employment

U.S. Labor Force Declines by 720K

/ L. M. Walker / 1 Comment

October Unemployment Manipulation

– By: Larry Walker II –

The big story out of the October household survey was the decline by 720,000 in the headline labor force, which largely reflected the loss of longer-term unemployed into the broader U-6 unemployment measure.

In fact, since January 2009, the U.S. Labor Force has only grown by 607,000. Yet, over the same period, 11,034,000 persons have been removed from the labor force (see chart above). Once removed, such are neither counted as employed nor unemployed, each amounting to the equivalent of zero-fifths of a person in terms of modern governmental accounting.

In Manipulation 101: The Real Unemployment Rate, we learned that as the size of the labor force erodes, the unemployment rate artificially declines. So let’s recall how the unemployment rate is calculated. The unemployment rate is calculated by dividing the number of unemployed persons by the size of the labor force:

[ (A) Total Unemployed / (B) Labor Force = (C) Unemployment Rate ]

Thus, the official unemployment rate of 7.3%, as reported by the Bureau of Labor Statistics (BLS) on its November 8, 2013, Employment Situation Report, was calculated as follows:

However, when the 720,000 longer-term unemployed which were removed from the labor force in October are added back, the real unemployment rate actually rose to 7.7% (shown above). And, if we were to add back all long-term unemployed workers, removed from the labor force since February 2009, the real unemployment rate would be 13.4% (also shown above).

As I reported earlier this year, in Black Unemployment Rate Closer to 37.9%, there is an alternative to the federal government’s phony reporting. Shadow Government Statistics publishes a more accurate measure of unemployment based on pre-1994 BLS methodology. The seasonally-adjusted SGS Alternate Unemployment Rate reflects current unemployment reporting methodology adjusted for SGS-estimated long-term discouraged workers, who were defined out of official existence in 1994.

In other words, the SGS Alternate Rate adds millions of long-term discouraged workers back to the BLS estimate, which only includes short-term discouraged workers. In case you didn’t catch that, this means the BLS has eliminated long-term discouraged workers (i.e. those who have been without a job for so long that they haven’t bothered to look for work in more than 12 months) from official unemployment statistics since 1994, thus distorting the true employment situation.

Accordingly, although the Bureau of Labor Statistics boasts of an official U-3 unemployment rate of 7.3%, and an official U-6 rate of 13.8%, the real unemployment rate, based on pre-1994 BLS methodology, has actually increased from 18.3% in January 2009 to 23.5% as of October 2013 (shown above).

Of course the Chief of the White House will simply continue to repeat something like, ‘Now that we’ve fixed (i.e. effed up) the nation’s health care system, it’s time to finish fixing (i.e. effing up) the economy.’

“How long, O LORD? Will you forget me forever? How long will you hide your face from me?” ~ Psalm 13:1 (ESV)

Related: #unemployment #manipulation

Give Up 300,000 Federal Workers… and then we’ll talk.

/ L. M. Walker / 2 Comments

U.S. Government Shutdown: Negotiation 101

– By: Larry Walker II –

“Treasury Secy. Jack Lew warns the country will run out of money later this month. Actually, that’s another lie. The country ran out of money $17 trillion ago. It’s all borrowed since then, much of it by this administration.” ~ Andrew Malcolm *

The United States federal government shutdown of 1995 and 1996 was the result of conflicts between Democratic President Bill Clinton and the Republican Congress over funding for Medicare, education, the environment, and public health in the 1996 federal budget. The government shut down after Clinton vetoed the spending bill the Republican Party-controlled Congress sent him. The federal government of the United States put non-essential government workers on furlough and suspended non-essential services from November 14 through November 19, 1995 and from December 16, 1995 to January 6, 1996, for a total of 28 days. The major players were President Clinton and Speaker of the U.S. House of Representatives Newt Gingrich.

According to the U.S. Bureau of Labor Statistics, in November of 1995, near the beginning of the shutdown, there were 2,152,900 federal government employees, excluding postal workers. By January 1996, at the end of the shutdown, this number had been trimmed by 110,300, to 2,042,600. After the parties reached an agreement, the number of federal workers was further slashed, by an additional 184,900, falling to it’s lowest point in more than 30 years, all the way to 1,857,700 by October of 2000 (see chart below).

Looking back a bit farther, there were 2,309,200 federal employees in December of 1992, so the number had already been slashed by 254,600 from the time Bill Clinton entered office until the shutdown. All in all, the federal government was able to rid itself of 451,500 non-essential employees between the years 1993 and 2000. Simply amazing!

Unfortunately, since October of 2000, the number of federal employees has grown by 291,200, reaching 2,148,900 by August of 2013. How quickly we forget. But the situation today is even more dire. According to the Cato Institute, “Total wages and benefits paid to executive branch civilians will be about $248 billion in 2013, indicating that compensation is a major federal expense that can be trimmed. During the last decade, compensation of federal employees rose faster than compensation of private-sector employees. As a consequence, the average federal civilian worker now earns 74 percent more in wages and benefits than the average worker in the U.S. private sector.” What’s up with that?

Keeping in mind that the only time the federal budget has balanced in our lifetimes was between the years 1996 and 2000, and putting aside partisan B.S. for a moment, what does that tell you? Was it just a coincidence that balancing the federal budget during this time-frame entailed slashing the number of federal workers to the lowest level in more than three decades? No it wasn’t.

The Bottom Line: What this should tell us is that among the 900,000 (or so) non-essential federal workers just placed on furlough, at least 300,000 need to be sent packing – permanently. There’s no way the federal budget will ever balance again, until the federal government takes serious measures to reduce its own size. The private sector is not the problem; government is the problem. Now is not the time to add new entitlement programs, and ever more federal employees, rather like 1995 it’s time to slash and burn. Give up 300,000 federal workers, then, and only then, may we engage in an adult conversation regarding the remainder of the federal budget.

