The Democratic National Convention in Charlotte, N.C., ended in a big whimper, much like President Obama’s term in office. In his keynote address on Thursday, the president struggled unsuccessfully to give the public a compelling reason to vote for him. The message of hope that worked in 2008 no longer holds up in light of the economic despair of 2012. The Bureau of Labor Statistics on Friday confirmed just how bad things are out there. The crucial number is not the official 8.1 percent unemployment rate or the 96,000 jobs created, but the 368,000 Americans who left the work force. For them, hope is gone.
This exodus from the job market drove the labor-force participation rate to a 30-year low of 63.5 percent, continuing a trend that has gone downhill throughout this so-called recovery. It’s a sign of how far down the path the United States is to having a permanent underclass, where the hope of achieving the dignity of gainful employment has been abandoned.
In the not-so-honest world of bureaucratic mathematical gimmickry, the exodus works in Mr. Obama’s favor. The 0.2 percent slip in workforce participation since last month is responsible for the illusory 0.2 percent improvement in the official unemployment rate. Had the participation number not changed from last month, the unemployment rate would have been 8.3 percent. If job-market participation had remained at the historic level of 65.7 percent, the official unemployment rate would be 11.2 percent.
It’s a screwy system in which the jobless numbers look better than they really are because people in despair have given up looking for a job altogether. There are currently 2.6 million Americans who are described as “marginally attached to the labor force” but are not counted among the officially unemployed because they haven’t searched for work for four weeks. These frustrated multitudes would almost certainly work if offered a job. Add these to the overall tally and the unemployment rate would hit a staggering 12.8 percent at the historic participation rate.
The traditional measure of unemployment is no longer the most accurate. Broader gauges that score discouraged and marginally attached workers offer a more complete assessment, which pegs the trouble in the 15-to-16 percent range through much of this technical recovery. That is, roughly one out of six or seven Americans is out of work.
Things just aren’t getting better, while job-creation numbers for the last two months have been revised downward. The latest data show only 45,000 jobs created in June, not the 64,000 previously reported; July saw 141,000 new jobs, not 163,000. Wages, which have been stagnant, edged down — unwelcome news as the price of gasoline and food continues to rise.
The only way out of stagnation this extreme is growth that generates 300,000 new jobs monthly. That can’t happen in the current environment of fiscal and regulatory uncertainty. Businesses only see their taxes increasing and their regulatory burden growing heavier. Investors would rather hold on to their cash than make a bet on a better tomorrow. As long as government continues distorting investment decisions, we’ll be stuck with malaise. The Federal Reserve isn’t going to change the minds of investors and job creators by printing more money. The Obama administration must reverse course from its current, anti-capitalist agenda to encourage the economic hope Americans sorely need.
The Washington Times
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