The Obama Administration would have us believe that the newest jobs data (i.e. 200,000 jobs created in December, and 8.5% unemployment) is proof that the President’s economic policies are working. His top economic adviser dutifully said the newest report proves that “it is critical that we continue the (President’s) economic policies that are helping us dig our way out of the deep hole.” Who would expect Obama’s staff economist to say anything different?
But, a little more analysis of the data proves that rather than “healing” the economy, as Obama likes to say, his policies have worsened the recession and prolonged the recovery.
As a recent Investor’s Business Daily editorial explained, over the past 30 months the size of the labor force has actually shrunk by 843,000 people – 170,000 in just the past two months. That just doesn’t happen in America. At a similar point in the Reagan recovery of the 1980s the labor force had expanded by more than 4 million workers according to IBD.
The labor force participation rate (LPR) – the percentage of people employed or looking for work of the total age eligible population – is currently just 64%. As the following chart from the Bureau of Labor Statistics indicates, that is worse by far than when Obama took office in January 2009, and it is still trending downward. In fact, the current LPR is at the lowest level in nearly 30 years. It’s disingenuous to talk of recovery when continually more people are still leaving the work force, and it is nearly impossible to increase economic output until more – not less – people are productive workers.
Labor Force Participation Rate, 2009-2011
Source: Bureau of Labor Statistics
Simply put, millions of Americans are still so disillusioned, disappointed, and disgusted that they aren’t even trying to get a job. When adjusted for the abnormally low participation rate, “unemployment would be more like 11.5%,” according to the IBD editors.