References and Related:

Chart: Overpaid Federal Workers – Cato Institute

If 900,000 federal workers can be furloughed as ‘non-essential,’ why employ them? – Investor’s Business Daily

Make the Shutdown of Undesirable Federal Departments and Agencies Permanent: A Continuing Resolution is an abomination. – Ideal Taxes Association

U.S. Government Manufactures 469,000 Jobs – Natural Born Conservative

Watcher’s Council Nominations – Storming The Barrycades Edition – Watcher of Weasels

U.S. Government Manufactures 469,000 Jobs

/ L. M. Walker / 2 Comments

Phony Current Employment Statistics (CES)

“How many legs does a dog have if you call the tail a leg? Four. Calling a tail a leg doesn’t make it a leg.” ― Abraham Lincoln

– By: Larry Walker, Jr. –

According to the U.S. Bureau of Labor Statistics (BLS), via its September 26th CES Preliminary Benchmark Announcement, the number of Private Sector Jobs reported in March 2013 was overstated by 136,000, and the number of Government jobs was understated by 12,000. But not to be outdone by a deteriorating economic reality, the BLS eliminated this bad news through a major change in its reporting methodology. After the change, instead of an overstatement of 124,000 nonfarm jobs (-136,000 + 12,000), the BLS will instead be reporting a net gain of 345,000 jobs on its January 2014 employment situation report. It’s magic!

Here’s what the BLS said (emphasis mine), followed by the translation in plain English.

“Each year, employment estimates from the Current Employment Statistics (CES) survey are benchmarked to comprehensive counts of employment for the month of March. These counts are derived from State Unemployment Insurance (UI) tax records that nearly all employers are required to file. For National CES employment series, the annual benchmark revisions over the last 10 years have averaged plus or minus three-tenths of one percent of Total nonfarm employment. The preliminary estimate of the benchmark revision indicates an upward adjustment to March 2013 Total nonfarm employment of 345,000 (0.3 percent). This revision is impacted by a large non-economic code change in the Quarterly Census of Employment and Wages (QCEW) that moves approximately 469,000 in employment from Private households, which is out-of-scope for CES, to the Education and health care services industry, which is in scope. After accounting for this movement, the estimate of the revision to the over-the-year change in CES from March 2012 to March 2013 is a downward revision of 124,000.”

What this means in plain English is that the BLS has once again changed the rules of the game, this time adding an estimated 469,000 Private Household Employees to its accounting of private sector jobs. So what’s wrong with that? Aren’t private household employees considered part of the private sector? The answer is no. Private household employees have never before been considered part of the private sector. The main reasons they have not been are as follows: (1) the BLS has no way of knowing how many household employees really exist, (2) no idea how many are considered full-time, part-time or temporary, and (3) will have virtually no way of tracking changes in the number of such employees on a monthly basis (i.e. its reports are issued monthly).

Unlike private sector businesses, which are surveyed monthly and file quarterly employment reports, private households are not surveyed in the same manner and only file employment reports on an annual basis. According to the Internal Revenue Service (IRS), although household employees are most commonly associated with child care providers, such as nannies, private household employees also include service providers such as gardeners, cleaning personnel or maids, babysitters, housekeepers, private nurses or home health aids and drivers or chauffeurs. Since such employees have never been included in private sector reporting in the past, the federal government’s employment statistics after January 2014 will be forever inconsistent with every prior period.

The table above, courtesy of the BLS, shows the March 2013 preliminary benchmark revisions by major industry sector. I have added a second column showing the changes without the addition of the newly concocted 469,000 private household employees. As you can clearly see, consistent with all prior CES statistics, there are actually 124,000 fewer nonfarm jobs than previously reported.

The bottom line: The number of private sector jobs reported in March 2013 was overstated by 136,000. The number of government jobs reported for the same period was understated by 12,000. That’s reality. Those are the facts. Just like the Bureau of Economic Analysis has been overstating Gross Domestic Product due to changes in its reporting methodology, the BLS has been following suit. As the U.S. economy continues to crumble, aside from QE3, the only tool the federal government has left to combat this new reality is to lie through its teeth. Changing the rules midstream in order to paint a rosy economic scenario through phony statistical reporting is not only dishonest, but reprehensible. The problem with lying is that eventually reality catches up. When there are no longer any warning signs, yet the national economy collapses, who will you blame?

Related:

2013 GDP Growth Rate Closer to -1.75% ― Phony Government Statistics: GDP

Black Unemployment Rate Closer to 37.9% ― Phony Government Statistics, Detroit and Black Americans

Entertainment R&D Boosts Federal GDP Calculation Following Formula Changes

The new GDP methodology: What you need to know: U.S. economy over $500 billion larger due to new definitions

Government Economic Reports: What You’ve Suspected but Were Afraid to Ask.

A Different Look at Full-Time Employment

/ L. M. Walker / 1 Comment

The Rise in Part Time Employment since the Great Recession

– By: Larry Walker, Jr. –

There are five categories among all nonagricultural workers who are officially counted as employed: government workers, private household and private industry workers, the self-employed and unpaid family workers. Among them there are three additional status classifications: those employed part time for economic reasons, part time for noneconomic reasons, and those employed full-time. An analysis of recent trends reveals that the number of part time workers is on the increase, while the number of full-time workers is on the decline.

Before we begin, the aforementioned status classifications of nonagricultural workers are defined as follows:

Part time for economic reasons refers to those who worked 1 to 34 hours during the reference week for a reason such as slack work or unfavorable business conditions, inability to find full-time work, or seasonal declines in demand.

Part time for noneconomic reasons refers to persons who usually work part time for reasons such as childcare problems, family or personal obligations, school or training, retirement or Social Security limits on earnings, and other reasons. Excluded are persons who usually work full time but worked only 1 to 34 hours during the reference week for reasons such as vacations, holidays, illness, and bad weather.

Employed full-time refers to those who worked 35 hours or more during the reference week. This includes workers who have both one full-time and part time job as well as those whose combined hours in two or more part time jobs total at least 35. Are you with me so far? Good.

The chart above displays the number of nonagricultural workers employed part time for economic reasons. It extends from January 1992 through January 2013 for historical context, but what should stand out is the difference between where we are today, versus the month the recession began. In December 2007, at the onset of the Great Recession, 4.6 million workers were employed part time for economic reasons. Yet as of last month, three-and-a-half years after the recession ended, the figure stands at 8.5 million, an increase of 3.9 million, or 83.4%. How’s that for progress?

If measured from the peak of misery, I suppose one could perceive an improving situation, however in more concrete terms, Americans are actually worse off today than at any time since 1993. No amount of words can change the facts.

