing starts in each quarter:

 

Fewer housing starts create fewer construction jobs that attract fewer crossings and, therefore, fewer SWB apprehensions.  The correlation holds before and after the mid-2006 housing collapse. 

What about welfare? 

Here is a chart of the national real average TANF benefit level per family of three from 2003 to 2011 (2012 data is unavailable) and SWB apprehensions:

 

Prior to mid-2006, TANF benefit levels fell while unauthorized immigration rose.  During the housing construction boom, unauthorized immigrants were attracted by jobs and not declining TANF benefits.  After mid-2006, when housing starts began falling dramatically, real TANF benefit levels and unauthorized immigration both fell at the same time.  If unauthorized immigration was primarily incentivized by the real value of welfare benefits, it would have fallen continuously since 2003.   

The above chart does not capture the full size of welfare benefits or how rapidly other welfare programs increased beginning in 2008.  As economist Casey Mulligan explained in his book The Redistribution Recession, unemployment insurance, food stamps (SNAP), and Medicaid benefits increased in value and duration beginning in mid-2008.  Including those would skew welfare benefits upward in 2008 and beyond, but unauthorized immigration inflows still fell during that time.

In conclusion, housing starts incentivize unauthorized immigration while TANF does not. 

Ed Glaeser Makes Lamentably Rare Case for the Freedom to Trade

Support for free trade, especially from politicians, often rests on tired mercantalist arguments about the benefits of exports and jobs. That can backfire, as we’ve seen recently with trade figures showing that the U.S. trade deficit with Korea has widened since the Korea-U.S. Free Trade Agreement came into force. That’s why I’ve argued that relying on rhetoric about all the exports and jobs that free(r) trade will create is a dangerous game: where, might trade skeptics ask, are all those exports you promised us, and why should we support trade liberalization if the results we were promised don’t materialize? So I was thrilled today to see a small post on Bloomberg.com from Harvard economics professor Ed Glaeser calling for the president to make a strong push for a U.S.-EU trade agreement, because of the benefits it would bring U.S. companies and consumers:

He should use his address to make the U.S. a leading voice once again for economic freedom: the freedom of consumers to buy European goods and the freedom of producers to sell their goods on the other side of the Atlantic.

It is gratifying to see a principled case for free trade, resting on a foundation of freedom, in the media. Here’s hoping President Obama read Professor Glaeser’s article, and heeds his advice.

The ‘New Normal’ of High Unemployment

I almost feel sorry for the Obama administration’s spin doctors. Every month, they probably wait for the unemployment numbers from the Bureau of Labor Statistics with the same level of excitement that people on death row wait for their execution date.

This has been going on for a while, and today’s new data provide another good example.

As the chart below indicates, the White House promised that the unemployment rate today would be almost 5 percent if we enacted the so-called stimulus back in 2009. Instead, the new numbers show that the jobless rate is 7.9 percent, almost 3.0 percentage points higher.

Obama Unemployment

I enjoy using this chart to indict Obamanomics, in part because it’s a two-fer. I get to criticize the administration’s economic record, and I simultaneously get to take a jab at Keynesian spending schemes.

What’s not to love?

That being said, I don’t think the above chart is completely persuasive. The White House argues, with some justification, that these data simply show that they underestimated the initial severity of the recession. There’s some truth to that, and I’ll be the first to admit that it wouldn’t be fair to blame Obama for a bleak trendline that existed when he took office (but I will blame him for continuing George W. Bush’s policies of excessive spending and costly intervention).

That’s why I think the data from the Minneapolis Federal Reserve are more damning. They show all the recessions and recoveries in the post-World War II era, which presumably provides a more neutral benchmark with which to judge the Obama record.

A Four-Picture Indictment: Final Pre-Election Jobs Report Is Not Good News for Obama

In some sense, President Obama is fortunate. I predicted a long time ago that he would win re-election if the unemployment rate was under 8 percent.

Well, the new numbers just came out and the unemployment rate is 7.9 percent.

So even though his stimulus failed, and even though his class-warfare tax policy is like a dark cloud over the economy, and even though his plans to further increase the burden of government spending will accelerate America’s descent into a Greek-style fiscal quagmire, he may dodge the proverbial bullet.

You can see my latest election prediction by clicking here, and you can even cast a vote in my reader poll. But let’s set aside the crystal ball nonsense and focus on public policy.

Below are four images that summarize Obama’s dismal performance.

We’ll start with a chart showing what President Obama claimed would happen to unemployment if we enacted his so-called stimulus compared to the actual real-world results.

As you can see, the joblessness rate currently is more than 2.5 percentage points higher than Obama claimed it would be if we implemented his Keynesian plan.

Now let’s look at some updated images of how this “recovery” compares to previous recoveries in the past six decades, based on data from the Minneapolis Federal Reserve Bank. We’ll start with the unemployment rate. Take a wild guess which president has presided over the red line at the bottom.

Previously, I’ve compared Obamanomics and Reaganomics,but this image may be even better because it shows all business cycles and confirms that the Obama years have been the worst in post-World War II history.

And we see something similar if we look at GDP growth. Once again, go out on a limb and guess who is responsible for the weakest recovery since World War II.

Last but not least, this info-graphic is a bit dated, but Obama’s dismal track record would not change if we added the past few months of data.

Defenders of the White House argue that all these bad numbers are a legacy of the dismal situation that Obama inherited. That’s partially true. Obama should not be blamed for the depth of a recession that began before he took office.

But he should be held at least somewhat accountable for an anemic recovery—particularly since he promised “hope” and “change” and then continued the big-spending, pro-cronyism policies of the Bush years.

The moral of the story, needless to say, is that free markets and small government are the keys to growth and prosperity.

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