Friday, August 3, 2012

Looking Past The Unemployment Spin

For the short version with less commentary, please read The End of July Unemployment Spin at

At 8am EST on August 3rd, 2012 the July Unemployment (U3) and Workforce Participation statistics were released. Given the trend over the past 3 and 1/2 years, they should come as no surprise. there were small changes, and none of them positive when the situation is taken in aggregate.

Some will attempt to spin the numbers with the "good news" of the lethargic increase of 163k or so "new jobs created". However, over the last two weeks over 722K more people lost their jobs. That is a net LOSS of 559,000 jobs. That is hardly an increase.

To top it off, they revised the June numbers. The "jobs created" in June was originally reported at about 80k. The revised numbers are significantly lower at 64k. So, they lied in July when they released the June report. Of course, this is the trend from the Bureau of Labor Statistics. They report the less pessimistic report, then revise it to be more accurate (and dismal) a month later.

The average pay for non-farm, non-supervisory jobs increased by $.02 an hour from $19.75 to $19.77. Given  an inflation rate over 3%, that does not even cover cost of living increases. The mainstream media will most likely report that as positive, since that 2 cent raise means that a worker will be able to buy an additional pack of gum at the end of his work week (averaged at 34 hours a week).

The U6 numbers remained largely unchanged, indicating that the real unemployment rate and underemployment rate (people stuck with part-time jobs who have been seeking full-time employment) is closer to 15%. The U3 rate normally reported in the news is up, increasing to 8.3%.

If you couple the U3 rate increase with yet another drop in workforce participation, the numbers get sickening. Currently, 58.4% of the population is of working age. Of those of working age, currently only 63.7% are working or looking for work. 5 years ago, that workforce participation was closer to 70%. What this means is that of our population, 311,591,917, only 181,969,680 are of working age. Of that 181,969,680 only 115,914,686 are willing to work. Only 106,293,767 are actually employed. That means only 38.2% of Americans are working or looking for a job. That means only 38% of citizens are willing to make a wage, pay taxes, and support the 62% who aren't. THAT is dismal.

Long-term unemployment also increased slightly. Those are people who have been employed over 27 weeks. However, as many of them approach 99 weeks, when the handouts end, they apply for SSDI claiming anxiety and depression for being unable to find employment. At that point, they are no longer part of the workforce. They also get a monthly paycheck averaging $1110 that is paid for by those 34.1% of the US Population who are actually working.

No matter which stats the politicians want to draw your attention to, the aggregate numbers display bad news. You will hear that those people that bust their butts to become "top earners" need to pay more in taxes. In the same diatribe, you will hear that they need to pay their "fair share". If you want to talk about the real fair share, you need to ask the 49% of the US population that are receiving government subsidy handouts when they are going to stop being parasites, produce, earn, and pay their fair share. 

That point is moot until the government gets out of the way. Interference in the market, unpredictable changes in regulations, restrictions, fees, hidden taxes, and not knowing from day to day what tomorrow's tax rate is going to be cause stagnation in business growth. A company is not going to expand in an unstable environment. The Government is creating that unstable environment. If they did away with the ridiculous and unnecessary regulations instead of increasing them (many without constitutional legislation), companies may be more willing to expand, thus hire more workers. Those wishing to start new businesses may actually take the chance rather than look at the economy and think "I'll have to work 3 years just to pay off the fees and regulations for the first operational year".