The second chart (above) shows the number of nonagricultural workers employed part time for noneconomic reasons. This isn’t all that relevant on its lonesome, because it represents those working part time because they want to. However, what is significant is that the number has grown by a staggering 6.3 million since the early 1990’s. In fact, when combined with the previous chart, we find that as of January 2013, a total of 26.7 million out of the 139.7 million officially counted as employed (see chart below), or 19.1%, are merely part-timers. This would be great if our workforce was able to work fewer hours for greater pay, without need of governmental assistance, but we all know that’s not the case.

So what? So, the next chart (above) shows that in July of 2000 there were a total of 135.1 million nonagricultural employees, that the number grew to 145.1 million by July of 2007, and that it has since declined to 139.7 million. Again, if measuring from the peak of misery, it would appear that the employment situation has improved, but in real terms, we have 5.4 million fewer workers today, than we had in 2007. Thus, we are effectively back where we left off at the end of 2005, more than seven years ago. I guess that’s good in the eyes of some, but when discounted for the growth in the number of part time workers the situation is bleak.

In the last chart (above), when the number of nonagricultural workers employed part time, both for economic and noneconomic reasons, is subtracted from the total employment level, we find that the number of full-time workers has declined from 123.1 million in July 2007, to 112.9 million in January 2013. In other words, we currently have 10.1 million fewer full-time workers than existed at the pre-recession peak. Also notable is the fact that the number of full-time jobs in existence today, 112.9 million, is fewer than the 115.9 million which existed in July of 2000, more than a decade ago.

I suppose one could find a way to twist these numbers into a bright and rosy future, that is if one has no sense of where we have been or where we are headed, but since government spending is currently twice what it was just a decade ago, and politicians are frantically grasping to fill a gap, which for all of their efforts has merely widened, I fail to comprehend their hardheadedness.

According to POTUS, “We’ve created 6 million new jobs under my administration.” But according to reality, we currently have 5.4 million fewer workers than we had just over five years ago, 10.1 million fewer full-time workers, and 3.9 million more are employed part time for economic reasons. So you tried your plan, and it failed, and the employment situation won’t improve until government stops playing enabler, gets out of the way, and lets God reign.

“Without God there is no recovery, only disappointing substitutions and repeated failures.” ~ Friend of Bill’s

The data presented in this post was obtained through the Current Population Survey (CPS), a monthly sample survey of about 60,000 households conducted by the Bureau of the Census for the Bureau of Labor Statistics.

References:

My Worksheets: Part Time Workers for Web

A Different Look at Part-time Employment | Bureau of Labor Statistics

Table A-8. Employed persons by class of worker and part-time status

Black Unemployment Jumps 10.9% on Obama

/ L. M. Walker / 2 Comments

Are you better off today than four years ago?

– By: Larry Walker, Jr. –

According to the latest report from the Bureau of Labor Statistics, the official unemployment rate for all Americans rose by 1.3% since Barack Obama took office. But over the same period, the unemployment rate for Black Americans jumped by 10.9%, and the number of unemployed Black Americans climbed by 19.1%. So are we better off than we were four years ago? You might be, but the Black Community as a whole definitely is not. So will 90% of Blacks vote to re-elect Obama anyway? You betcha, because it’s not about tangible results, or even the content of one’s character; shamefully for many it’s about the candidate’s skin color.

Per the first chart above, the Official Unemployment Rate has increased slightly from 7.8% on January 31, 2009, to 7.9% by October 31, 2012, an increase of 1.3% (0.1 / 7.8). So the official unemployment rate isn’t any better than it was when Barack Obama took office, it’s about the same, or slightly worse. What about that?

And according the second chart above, the Unemployment Rate for Black Americans jumped from 12.7% on January 31, 2009, to 14.3% by October 31, 2012, for an increase of 10.9% (1.6 / 12.7). So the unemployment rate for Black Americans has continued to rise at a recessionary pace, in spite of Hope and Change. So what about that?

And according to last chart, the number of unemployed Black Americans has continued to surge at a recessionary pace, climbing from 2,254,000 on January 31, 2009, to 2,684,000 by October 31, 2012, for an increase of 19.1% (430,000 / 2,254,000). So the number of unemployed Black Americans, those who refuse to go on welfare or disability and remain in the labor force, has risen due to the countermanding policies of Barack Obama. What countermanding policies you say?

To name a few:

  1. Threatening to hike tax rates on the people who might have given someone a job instead.

  2. Forcing employers to provide health insurance to current employees, leaving no room for expansion or new hires.

  3. Spending borrowed money to subsidize solar panels, wind turbines, and battery operated vehicles, while the U.S. electrical grid remains vulnerable.

  4. Allowing strict EPA regulations to stifle jobs in the oil and gas, and mining industries.

  5. Increasing deficit-financed expenditures on Welfare, Food Stamps, and Disability as if that’s what Americans are demanding.

  6. Running up $5.3 trillion of debt in 4 years, the largest increase in our history, resulting in the first sovereign credit downgrade in American history.

Well, you can’t have it both ways. You don’t achieve job creation through raising taxes, forcing employer mandates, social engineering, killing current jobs, offering free rides, or destroying the nation’s credibility. So admit it, Obama’s policies didn’t work. They didn’t work for Franklin D. Roosevelt, they have never worked, and they aren’t working today. So what now? More of the same, or will you dare to be different? Common sense dictates that if you want a different result, you must try something different. See you on Tuesday. Be there!

If the unemployment rate don’t fit, vote for Mitt!

Data:

Worksheets on Google Drive

References:

Bureau of Labor Statistics: CPS Data Table A-2

Bureau of Labor Statistics: CPS Data Table A-1

Related:

Black Employment | Back to the 1970s

Has Obama Created More Jobs Than Bush Yet?

U.S. Jobs Deficit Sticks at 11.6 Million in October

/ L. M. Walker / 3 Comments

32 Years from Full-Employment

– By: Larry Walker, Jr. –

In the fairest sense, the U.S. Jobs Deficit has improved by an average of 30,000 jobs per month since January 1, 2011. And although this may be good enough for indifferent Obama loyalists, what it really means is that based on Barack Obama’s very best job creation averages to date, full employment is still another 32 years away. Based on yesterday’s Employment Situation Report, 171,000 nonfarm jobs were added in the month of October. However, since the U.S. needs to add a minimum of 320,850 jobs each and every month for the next 60 months in order to return to full-employment, October’s result fell short of the mark by 149,850.

