Unemployment Rates: More GOP Fuzzy Math Exposed

Now that the falderal surrounding last week’s unemployment report has died down, we can again disprove the fuzzy math that leads brainiacs like Joe Scarborough, JacK Welch, and the FOX Propaganda Network use to justify their paranoid conspiracies when actual arithmetic was the dastardly culprit.

Aside from it being another example of conservatives either not being the financial wonders they claim to be (Republicans pontificate? Who knew?), or they are just so used to being able to invent propaganda and have it propogated though their connections to all broadcast and cable news outlets, that they simply don’t care about those pesky fact-checkers online anymore proving that they’re lying.

And apparently, it’s wrong for people who know what they’re talking about (economists, bureaucrats and statisticians) to tell people who don’t know what they’re talking about (Jack Welch and Donald Trump) that they don’t know what they’re talking about.

You might recall that last week, former General Electric chief Jack Welch and FOX NOT-NEWS, paragons of skewed and biased opinions, have added conspiracy and misinformation to their proud resumes. Big shot MSNBC host and former Republican Congressman from Florida, Joe Scarborough, having read an innocuous tweet from past-his-prime and former GE CEO Jack Welch, claimed President Obama or his surrogates had managed what no other administration in history had managed: politically influencing the BLS’s unemployment report for partisan political reasons,(including uber-corrupt Richard Nixon who claimed the Bureau of Labor Statistics was out to shame him because it was run by Jews).
After a report on Friday, October 6th,  showed the unemployment rate dropped to 7.8%, James Pethokoukis of the “severely conservative” American Enterprise Institute wrote, “If the labor force participation rate was the same as when President Obama took office, the unemployment rate would be 10.7%.”

And he was right. Unfortunately for Mr. Pethokoukis, it’s not a very relevant observation.

It’s comparable to the lie that Republicans love to repeat that since gasoline is so much higher now than when President Obama took office that it must be Obama’s fault. What mostly GOP backers conveniently forget is that the reason gasoline was so low on the day President Obama was sworn in was because the Bush Financial Crisis caused oil/gasoline prices to plunge from the pre-crash previous three-month prices of $147/bl for oil and a $4.85/gal for gasoline. Thankfully, the Bush financial debacle was the last debacle of the Bush Administration that had seen 9/11, the never-solved anthrax killings and attacks on officials, Katrina’s botched rescue and recovery, Enron, WorldCom, oh what the hell). But the GOP focuses on a Libyan Embassy attack as demonstrative evidence of  the President’s failures. Talk about your

false equivalences!

Those Pesky Facts That Republicans Hate So Much

Explaining this requires some jargon, but it’s important to understanding the unemployment rate.

The standard unemployment rate most cited in the media, called U3, is calculated by dividing:

  1. The number of Americans who are not working but who looked for work in the past four weeks (the unemployed).
  2. The number of working-age Americans who are either employed or unemployed (the labor force).

These calculations leave flexibility cy design so it’s understandable that they would produce some fuzzy figures for amateurs. If you’re out of work but haven’t been looking for a job in the past four weeks, you’re not counted as unemployed; or even part of the labor force. It’s labor’s no-man’s land.

A more complete (and also commonly mis-applied) way to take the true measure of the job market is the labor force as a percentage of the population, called the labor force participation rate. It’s the best way to keep track of previous workers who have dropped out of the labor force. And as Pethokoukis hints at, it has indeed plunged:

 

English: Graph of US Civilian Labor Participat...

English: Graph of US Civilian Labor Participaton Rate from 1948 to 2010 (Photo credit: Wikipedia)

Pethokoukis is also correct in saying that if we had the same labor force participation rate today as we did in early 2009, the unemployment rate would be much higher than is currently reported.

But before you shout conspiracy!,  (Jack Welch, Joe Scarborough, FOX “News”), you need to understand why the labor force participation rate has dropped so precipitously.

 

Yes, part of it is because many have given up looking for work, which I assume is the point Pethokoukis wanted to make.

 

But that doesn’t explain all of the decline. It explains very little, which is no stranger to Republican politicians and pundits. Politicians make lousy economisrs and pundits are politicians that can’t get elected od couldn’t get a real job. So here are the relevant explanations for the falling participation rate; and they have nothing to do with the recession:

  • The country is aging hence retiring at the rate of 10,000 formerly employed every day
  • Men have been leaving the labor force consistently for 60 years.
  • More people aren’t working because they’re in school.
  • In an economic downturn, many who are laid off start their own businesses (including yours truly). That current monthly number is between 20,000-25,000 individuals per month according to the conservative-leaning  Fiscal Times.

Let’s go through each one.

The first baby boomer turned 65 last year. Many retired before then, and millions will leave the work force over the coming decade. And since the boomers are an abnormally large group, their retirement means a lower percentage of the population is of prime working age.

The falling participating rate is due to aging and not the recent recession which was predicted by sociologists several years before the recession began:

 

“An aging population will push down labor force participation whether the economy does well or poorly,” writes the uber-conservative Heritage Foundation. Don’t blame the president. Blame my parents. Did ya get that Republicans? I you’d even listen to your own analysts you might learn something instead of making fools of yourselves speaking about things you either don’t understand or purposely obfuscate.

Next, men have been fleeing the labor force consistently since the Bureau of Labor Statistics began keeping track in 1948: this is mainly due to men foregoing the 9-5 work world and starting their own businesses. Women have set records starting businesses as well but men have dominated that segment of the exodus from the coat-and-tie chains of the business sector.

 

There are all kinds of explanations for this, including a changing dynamic between male and female breadwinners, increased disability benefits, and fewer opportunities in industries like manufacturing that were once male-dominated. Whatever the reason, it’s clearly not linked to the last recession, or even any recession. From 1995 to 2000, when the economy boomed like never before under President Clinton( the only administration to leave office with a budget surplus since Calvin Coolidge: 1923-1929), the labor force participation rate for males fell. For decades this was balanced out (and then some) by a surge in the female participation rate. But now that female participation is topping out, the overall participation rate suffers a net decline.

Last, the overall participation rate is falling partly because more people are in school:

 

Again, utilizing the “severely conservative”  Heritage Foundation’s own analysis, rising education enrollment and how it changes labor participation has had a major effect on the participation rate:

One of the greatest costs of obtaining an education is the opportunity cost of going to school. Most students cannot work full-time jobs while studying full-time. They forgo the income they could have earned in order to study. In a recession, when job opportunities decrease, this opportunity cost falls. It becomes relatively less expensive to go to school: Students only lose money by not working if they could have found a job in the first place. A weak economy will cause many people to attend school that would not otherwise.

The truest measure of our weak jobs market is the number of Americans not in the labor force has increased by 9.5 million since late 2007. Of those, 2.1 million say they want a job but can’t find one.

 

That’s probably the fairest estimate of today’s job shortage compared with five years ago. But the Obama administration rescued a disastrous economy from Great Depression 2.0, inherited two unnecessary wars that George Bush would not even include in his budget numbers, and still manage to add 4.5 million private sector jobs during his time in office.

 

Given the obstruction President Obama has faced in Congress, it is astounding that the American people don’t recognize such a good thing when they see it and would even consider putting the fate of the country back into the hands of the neo-cons that took us to the precipice of economic doom in the first place. It’s truly astounding. But then, so was Nazi Germany.

Harvey Gold

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