Last Friday, yet another one of those “unexpected” developments that baffle economic “experts,” reared its ugly head. Job creation plummeted in December, with only 74,000 Americans gaining employment, matching the weakest gain since January 2011. The experts expected 193,000 jobs to be created, and while many of them were baffled by this number, Heidi Shierholz, an economist with the Economic Policy Institute, was refreshingly honest. “We’re going to have a long-term unemployment crisis for a long time,” she warned.
Unfortunately, lackluster job creation is only part of the picture. The quality of the jobs is another factor adding to the bleakness, in that 40,000 of the total created were temporary employment. Combined with retail and wholesale trade, these sectors added 100,000 jobs to the economy, meaning other sectors, such as construction, lost jobs.
The fragile nature of temporary employment speaks for itself. Retail and wholesale trade employment isn’t much better, as those jobs tend to be low paying. And many of those retail jobs many be unsustainable as well, now the the busiest shopping days of the year are behind us.
What lies in front of us is daunting. Despite the dismal jobs total, the unemployment rate dropped from 7 percent to 6.7 percent. Yet the true nature of that seeming paradox is no longer lost on the public, as more and more Americans are becoming aware that such a statistic represents the reality that millions of Americans have either retired, or simply given up looking for a job. As a result, they are no longer counted as “unemployed.” If those “missing” Americans were part of the equation, the unemployment rate would be 10.2 percent.
The December numbers were especially brutal: a staggering 347,000 Americans dropped out of the labor force, raising the annual total to 535,000, and lowering the overall labor participation rate from 63 percent to 62.8 percent. That number represents a new 35-year low, hitting a level not seen since 1978.
It also represents almost 92 million Americans who are not working.
Senator Jeff Sessions (R-AL) put the numbers in the proper perspective. “In December, the economy added only 74,000 jobs – not nearly enough to keep up with population growth –and 347,000 left the workforce,” he explained. “That means for every one job added, nearly 5 people left the workforce entirely. There are now nearly 92 million Americans outside the workforce, resulting in the lowest participation rate in 36 years. The President’s immigration plan will only make things dramatically worse – and no amount of ‘promise zones’ will be a sufficient remedy for the millions of displaced workers.
The “Promise Zones” to which Sessions refers is the latest big-government “solution” to our economic malaise, courtesy of a president and a Democrat Party that apparently know no other kind, despite five years of failure. Last Thursday, President Obama promised to help five struggling communities–San Antonio, Los Angeles, Philadelphia, Southeastern Kentucky and the Choctaw Nation of Oklahoma–cut through the “red tape” of federal agencies in order to gain access to existing government resources. We will help them succeed,” Mr. Obama said. “Not with a handout, but as partners with them, every step of the way. And we’re going to make sure it works.”
Apparently the president and his supporters miss the real meaning behind the words “red tape.” They are a euphemism for the bureaucratic inertia and indifference that invariably attends bloated and inefficient government. In this particular case, that inertia and indifference seemingly extends to the president himself, whose original promise to “partner with 20 of the hardest-hit towns in America to get these communities back on their feet,” was made during his State of the Union address–last February.
Sen. Ted Cruz (R-TX) cut through the banality. “All of America needs to be a real ‘Promise Zone’–with reduced barriers to small businesses creating private-sector jobs–and we should start by repealing every word of Obamacare, building the Keystone pipeline, abolishing the IRS and rolling back abusive regulations,” he said. Cruz also mocked the president’s latest obsession with inequality. “It’s altogether fitting that President Obama is today talking about income inequality, because income inequality has increased dramatically as a direct result of his economic policies,” he said.
That income inequality is best represented by a Wall Street stock market hitting record highs, even as Main Street median incomes have declined 4.4 percent since the so-called recovery began in 2009. A great deal of that disparity was engendered by the Federal Reserve’s unconscionable determination to continue pursuing Quantitative Easing (QE) and its Zero Interest Rate Policy (ZIRP), a “two-fer” Keynesian economic effort aimed at “jumpstarting” the economy. What it really did was bail out Wall Street banks and rich investors at the expense of ordinary Americans, who can’t even sniff a decent return on their hard-earned savings.