When the entire Obama record is analyzed, it turns out that U.S. employers have only added a total of 194,000 nonfarm jobs since February 1, 2009 (133,755,000 – 133,561,000). The jobs deficit has increased by 5,521,000 during Barack Obama’s 45-month term, from 6,110,000 on January 31, 2009 to 11,631,000 on October 31, 2012. The average number of nonfarm jobs created on a monthly basis in 2012 is 157,000, which is ironically the same as in 2011. In contrast, the average number of jobs created in 2010 was 86,000, compared to an average loss of (422,000) per month in 2009.

So an average of 157,000 jobs a month, over the past 22 months, is the best that Barack Obama’s policies have been able to accomplish. This may sound great to some folks, but since 127,000 new jobs are required each and every month just to keep pace with population growth, what it really means is that we are clearly locked on a trajectory that chips away at the present 11,631,000 jobs deficit by a mere 30,000 jobs per month. So what does this mean in plain English? In other words, how many jobs must the U.S. create each and every month going forward in order to reach full-employment, and how long will it take?

Updated Jobs Benchmark

Updating Paul Krugman’s original benchmark with the latest figures, we discover that to be meaningful, the number of jobs needed to return to more or less full employment by December of 2014 (the original target date), or within the next 26 months, is now 574,346 jobs a month, as follows:

In order to keep up with population growth, we would need to create 127,000 jobs times 26 months, or 3,302,000. Add in the need to make up for the jobs deficit and we’re at around 14,933,000 (3,302,000 + 11,631,000) over the next 26 months — or 574,346 jobs a month.

But since that’s never going to happen under the countermanding policies of Barack Obama, we are forced to extend the time frame. However, even when we extend the target date to 5 years from today, which will be more than 8 years from the time the recession ended, the number of jobs needed to return to more or less full employment by October of 2017, or within the next 60 months, is now 320,850 jobs a month, as follows:

In order to keep up with population growth, we would need to create 127,000 jobs times 60 months, or 7,620,000. Add in the need to make up for the jobs deficit and we’re at around 19,251,000 (7,620,000 + 11,631,000) over the next 60 months — or 320,850 jobs a month.

Did the U.S. add 574,346 jobs last month? No. Did we add 320,850? No. In fact, according to the Bureau of Labor Statistics, the U.S. has only added 194,000 nonfarm jobs since Obama took office (i.e. February 1, 2009) (see related table). So what does that tell you? It tells me that Barack Obama’s economic policies have failed miserably. He’s the one who said, “If I don’t have this done in three years, then there’s going to be a one-term proposition.” So don’t blame conservatives and independents when the earth slides from under his feet on Tuesday.

Fair Enough?

In the fairest sense, when we average the number of jobs created over the last 10 months, we arrive at 157,000 a month. And when we average the number created in 2011 we ironically get 157,000 as well. Do the math. So in other words, there has not been any improvement this year over last year. So we’re not moving forward after all, we’re stuck in neutral. And since we know that it takes a minimum of 127,000 jobs a month just to keep up with population growth, we are only chipping away at the 11,631,000 jobs deficit by 30,000 jobs a month (157,000 – 127,000). Thus, on the current trajectory, full-employment is roughly 388 months — or 32 years away.

[For the mathematically challenged, take the jobs deficit of 11,631,000 and divide it by the twenty-two month average improvement of 30,000, and you get 388 months. Now divide 388 months by 12 and you get 32 years.]

So four more years of Obama’s trickle-down-government approach places us on the track to reach full-employment by around the year 2044. And that’s giving him the benefit of the highest job creation averages achieved during his entire presidency. I’ll be 84 years old by then, and my one year old twin granddaughters will be 33. I’m sorry, but no matter how you spin the numbers, Barack Obama isn’t worthy of a second term.

Until the number of Nonfarm jobs is expanding by a minimum of 320,850 a month for a sustained period of at least five years, anything short is bad news. The Romney-Ryan Team is the only one on the ballot with a plan targeted to come anywhere close to what’s needed. Aside from that, with the national debt already beginning its ascent towards $20 trillion, with 25 million Americans unemployed or underemployed, with the Federal Reserve devaluing our currency by printing money to purchase mortgage-backed debt on an unlimited basis, with our tax and regulatory structure mired in uncertainty, with a foreign policy meltdown, and with the price of gasoline hovering above $3.25 for a record 86 consecutive weeks, there is absolutely, positively, no reason to consider a second Obama term. None!

[Note: Paul Krugman and other left-wing cronies are now trying to push the idea that, since July 2011 only 90,000 jobs have been required to keep up with population growth. “The number used to be higher, but baby boomers are getting old — the same thing that affects the household survey.” However, even if such a radical 30% shift had occurred within the last four years, it would only alter the current jobs deficit by a diminimus amount — 592,000 jobs, from 11,631,000 to 11,039,000, so phooey! There’s no turning back now, we’re sticking with the original benchmark which Mr. Krugman laid out in December of 2009.]

Data:

Worksheet on Google Drive

Has Obama Created More Jobs Than Bush Yet?

/ L. M. Walker / 1 Comment


:: Card Stacking ::

MythBuster III: Rational or Ridiculous?

– By: Larry Walker, Jr. –

Card stacking, or selective omission, is one of the seven propaganda techniques identified by the Institute for Propaganda Analysis. It involves only presenting information that is positive to an idea or proposal and omitting information contrary to it. Card stacking is used in almost all forms of propaganda, and is extremely effective in convincing the public. Although the majority of information presented by the card stacking approach is true, it is dangerous because it omits important information. The best way to deal with card stacking is to get more information.

Back in October of 2010, the left-wing media and White House tried to spin the myth that, “Obama created more jobs in 2010 than Bush did in eight years.” However, this delusion was busted in the first MythBuster series (here), simply by proving that at the time, not one single solitary job had been created during the Obama Administration. In fact at the time Mr. Obama was proudly presiding over a 2,991,000 loss in private sector jobs. So where are we today, 2 years later and 44 months into Mr. Obama’s agenda? Has Obama created more jobs than Bush?

Current Employment Statistics: No Shot

Let’s turn to the Bureau of Labor Statistics, focusing first on the Current Employment Statistics (CES). The CES is a monthly survey of about 141,000 businesses and government agencies, representing approximately 486,000 individual worksites, in order to provide detailed industry data on employment, hours, and earnings of workers on nonfarm payrolls, also known as Table B.

