Today (Sept. 5), the Washington Post proclaims “Hiring dropped in August, as economy added 142,000 jobs; unemployment rate at 6.1 percent” while the Huffington Post furrows its brow over why the Economy Barely Budges In Disappointing Jobs Report – despite the cheerful announcement from the Bureau of Labor Statistics (BLS) that the unemployment rate is now at 6.1 percent!
For those who have been around the economy awhile, the current 6.1-percent economy looks nothing like the 6.1-percent economies we had in the summers of 1994 and 2003. Here is why: the BLS has constantly redefined away the problem of persistent unemployment, simply removing the annoyingly unemployed from the statistics and focusing on tracking merely changes in the employed versus the recently unemployed. That’s like saying “Well, that supplier has failed so long that we’ll just not count their broken parts in our QA stats.” That doesn’t change the fact that there’s a lot of failure out there.
Instead, let’s look at the bigger picture – the labor participation rate. From 1975 to current times, here’s what that looks like, according to the BLS:
And no, this is not a cherry-picked time series – take a look at the entire postwar stretch, which is how far back the stats go:
As you can see, we are now heading toward the level of workforce participation we had prior to women joining the workforce in bulk.
The current numbers (62.8 percent) are identical to those at the end of 1977 – the sad years of stagflation, Soviets going into Afghanistan, national energy policies, continued 55-mph speed limits, dubious arms treaties, and (perhaps not surprisingly) widespread economic malaise. Note that the current participation trend continues to point downward. This is not a recovery.
With a civilian population of around 244 million today, if we had 66-percent labor participation (this is the lower boundary during the 20 years between 1988 and 2008) instead of our current 63 percent, that would mean an additional 7 million people employed today. Now that would be a recovery!
In case you are still not convinced, look at the international statistics (albeit a different age range than referenced earlier) – it’s not looking good.
High employment isn’t the only answer of course. Just look how that helped the Soviets. People need to do something productive as well. No matter where you stand politically, it should be clear that we can’t redistribute our way to growth – we’ve tried that for many years now – to get out of this quagmire we need to make the U.S. an attractive place do business again.
Regardless of the reason, when the federal government goes out of its way to sue and harass corporations (employers) it is not encouraging more of them to expand in the U.S. We have written about this in the past too:
- Raided by the Feds, Gibson Sings the Supplier Performance and Risk Blues
- FCPA Inc.: How the Foreign Corrupt Practices Act Became an Industry Unto Itself
- Prediction: USA 2020 – Will We Have Any Major Corporations Left?
And these are just some examples, whether you work for BP, Halliburton, Bank of America (or any large financial firm), Nestlé, an automotive company, or just about any other firm, even though negligent behavior cannot be acceptable, when the federal government extorts billions of dollars from the private economy just because they can, this does not bode well for the economy. As we can see in the real employment numbers.
Enjoy the weekend!