Understanding What September's 7.8% Unemployment Rate Means to Employment

"Worse yet let the unemployment rate fall to 7.9% between now & November (one lousy tick below the maximum 8% shown in the graph for the "with recovery plan" i.e., stimulus) for business cycle reasons & BO will release a barrage of ads saying his plan is working – just a little late because things were worse under Bush than could ever have been imagined. Such a similar plan worked to get FDR reelected in the 1930s when the economy was even worse."  This was just part of the June 1, 2012 posting entitled The Most Important Unemployment Number May Be Yet To Come – & of course it came on Friday in the September unemployment report two ticks below the psychological 8.0% unemployment level.

 

Any euphoria in Mitt's camp from the results of the first debate was erased by September's unemployment report of a reduced 7.8% unemployment rate as partisans like Jack Welch & Sean Hannity said both the lower rate & the reported 873,000 jobs increase were out of line to the point they were even part of a conspiracy.  After 43 months of finding the unemployment reports just fine for their purposes all of a sudden this one is phony to them.

 

Rather than complain - the better course to find out what is happening is to study the Bureau of Labor Statistics (BLS) detailed reports – which I did.

 

The BLS reported that the total number of people employed in September was 143 million – an increase of 873,000 in the month & a decrease of 456,000 in the unemployment ranks.  The doubts of Jack & Sean re the validity of these numbers originate in the fact that it has been thirty years since this type of a high monthly increase was reported.  With the economy limping along with less than 2% growth & Thursday's report of first time unemployment claims still very high the 7.8% number is suspicious & does require further study to make sure the books were not cooked in BO's favor.

 

The difference is that in the 1980s real good paying full time jobs were being plentifully created by the private sector.  Last month there was an increase of 582,000 jobs in a category the BLS calls "part time for economic reasons" such as slack work, poor business conditions, or could only find part time work.  People in this category who really want full time work totaled 8.6 million.  All of these people are counted as employed members of the labor force if they worked as little as one hour per week & received pay.

 

Take all of the above stats & apply them with the decades long consistent BLS methodology & the arithmetic results in the determination that the unemployment rate fell from 8.1% in August to 7.8% in September. 

 

Now the lower unemployment rate by itself seems good (you could even quote BO & say we are on the right track) until you know the above explanation.  But if you take the 12.1 million unemployed plus the 8.6 million involuntary part timers plus the 2.5 million marginally attached to the labor force (this figure includes 802,000 discouraged workers - those who did not actively look for work in the prior 4 weeks for reasons such as they think no work is available, could not find work, lacks schooling or training, employer thinks too young or old, and other types of discrimination) & add them up & do the appropriate arithmetic you find that the U6 unemployment-underemployment rate remained 14.7% in September - unchanged from August meaning we are not on a new right track but rather on the same rotten track. 

 

The U6 unemployment-underemployment rate leads to the uncovering of the real problem – namely the jobs being created are not good ones (i.e., they are low paying with no future for the worker or the country).  The creation of low paying jobs & a hesitancy by employers to hire @ all are typical characteristics coming out of any recession but we have not been in a recession since June 2009.  To think that BO's government dependent programs can or will help bring back prosperity is absurd – they will lead to more poverty.  Since the recession ended more unemployed workers dropped out of the labor force than found jobs.

 

Although BO is pretending during the campaign that he wants to improve this situation we know from all of the documentation since January 20, 2009 that the U6 unemployment-underemployment situation fits right in with BO's plans to complete the socialization of America – for starters.   Over half of college graduates under 25 were underemployed in 2011 – source Center for Labor Market Studies @ Northeastern University, senior citizens are plagued by drastic reductions in CD interest income, & many people in their fifties realize they will never work again.  The rest of the citizenry is just waiting for the ax to fall on them.  It is important to resist turning to BO & the government even under these circumstances.  We don't have to live under these conditions & the sooner we change the current government-dependent mindset the sooner things will improve.

 

Like BO, Mitt has his own class warfare fight going on that is rooted in his statement during the debate – "I will not reduce the share of taxes paid by high income earners."  This lack of growth message offers no help to our economic or employment problems.  It is the top marginal income tax rate that needs to be cut for growth to occur – not the middle or lower class rates.  In fact lowering marginal income tax rates for every bracket while leaving the effective tax rate the same for upper income people will only add to the deficit.  Mitt has two conflicting dueling goals: 1) "I won't put in place a tax cut that adds to the deficit," & 2) "I will lower taxes on middle-income families."  Mitt will cut the top marginal rates & also the deductions for the high earners leaving them & America right where we are now.