When we add up the total number of nonfarm jobs created during Mr. Obama‘s 44-month tenure (February 1, 2009 to September 30, 2012), we find that a total of 61,000 jobs have been lost (133,561,000 – 133,500,000). Thus, Mr. Obama’s job loss average is 1,386 jobs per month. Oops!

And when we add up the total number of nonfarm jobs created during Mr. Bush’s 96-month tenure (February 1, 2001 to January 31, 2009), we find that a total of 1,095,000 jobs were created (133,561,000 – 132,466,000). So Mr. Bush’s job creation average was 11,406 jobs per month.

Therefore, in terms of the CES, Mr. Bush’s job creation record was 922.9% greater than Mr. Obama’s [(11,406 + 1,386) / 1,386]. Oops!

Current Population Survey: Fair Shot

Just to be fair, we’ll return to the Bureau of Labor Statistics, this time focusing on the Current Population Survey (CPS). The CPS is a monthly survey of households conducted by the Bureau of Census for the Bureau of Labor Statistics, also known as Table A. The CPS is a broader survey, which includes those who are self-employed or who work for smaller companies. It’s also the data set used to calculate the official unemployment rate.

When we add up the total increase in the employment level during Mr. Obama‘s 44-month tenure (February 1, 2009 to September 30, 2012), we find that a total of 787,000 jobs have been created (142,974,000 – 142,187,000). That’s an average of 17,886 jobs per month, which is at least positive, although far short of the four or five million he esteems.

Yet, when we add up the total increase in the employment level during Mr. Bush’s 96-month tenure (February 1, 2001 to January 31, 2009), we find that a total of 4,409,000 jobs were created (142,187,000 – 137,778,000). That’s an average of 45,927 jobs per month.

Thus, in terms of the CPS, Mr. Bush’s job creation record was 256.7% greater than Mr. Obama’s (45,927 / 17,886). Oops!

Officially Busted!

The claim, “Obama created more jobs than Bush did in eight years,” is officially busted. Although I could cherry-pick and find a period where nonfarm jobs growth was up by 7 or 8 million during Mr. Bush’s term, for example from 2003 through 2007, and use that to pummel Mr. Obama’s record into the ground, I choose to remain among the rational. I don’t want to hear another word about Obama having created four of five million jobs over some arbitrary period.

Most of us would agree that Mr. Bush’s job creation record was pretty dismal, but compared to Mr. Obama’s record, we were far better off during the Bush years. The truth is that the number of nonfarm jobs (CES) grew 922.9% greater during Bush’s 96-month term, in spite of the massive losses incurred during two recessions, than during Mr. Obama’s 44-month term. And likewise, the employment level (CPS) grew 256.7% greater during Bush’s term, than during Mr. Obama’s.

We are currently around 4 or 5 million jobs short of where we were before the Great Recession. Frankly, Mr. Obama’s job creation record is ridiculous, pathetic, and unacceptable. He should be ashamed, as should anyone attempting to spin such trifle. It’s time to throw the bums out.

References:

Institute for Propaganda Analysis (IPA)

Bureau of Labor Statistics: CES Data

Bureau of Labor Statistics: CPS Data

Austerity Matrix

/ L. M. Walker / Leave a comment

Excerpt from: Krugman’s Anti-Austerity Madness

– By: Larry Walker, Jr. –

In economics, austerity refers to a policy of deficit-cutting by lowering spending via a reduction in the amount of benefits and public services provided. Austerity policies are often used by governments to try to reduce their deficit spending and are sometimes coupled with increases in taxes to demonstrate long-term fiscal solvency to creditors. However, austerity policies don’t have to include tax hikes, and in fact as we shall see the optimal austerity policy actually involves a combination tax cuts paired with deficit reduction.

The key phrase above is “to demonstrate long-term fiscal solvency to creditors”. If there were no creditors, then politicians and government officials wouldn’t have to worry about austerity. If there were no creditors, nations could simply print their own currencies on an unlimited basis, and spend without consequence. But in the real world, since creditors exist, some measure of austerity is required no matter what emotions dictate. Besides, history itself teaches us that printing money without restraint is the surest path to the vicious spiral of hyperinflation, a large increase in the money supply not supported by gross domestic product (GDP) growth, which leads to rapid erosion of a nation’s currency and ultimately to ever more pain.

In the table below, I have summarized all the possible fiscal austerity combinations available to the United States and Europe. When viewed graphically the optimal policy choice should be clear.

Although many Americans, including the President, think the way forward should involve some combination of spending cuts and tax hikes, credit ratings agencies disagree. For example, according to Fitch Ratings Co., “Fiscal Indecision Threatens US ‘AAA’ – Under current law, tax increases and spending cuts equivalent to about 5% of GDP will take effect in 2013 – if permanent, such a “fiscal cliff” could derail the US economic recovery…” Yet it’s not the spending cuts that are problematic, deficit reduction is a must, but rather the combination of tax hikes and spending cuts.

Following the Austerity Matrix, it turns out that:

  1. Tax hikes lead to the fiscal cliff no matter what happens with spending. Why? Because tax hikes lead to private sector austerity, resulting in job and benefit cuts, which leads to lower tax revenues and less economic output. So tax hikes should be off the table. The only reason they’re still being discussed in the United States is because of Obama’s “fairness doctrine”, which if you ask me is total nonsense. Besides, raising taxes on 1% of taxpayers won’t change anything for the other 99%, where the main problem is the lack of opportunities.

  2. Maintaining current tax rates can work, but only in conjunction with spending cuts. However, this only leads to slow growth, which is basically what we have now. Our current real gross domestic product (GDP) annual growth rate of 1.3% is not enough to change the trajectory of our ever increasing jobs deficit. If tax rates are maintained while spending levels are maintained or raised, we still wind up plunging over the fiscal cliff.

  3. The optimal fiscal austerity policy involves a combination of tax cuts and deficit reduction, which leads to rapid growth, or exactly what is needed following an economic crash. But, cutting taxes while maintaining or increasing spending levels only hurtles us over the fiscal cliff.

So there is only one viable fiscal austerity alternative: Cut taxes and reduce government spending. But this always brings up the same old moth-eaten question from faithless do nothings. How will you pay for the tax cuts? The apparently not so obvious answer is — with jobs.