And now the latest jobs report has put the Fed in a bind. Last June, outgoing Fed chairman Ben Bernanke promised that QE would end if unemployment fell to 7 percent by mid-2014, and that a 6.5 percent unemployment rate was “milestone” number at which ZIRP will be jettisoned, and interest rates will be allowed to rise. Last month the Fed reduced its bond-buying spree from $85 billion per month to $75 billion, based on an “improving” economy. Incoming chairwoman Janet Yellen was expected to continue a reduction in bond buying. Yet as the New York Post’s John Crudele explains, last Friday’s jobs report “blew up in the Fed’s face.” He further notes that if February’s jobs report is equally dismal, the Fed’s bond buying will once again increase. Thus, we will continue debasing our currency in the hopes that something remarkably akin to a Soviet-like Five Year Plan will eventually work–give or take 92 million Americans.
Unsurprisingly, the excuse-makers were out in force. The government cited “unusually cold weather in parts of the country,” a theme echoed by many economists, despite the reality that the so-called “polar vortex” hit in January. Federal government job cuts of 98,000 workers–over the last three years–were also blamed for there slowdown. Others suggested it was nothing more than an anomaly. I wouldn’t pay any attention at all to these numbers,” said Moody’s Analytics chief economist Mark Zandi. “They’re not consistent with anything. We’re going to get the benchmark revisions, and they’re going to be all revised up and revised away.”
Zandi also blamed the declining workforce participation rate “in large part” on baby boomer generation retirements. The Department of Labor apparently disagrees. “Declining labor force participation rates of young people are pushing down the overall participation rate,” it contends.
Even worse than the excuses were the “solutions.” Aside from the aforementioned Promise Zones, Democrats contend that extending unemployment benefits creates jobs. Thus the press is on to extend them at least another three months, for the 1.3 million Americans who lost them on December 31. Democrats insist on doing so despite ample evidence that extending jobless benefits hurts jobs creation. The just-expired law had provided Americans with 47 weeks of federal benefits in addition to state benefits that run as long as 26 weeks. Apparently any hesitation to extend benefits beyond a total of 73 weeks indicates a lack of compassion. However, according to the Federal Reserve Bank of San Francisco and the National Bureau of Economic Research, it indicates that people tend to get aboard a “gravy train.”
More to the point, it is indicative of Democrats trying to have it both ways: either the economy is getting better or it isn’t.
Another indicator that it isn’t, and one of the more pernicious efforts at advancing a solution comes courtesy of the Business Roundtable and Labor Secretary Thomas Perez. The Roundtable cites a lack of workforce preparedness, resulting in a “skills gap” as one of the chief impediments to job creation. Thus they have joined Perez in promoting comprehensive immigration reform as the answer to America’s job woes.
Americans’ job woes? The Congressional Budget Office (CBO) and Joint Committee on Taxation have already concluded that immigration reform would depress wages and make it more difficult for Americans to find jobs. Jeff Sessions had some choice words for the advocates of reform. “America is not an oligarchy,” he declared. “House Republicans need to tell the President firmly: we work for the American people. We reject any immigration plan that puts special interests before working Americans. We are going to defend the working people of this country. A small group of CEOs does not get to set immigration policy for our country. We will not enrich the political class at the expense of the middle class.”
Last Friday’s jobs report, coupled with Republicans’ apparent desire to continue pursuing immigration reform suggests otherwise. “There are days I’m numb,” said Jamie May, a former senior manager for a corporate housing company. May once commanded a six-figure salary, but is now willing to take a job in the $30K-$40K range, following three layoffs. “The mental toll — the depression — the feeling of being unworthy and unwanted, after being highly successful. I just want a job,” she added.
So do millions of other Americans, all of whom are being held hostage to Promise Zones, Federal Reserve machinations, unemployment benefit extensions and comprehensive immigration reform. One wonders when their patience will run out.
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