Tag: unemployment rates

No, the ‘Real’ Unemployment Rate Isn’t 17.3%

Nearly every economic commentator from Fox News (on the fair and balanced side) to Paul Krugman (on the unfair and unbalanced side) is eager to tell you that the “real” unemployment rate is not 10% but 17.3%.  The latter figure is the largest of six offered by the Bureau of Labor Statistics.   But that does not make it more meaningful.

Many people believe (incorrectly) that unemployment is a measure of how many jobs were lost.   But people can also be unemployed because they quit their job, or because they never worked before, or haven’t worked in a long time.  Job losers accounted for 63.7% of the unemployed in December, down from 66.1% in September.  If we counted only those who were unemployed because they lost their jobs, that measure of unemployment was 6.3% in December — down from 6.7% in October.

The 17.3% figure, by contrast, starts with those looking for jobs during the past month and adds “all marginally attached workers, plus total employed part time for economic reasons.”   That phrase “marginally attached” means people who looked for work at some point during the past year, but not lately. Contrary to press reports, relatively few of the “marginally attached” are those discouraged about job prospects.  Adding discouraged workers would only push the unemployment rate up by half a percentage point, to 10.5%.   And even that small number of discouraged workers is not simply those who could not find work, but those who simply “think” no work is available, or think they are too young, too old, or that they lack the necessary schooling or training.

The rest of the “marginally attached” don’t even think they can’t find work.  Instead, they are not looking for work “for such reasons as school or family responsibilities, ill health, and transportation problems.”  To describe such people who are not available for work as “underemployed” (much less unemployed) is an abuse of the language.

As for those “working part-time for economic reasons,” only a fourth say they could only find part-time work.   Those who normally work a 9-to-5 schedule (35 hours a week) are counted as working part-time for economic reasons if they miss even one hour “for reasons such as holidays, illness and bad weather.”   That isn’t really underemployment, much less “real” unemployment.

What is unique about last year’s unemployment was its typical duration — doubling the number of weeks people remain on the dole.   Because those who have been unemployed 12–18 months do not leave the ranks of the unemployed until their benefits are about to run out (after an unprecedented 79 weeks or more), it doesn’t take many newly unemployed to push the rate above 10%.  Congress tripled the number of weeks people collect unemployment benefits (describing that and other transfer payments as a  “stimulus”) and now wonders why so many people take so long to accept a suitable job offer.   If you subsidize something, you get more of it — and that applies to unemployment too.   Many of those same clueless  legislators may be equally surprised to find themselves out of a job next November.

Health Care: Not Close to Over

The fat lady hasn’t even started to warm up yet.

The narrow 220-215 victory in the House on Saturday night was a step forward on the road to a government takeover of the health care system.  But as close and dramatic as that vote was, that was the easy part.  The Senate must still pass its version of reform—which will not be the bill that just passed the House.  Nancy Pelosi was, after all, able to lose the votes of 39 moderate Democrats.  Harry Reid cannot afford to lose even one.  A conference committee must reconcile the two vastly different versions.  And then, Pelosi must hold together her 3 vote margin of victory (if it gets that far).  Yet several House Democrats who voted for the bill on Saturday said they did so only to “advance the process.” Their vote is far from guaranteed on final passage.  And, House liberals are almost certain to be disappointed by the more moderate bill that may emerge from the conference.

Among the more contentious issues:

Individual Mandate: This should’ve been low-hanging fruit. Democrats agreed on a mandate early in the process. But it became increasingly plain that a mandate would hit those with insurance as well as the uninsured – forcing people who are happy with their plan to switch to a different, possibly more expensive plan. With this mandate now being seen as a middle-class tax hike, qualms have developed.  The House bill contains a strict mandate, with penalties of 2.5 percent of income backed up by up to five years in jail.  The Senate Finance Committee, on the other hand, watered down the mandate’s penalties and delayed the mandates implementation.

Employer Mandate: The House bill also contains an employer mandate, a requirement that all but the smallest employers provide insurance to their workers or pay a penalty tax of up to 8 percent of payroll.  The Senate,  looking at unemployment rates over 10 percent, seems unlikely to include an employer mandate.

The Public Option: The House included, if not a “robust” public option, at least a semi-robust one.  But moderate Democrats in the Senate are clearly not on board.  Joe Lieberman (I-CT) says that he will join a Republican filibuster if the public option is included.  Harry Reid is trying various permutations: a trigger, an opt-in, an opt-out.  But as of now there is not 60 votes for any variation.

The Sheer Cost: Fiscal hawks like Sen. Evan Bayh (D-IN) say they will not support a bill that adds to the deficit or spends too much.  But the house bill cost a minimum of $1.2 trillion.

Taxes: The House plan to add a surtax on incomes of $500,000 or more a year has no support in the Senate. At the same time, the Senate plan to slap a 40 percent excise tax on “Cadillac” insurance plans is unacceptable to key Democratic constituencies like labor unions.

Abortion: Conservative Democrats insisted on a strict prohibition on the use of government funds for abortion.  The bill could not have passed without the inclusion of that provision.  House liberal swallowed hard and voted for the bill, despite what they called “a poison pill” anyway with the expectation that it will be removed later.  If the final bill includes the prohibition at least a couple liberals could defect.  If it doesn’t, conservative Democrats won’t be on board.

Immigration: The Senate Finance Committee included a provision barring illegal immigrants from purchasing insurance through the government-run Exchange.  The House Hispanic Caucus says that if that provision is in the final bill, they will vote against it.

As if these disagreements among Democrats wasn’t bad enough, public opinion is now turning against the bill.

President Obama has called for a bill to be on his desk before Christmas—the latest in a series of deadline that are so far unmet.  It is hard to see how Congress can meet this one either.  The Senate has not yet received CBO scoring of its bill and is not prepared to even begin debate until next week at the earliest.  That debate will last 3-4 weeks minimum, assuming there are 60 votes for cloture.  That means, the bill cant’ go to conference committee until mid-December, even if everything breaks the way Harry Reid wants.  Privately, Democrats are now suggesting late January, before the State of the Union address, is the best they can do.

The fat lady can go back to sleep—this isn’t over yet.