Did you get that? Cutting tax rates across the board, which incidentally is included in the Romney-Ryan Plan, is not a way of giving anyone anything, since the government is merely enabling everyone to keep more of their own money. The dirty little secret is that this is how you grow an economy. When the government confiscates less money from the private sector, the economy eventually finds its footings and will dig its own way out of any hole. I challenge anyone to show me when this form of austerity has ever been implemented and failed to deliver greater revenues and higher levels of economic growth.

At this point you’re probably thinking, “Well, Bill Clinton raised taxes and cut spending and everything was copacetic.” But according to history, that’s actually incorrect. Although it’s true that President Clinton raised taxes during his first term, government spending also increased, that is until 1995 when his Democratic party lost control of both Houses of Congress.

It was actually during his second term when the austerity policy I’m talking about took place. That’s when Republicans passed the Taxpayer Relief Act of 1997, a reconciliation bill that reduced taxes and hence increased the deficit, paired with the Balanced Budget Act of 1997 (H.R. 2014 and H.R. 2015 respectively), each signed by President Clinton. Thus, it was actually tax cuts in conjunction with deficit reduction which produced the boom of the 1990’s, not the Clinton tax hikes.

The only differences between 1997 and today are that the United States wasn’t teetering on the edge of a fiscal cliff, and Republicans don’t currently control both Houses of Congress, but the solution to greater revenues, less spending and higher economic growth is the same.

Photo Credit:

Covertress | From Riches to Rags: Inflation & Poverty in Zimbabwe

U.S. Jobs Deficit Improves by 1,000 in September

/ L. M. Walker / 2 Comments

Measuring Relevance

:: The U.S. Jobs Deficit declined by 73,000 in September, however since it increased by 72,000 just one month prior, the result was a net improvement of an entire 1,000 jobs since July.

– By: Larry Walker, Jr. –

The ever elusive jobs deficit rose from 11,760,000 in July to 11,832,000 in August, and then pulled back to 11,759,000 based on yesterday’s Employment Situation Report. Employers added 114,000 jobs for the month, while the July and August figures were revised upward by 86,000. Thus, the U.S. realized a net gain of an even 200,000 Nonfarm jobs in September. And, since the U.S. needs to create a minimum of 127,000 jobs a month solely to keep pace with population growth; this results in an overall improvement to the jobs deficit of 73,000, as compared to the prior report. However, since the deficit increased by 72,000 in August, it really amounts to a net improvement of a mere 1,000 jobs since July.

Here’s the big picture. Today 12,088,000 Americans are officially unemployed (down from 12,544,000 in August). Another 6,427,000 are unemployed and want jobs, but have dropped out of the labor force and are not officially counted (down from 7,031,000 in August). Still another 8,613,000 are employed part-time for economic reasons (up from 8,031,000 in August). What this means is that 27,128,000 American’s are still unemployed or underemployed, an amount essentially unchanged since August. The truth is that if Barack Obama’s trickle-down-government approach had worked, then the jobs deficit wouldn’t be worse today than it was in December 2009, when it registered in at 11,479,000, yet it is.

In light of September’s minuscule improvement, how many jobs must now be created each month in order to reach full-employment? How long will this take? And, in light of the answer, is another four years of Obamanomics the cure? But first here’s a quick synopsis.

Synopsis

What is the jobs deficit? — It’s a measure of how far the United States has strayed from full-employment during the current economic recovery. More specifically, it tracks the shortfall in the number of jobs needed to keep up with population growth, and to recover those lost since the Great Recession.

Basically, the U.S. has needed to add 127,000 jobs a month since December 2007, the month the recession commenced, simply to keep up with population growth. Thus, a minimum of 7,366,000 new jobs have been needed since the recession began (58 months times 127,000). However, instead of adding jobs, the U.S. has instead lost 4,393,000 (see related table). So since we needed to add a minimum of 7,366,000, but instead lost 4,393,000, the sum of the two equals the current jobs deficit of 11,759,000 (see chart above). Got it?

Who initiated the benchmark, some right-wing economist? — No. The idea was actually initiated by Economist Paul Krugman. Here’s a quote from his December 2009 column: “Even if we add 300,000 jobs a month, we’re looking at a prolonged period of suffering — a huge cost from the Great Recession. So that’s kind of a minimal definition of success. Anything less than that, and it’s bad news.” But sadly, since December 2009, the U.S. has only averaged about 127,000 jobs a month. So in other words, we’ve basically been treading water since the measure was first established. For more, see Paul Krugman’s New York Times opinion piece entitled, The Jobs Deficit.

Updated Jobs Benchmark

Updating Mr. Krugman’s benchmark with the latest figures, we discover that to be meaningful, the number of jobs needed to return to more or less full employment by December of 2014 (the original target date), or within the next 27 months, is now 562,518 jobs a month, as follows:

In order to keep up with population growth, we would need to create 127,000 jobs times 27 months, or 3,429,000. Add in the need to make up for the jobs deficit and we’re at around 15,188,000 (3,429,000 + 11,759,000) over the next 27 months — or 562,518 jobs a month.

Since this isn’t going to happen under the evanescent policies of Barack Obama, we might as well extend the time frame. But, even if we extend the target date to 5 years from today, which will be more than 8 years from the time the recession ended, then the number of jobs needed to return to more or less full employment by September of 2017, or within the next 60 months, is now 322,983 jobs a month, as follows:

In order to keep up with population growth, we would need to create 127,000 jobs times 60 months, or 7,620,000. Add in the need to make up for the jobs deficit and we’re at around 19,379,000 (7,620,000 + 11,759,000) over the next 60 months — or 322,983 jobs a month.

Did the U.S. add 562,518 jobs last month? Nope. In fact we haven’t come anywhere close during the entire Obama recovery. Did U.S. employers add 324,200 jobs last month? Nope. We haven’t even come close to that, with the exception of the single month of May 2010, but those were just temporary Census jobs which disappeared in subsequent months.

Le Coup de Grâce

When averaged, the number of Nonfarm jobs created since the end of January of 2009 comes to a loss of -20,000 jobs a month. Well, that doesn’t work. So if we average the number of jobs created over the last 9 months, we arrive at 146,000 a month. That’s better. And when we divide this into the 4,393,000 jobs lost since the recession began, it tells us that at the current pace we should recover the jobs lost to the recession in another 30 months, or 2.5 years. That’s fantastic! It means it will only have taken 6.5 years to get back to square one!

