More Unemployed Presently, Than in 2009

This article appeared on on September 9, 2011.

According to the U.S. Bureau of Labor Statistics, there are fewer people employed now than back in January 2009 when Barack Obama was sworn in as President, and there are more people unemployed now than in January 2009.

Back then, a reported 142 million people had jobs. In July 2011, 139.2 million people had jobs.

In terms of employment, the private sector is smaller now than when Obama was sworn in. In January 2009, 110.9 million people were working in the (nonfarm) private sector, but by July 2011 there were only 109.9 million — despite the larger U.S. population in 2011.

Although these aren't large job losses, we're supposed to be in a recovery. Obama and his comrades have repeatedly claimed an ability to "turn the economy around." Actually, from the standpoint of the jobs situation, we're still in decline — worse off than we were when George W. Bush was president.

Unemployment has worsened for two principal reasons. First, Obama neglected the unemployment issue for more than a year while he focused on his personal priority — the government takeover of health insurance.

Second, many of Obama's policies have made it more difficult and more expensive for employers to hire people. Whenever something becomes more difficult and expensive, there's likely to be less of it.

In effect, Obama has promoted anti-jobs policies. When speaking to the joint session of Congress, Obama made clear he wants to repeat some of his biggest failures.

For starters, another round of "stimulus" spending — some $300 billion. Like his previous blowout, widely viewed as a failure, the new one is based on the discredited theory that the best way to promote private sector jobs is to drain hundreds of billions of dollars out of the private sector and give the money to government agencies and government employee unions.

The theory behind such stimulus involves the so-called Keynesian "multiplier" — each dollar of government spending will supposedly lead to more than a dollar's worth of total spending as the money circulates. But government money doesn't come out of thin air. It comes from taxpayers, and each dollar taken from taxpayers means they have less money, the people they do business will have less money, and so on. The alleged benefits of Keynesian spending are canceled out by taxation. That's why Obama's spending has failed to stimulate the economy as he claimed, and if Congress voted for another round of stimulus spending, it would be a bust, too.

In his address to Congress, Obama recommended temporary payroll tax cuts. This, too, has failed, because people don't change their long-term spending habits when they receive short-term income (or short-term tax breaks). People tend to spend more when they have reason to believe their long-term take-home pay is going up. Take home pay would go up if Obama supported permanent tax cuts, but he has always opposed permanent tax cuts.

Moreover, Obama — who extended the time when unemployed people could apply for up to 99 weeks (nearly two years) of benefits — proposed a further extension. But Princeton University economist Alan Krueger, who became Obama's Assistant Secretary of the Treasury for Economic Policy, warned: "once [an individual is] on the program, unemployment insurance can extend the time out of work... unemployment insurance can induce eligible workers to search less hard for a different job or work less hard on the current job... higher and longer duration unemployment benefits will cause unemployed workers to take longer to find a new job... unemployment insurance [tends to] to lengthen unemployment spells."

Thus far during Obama's presidency, the number of people in the civilian labor force has declined while the number of people out of the civilian labor force has gone up. These trends aggravate the financial problems of Social Security and Medicare, because each year there are relatively fewer people generating payroll tax revenue to cover the legions of baby boomers who are qualifying for benefits. As the debt limit debate reminded us, benefits exceed payroll tax revenue, and the entitlement deficits have to be made up with larger and larger amounts of borrowed money.

In addition, Obama seems to have no regrets about his two biggest pieces of legislation — the government takeover of health insurance and the Dodd-Frank financial regulation bill. Both have caused considerable uncertainty that discourages employers from hiring more people until they can figure out what the costs of new regulations and taxes will be. While Obama recently asked the Environmental Protection Agency to withdraw a proposed rule on ozone emissions, because it would destroy jobs, he hasn't suggested a serious review of other job-killing regulations. Meanwhile, his Administration continues to block energy industry projects that could create thousands of private sector jobs.

It's difficult to hold out much hope for the jobs situation until the policies change.