The only problem with this less than rosy scenario is that since we still need to create a minimum of 127,000 jobs a month, in order to keep up with population growth, based on the 9-month average, the jobs deficit is only declining by 19,000 jobs a month (146,000 – 127,000). Thus, full-employment is more like 619 months away, or another 52 years. So four more years of the trickle-down-government approach places us on track to reach full-employment by around the year 2064. Huh? Sorry Democrats but, we can’t wait.

No matter how you spin the numbers, they aren’t good. Until we see the number of Nonfarm jobs expanding by a minimum of 322,983 a month, for a sustained period of at least five years, anything short is just bad news. The addition of 114,000 jobs in September was 65% short of the mark required to reach the long-term target. And with the national debt hovering above $16 trillion, and beginning its ascent towards $20 trillion, there’s really no good reason to consider a second Obama term. None!

The Obama-Biden program establishes a goal of creating 1,000,000 new manufacturing jobs over the next four years, which would be an improvement, considering their policies have thus far resulted in a loss of 610,000, since January 2009. But that only accounts for a potential of 250,000 jobs per year, or around 21,000 a month. What about the other 300,000 jobs?

In stark contrast, the Romney-Ryan Plan includes a goal of creating more than 12,000,000 jobs over the next four years, or more than 250,000 a month. So which plan is most likely in the best interests of the United States? The one we’ve already witnessed for the last four years, or something different? Vote Romney-Ryan for real change. Hey, it’s math! It’s arithmetic! It’s all about relevance! You can’t fool the jobs deficit.

“You can fool some of the people all of the time, and all of the people some of the time, but you can not fool all of the people all of the time.” ~ Abraham Lincoln

Data: Worksheet on Google Drive

Photo Credit: Direct Relevance | University of Miami, Department of Computer Science

Krugman’s Anti-Austerity Madness

/ L. M. Walker / 2 Comments

Kicking Common Sense Down the Road

– By: Larry Walker, Jr. –

When one of today’s most brilliant liberal economists recently mentioned the European fiscal crisis, he said, “Spain is suffering the hangover from a huge housing bubble, which caused both an economic boom and a period of inflation that left Spanish industry uncompetitive with the rest of Europe. When the bubble burst, Spain was left with the difficult problem of regaining competitiveness, a painful process that will take years.”

Yet, when far less knowledgeable left-wingers, including the President, speak of America’s economic woes, they routinely regurgitate the meaningless thread, “We are suffering from 8 years of failed Bush policies.” But what does that mean? Aside from a flawed monetary policy which bails out cronies while treading on everyone else, and an out of control government which has become accustomed to borrowing and spending 50% more than its revenue, are we not also suffering the hangover from a huge housing bubble, which caused both an economic boom and a period of inflation that has left us uncompetitive with the rest of the world?

If it were possible for left and right to agree on our most pressing problems, perhaps we would have a chance of solving them, but when one ideology slovenly blames everything on the sum total of one man’s policies without distinguishing between what works and what doesn’t, we are condemned to the same infinite loop occurring in Europe. The only difference being that their fate ends with austerity, while ours ends with a plunge into a hyperinflationary abyss.

When referring to Europe’s current morass, economist Paul Krugman says, “But the truth is that the protesters are right. More austerity serves no useful purpose; the truly irrational players here are the allegedly serious politicians and officials demanding ever more pain.” Wait, austerity serves no useful purpose? It sounds like Mr. Krugman is saying that the protestors, fire bombers, and destroyers of personal property are the rational players, while serious politicians and officials seeking austerity are among the irrational. So what is austerity, and why would anyone in their right mind side with the protestors while deeming such measures irrational?

Austerity

In economics, austerity refers to a policy of deficit-cutting by lowering spending via a reduction in the amount of benefits and public services provided. Austerity policies are often used by governments to try to reduce their deficit spending and are sometimes coupled with increases in taxes to demonstrate long-term fiscal solvency to creditors. However, austerity policies don’t have to include tax hikes, and in fact as we shall see the optimal austerity policy actually involves a combination tax cuts paired with deficit reduction.

The key phrase above is “to demonstrate long-term fiscal solvency to creditors”. If there were no creditors, then politicians and government officials wouldn’t have to worry about austerity. If there were no creditors, nations could simply print their own currencies on an unlimited basis, and spend without consequence. But in the real world, since creditors exist, some measure of austerity is required no matter what emotions dictate. Besides, history itself teaches us that printing money without restraint is the surest path to the vicious spiral of hyperinflation, a large increase in the money supply not supported by gross domestic product (GDP) growth, which leads to rapid erosion of a nation’s currency and ultimately to ever more pain.

In the table below, I have summarized all the possible fiscal austerity combinations available to the United States and Europe. When viewed graphically the optimal policy choice should be clear. Although many Americans, including the President, think the way forward should involve some combination of spending cuts and tax hikes, credit ratings agencies disagree. For example, according to Fitch Ratings Co., “Fiscal Indecision Threatens US ‘AAA’ – Under current law, tax increases and spending cuts equivalent to about 5% of GDP will take effect in 2013 – if permanent, such a “fiscal cliff” could derail the US economic recovery…” Yet it’s not the spending cuts that are problematic, deficit reduction is a must, but rather the combination of tax hikes and spending cuts.

Following the Austerity Matrix, it turns out that:

  1. Tax hikes lead to the fiscal cliff no matter what happens with spending. Why? Because tax hikes lead to private sector austerity, resulting in job and benefit cuts, which leads to lower tax revenues and less economic output. So tax hikes should be off the table. The only reason they’re still being discussed in the United States is because of Obama’s “fairness doctrine”, which if you ask me is total nonsense. Besides, raising taxes on 1% of taxpayers won’t change anything for the other 99%, where the main problem is the lack of opportunities.

  2. Maintaining current tax rates can work, but only in conjunction with spending cuts. However, this only leads to slow growth, which is basically what we have now. Our current real gross domestic product (GDP) annual growth rate of 1.3% is not enough to change the trajectory of our ever increasing jobs deficit. If tax rates are maintained while spending levels are maintained or raised, we still wind up plunging over the fiscal cliff.

  3. The optimal fiscal austerity policy involves a combination of tax cuts and deficit reduction, which leads to rapid growth, or exactly what is needed following an economic crash. But, cutting taxes while maintaining or increasing spending levels only hurtles us over the fiscal cliff.

So there is only one viable fiscal austerity alternative: Cut taxes and reduce government spending. But this always brings up the same old moth-eaten question from faithless do nothings. How will you pay for the tax cuts? The apparently not so obvious answer is — with jobs.

Did you get that? Cutting tax rates across the board, which incidentally is included in the Romney-Ryan Plan, is not a way of giving anyone anything, since the government is merely enabling everyone to keep more of their own money. The dirty little secret is that this is how you grow an economy. When the government confiscates less money from the private sector, the economy eventually finds its footings and will dig its own way out of any hole. I challenge anyone to show me when this form of austerity has ever been implemented and failed to deliver greater revenues and higher levels of economic growth.

Because strait is the gate, and narrow is the way, which leads to life, and few there be that find it. ~ Matthew 7:14

At this point you’re probably thinking, “Well, Bill Clinton raised taxes and cut spending and everything was copacetic.” But according to history, that’s actually incorrect. Although it’s true that President Clinton raised taxes during his first term, government spending also increased, that is until 1995 when his Democratic party lost control of both Houses of Congress. It was actually during his second term when the austerity policy I’m talking about took place. That’s when Republicans passed the Taxpayer Relief Act of 1997, a reconciliation bill that reduced taxes and hence increased the deficit, paired with the Balanced Budget Act of 1997 (H.R. 2014 and H.R. 2015 respectively), each signed by President Clinton. Thus, it was actually tax cuts in conjunction with deficit reduction which produced the boom of the 1990’s, not the Clinton tax hikes.

The only differences between 1997 and today are that the United States wasn’t teetering on the edge of a fiscal cliff in the late 1990’s, and Republicans don’t currently control both Houses of Congress, but the solution to greater revenues, less spending and higher economic growth is the same.

Sophism

Austerity measures are the only way to avoid the bitter lessons of the Weimar Republic, and Zimbabwe. In this sense, serious politicians and government officials recommending the correct form of austerity, a combination of tax cuts and deficit reduction, are among the World’s most rational. But where are they? I actually agree with Mr. Krugman when he infers that the brand of austerity being practiced in Spain, tax hikes in conjunction with spending cuts, is detrimental, but that’s only one of nine possible fiscal austerity combinations, and as shown above — it’s one that doesn’t work. But, although Mr. Krugman has rightly identified the problem, his solution — printing money, and continuing to borrow and spend — is even more irrational.

Not all austerity programs are bad. Tax cuts paired with deficit reduction is the only austerity plan that works, and the only one any nation will ever need. Egging on protestors and attempting to create rifts between Germans and Spaniards solves nothing, nor does begging creditors to pour billions of dollars into a bottomless pit. Thus madmen like Mr. Krugman and those swigging from the same jar of Kool-Aid may be viewed as nothing more than facetious enablers of irrational whiners, crybabies and in some cases common criminals.

On June 7, 2012, Fitch Ratings downgraded Spain’s credit rating by three notches from A to BBB, or to just above junk bond status. So Spain skipped A (-), BBB (+) and sank straight to BBB with a negative outlook. This means that its borrowing costs went up, as investors demand higher and higher interest rates to compensate for the increased risk of default. It also means that fewer and fewer investors are inclined to funnel their savings into such improvidence, at least not until they see the fruits of a serious and meaningful austerity plan.

In the meantime, Spain’s loan delinquencies as a percentage of all loans continues to spike, its housing prices continue to deteriorate adding to the spike in loan delinquencies, and its unemployment remains at 24.63% further adding to its woes and the stressed loan market. If Spain follows the advice of Mr. Krugman, and rejects some form of austerity, it will continue on the course of a fourth-rate, junk bond servant, destined to borrow more and more simply to cover its debt service until it is eventually toppled by an adversary, plunges back into the Stone Ages, or otherwise succumbs to extinction.

Wrap

On September 14, 2012, Egan-Jones Ratings Co. downgraded its United States sovereign rating to AA (-) from AA on concerns that the Fed’s new round of quantitative easing, or QE3, will hurt the U.S. economy. In a note, the ratings agency said, “From 2006 to present, the US’s debt to GDP rose from 66% to 104% and will probably rise to 110% a year from today under current circumstances; the annual budget deficit is 8%. In comparison, Spain has a debt to GDP of 68.5% and an annual budget deficit of 8.5%.”

Technically, the United States is worse off than Spain; the only consolation being a lower unemployment rate. But then again we don’t count all of our unemployed. In the United States persons are classified as unemployed if they do not have a job, have actively looked for work in the prior 4 weeks, and are currently available for work. Thus, when someone is unemployed but wants to work, if they have not looked for work in the last 4 weeks they are no longer counted (i.e. not in labor force). In fact, according to the Bureau of Labor Statistics – Table A-16, a total of 7,018,000 working age persons have dropped out of the labor force since January of 2009. If they were counted, the number of unemployed would be 19,562,000, and the official unemployment rate would be 12.1% (19,562,000 / 161,663,000).

From my perspective, despite all of the distractions, the Romney-Ryan ticket is more serious about tackling the nation’s deteriorating debt and employment trajectories, than the Obama-Biden road show, which continues to make promises it knows it can’t deliver. Obama-Biden had a fair shot and only made our fiscal situation worse than it was four years ago. It was on Obama’s watch that, the United States sovereign credit rating was downgraded for the first time in history (with a negative outlook). Although not every ratings agency participated in the downgrade, those that haven’t are simply waiting for the outcome of the November elections.

What should be clear is that another four years of irrational fiscal policies won’t make things better. There are only so many combinations of fiscal austerity measures, and only one leads to rapid economic growth. The Romney-Ryan Plan, which involves a combination of across-the-board tax cuts paired with deficit reduction fits the bill. In contrast, the Obama-Biden script, which by law is already fixed on a Grecian-Spaniard style combination of tax hikes and spending cuts doesn’t. Vote Romney-Ryan for serious-minded fiscal leadership, or vote Obama-Biden for irrational, Weimarian, sophistic, subordination.

References:

Paul Krugman: Europe’s Austerity Madness – Here’s why the protesters in Spain and Greece are right that inflicting more and more pain serves no useful purpose.

Anthony B. Sanders: Spain’s Loan Delinquency Spike as House Prices, Unemployment Continue to Deteriorate

Photo Credit:

Mount Holyoke College – The Weimar Republic and Revolt 1918-23 – The photograph shows children playing with bundles of worthless money.