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Obama’s Unemployment Rate Is Stuck at 11 Percent

The opinions expressed by columnists are their own and do not necessarily represent the views of Townhall.com.

This latest recession started in December, 2007. Since the Great Depression 75 years ago, recessions in America have lasted an average of 10 months, with the longest previously lasting 16 months, not counting this latest spooky downturn.

The National Bureau of Economic Research, the recognized scorekeeper of when recessions start and end, declared this latest recession over in June, 2009, which would make it the longest recession since the Great Depression. But the historical precedent in America is the deeper the recession the stronger the recovery, as the American economy accelerates to return to its long term trendline. Based on that precedent, we should be in the third year of a raging recovery boom by now. But instead we have suffered the worst economic recovery from a recession since the Great Depression.

Unemployment actually rose after June, 2009, and did not fall back down below that level until 18 months later in December, 2010. Instead of a recovery, America has suffered the longest period of unemployment above 8% since the Great Depression, under President Obama's public policy malpractice. Even last month, 52 months after the recession started, while supposedly 115,000 new jobs were created, the labor force shrank by another 342,000 workers, which is the only reason the unemployment rate reportedly declined from 8.2% to 8.1%. Without the decline in the labor force, unemployment would have risen last month to 8.3%.

The labor force is actually 365,000 workers smaller today than it was in June, 2009 when the recession supposedly ended. Counting population growth since then, the economy is actually missing 7.7 million workers that would be in the work force if the labor force participation rate had remained the same since the supposed end of the recession three years ago.

As Investor's Business Daily reported on May 7, "That's in stark contrast to every other post-World War II expansion, which saw the labor force climb by the millions at this point in their recoveries, even as unemployment rates were driven down." Indeed, if labor force participation had stayed the same as it was when the recession supposedly ended in June, 2009, the unemployment rate would be 11%, as Investor's Business Daily also reported on May 7. That is a more realistic number because those millions of workers missing from the work force still exist and still do not have jobs.

That is the only way that the unemployment rate has been falling at all, working people giving up and dropping out of the work force. As the Wall Street Journal reported in their weekend edition of May 5-6, "Nearly three years into the [Obama] recovery, the U.S. still employs five million fewer workers than before the recession."

Leading taxpayer activist Grover Norquist and economist John Lott explain in their new book Debacle: Obama's War on Jobs and Growth and What We Can Do Now to Regain our Future, "[T]hings in America are a lot worse than the simple employment and unemployment numbers indicate because many people have given up looking for work and have completely left the labor force, and the government no longer counts people as unemployed after they give up looking for a job. Obviously, lowering the unemployment rate through disillusioned job seekers giving up looking is not a good thing."

"The contrast with the Reagan recovery is striking," Norquist and Lott continue, "After the Reagan recovery started, millions more people wanted to work than even before the recession started. The sharp drop in the unemployment rate during the Reagan recovery is therefore even more impressive....Despite all those new people looking for work, the unemployment rate fell from 10.8 percent at the end of 1982 to 7.2 percent by the presidential election in 1984." That is reflected by the fact that last month in the third year of Obama's supposed recovery the economy created 115,000 new jobs, while in September, 1983 in the first year of Reagan's recovery the economy created 1.1 million jobs in that one month alone, 10 times as much.

Moreover, as the Wall Street Journal also noted on May 5-6, "Even as employers added jobs last month, full time employment actually fell by 812,000." The Bureau of Labor Statistics reports that for last month the number of involuntary part time workers totaled nearly 8 million. The BLS says, "These individuals were working part time because their hours had been cut back or because they were unable to find a full-time job."

As a result, the BLS reported that in April, again 52 months after the recession started, the total unemployment rate counting the unemployed and involuntarily underemployed was still 14.5%. That's persistent depression level unemployment. But the Shadow Government Statistics website, which includes the long term discouraged workers the government doesn't count at all anymore since 1994, reports the total unemployment rate at 22.3%. That's what the total unemployment rate would be today if it was calculated the same way it was before 1994.

While economic recovery is long overdue, as indicated at the outset, several factors indicate worsening job trends and long term decline for America. Last month's jobs report indicated an all time record 5.1 million Americans suffering long term unemployment for 27 weeks or more, which is nearly double compared to when Obama entered office in January, 2009. Moreover, the median length of unemployment is now 19.4 weeks, which is also nearly double compared to when Obama entered office. Instead of a long overdue recovery resolving unemployment, half a million more Americans are unemployed today than when Obama became President.

In addition, the Census Bureau reports long term declining real wages and incomes, and more Americans in poverty today than at any time in the more than 50 years that Census has been tracking poverty.

Because Obamanomics has prevented any real recovery, and the return of America to its long term prosperity, the American economy is now indefinitely 20% below its long term economic growth path, which means the American people are now already 20% poorer than they would be otherwise. That will continue, or worsen, until President Obama's economic policies are consistently reversed, which will require a change of leadership.

Obama apologists argue that the usual standards for recovery from recessions do not apply this time because this recession was a "financial crisis," and recovery from a financial crisis takes longer. But this does not reflect the historical record for America. The history of America's recessions is listed at the website of the National Bureau of Economic Research. The record since the Great Depression is that previously recessions in America have lasted an average of 10 months, with the longest previously at 16 months, as noted above. Which of those previous recessions was supposed to be a financial crisis?

A recession is clearly defined as two consecutive quarters of negative economic growth. What defines a financial crisis rather than a regular recession? A newspaper headline? Recessions are always accompanied by turmoil in financial markets. The financial crisis excuse is just political propaganda to give Obama a free pass for his failures, not economics. But the American people have suffered gravely for Obama's failures, and he must be held accountable for them.

In a Wall Street Journal commentary in February, 2009, I noted that the emerging Obamanomics was following the exact opposite of every policy of Reaganomics in great detail. I predicted that it would consequently get the exact opposite results. That is what has happened.

Compare Obama's lack of a recovery 2 ½ years after the recession ended with the first 2 ½ years of the Reagan recovery. In those years under Reagan, the American economy created 8 million new jobs, the unemployment rate fell by 3.6 percentage points, real wages and incomes reversed a decline starting under Carter and were increasing, and poverty reversed an upsurge started under Carter and began a long term decline.

In the second year of the Reagan recovery, real economic growth boomed by 6.8%, the highest in 50 years. By sharp contrast, last year Obama's economy grew a paltry 1.7%.

The Reagan recovery blossomed into a 25 year economic boom, from 1982 to 2007, what Art Laffer and Steve Moore called in their book The End of Prosperity, "The greatest period of wealth creation in the history of the planet." In the first 7 years alone, 20 million new jobs were created, growing into 50 million new jobs over the entire boom.

When Reagan entered office, the first thing he did was lead Congress to enact the much derided at the time "Reagan budget cuts," which have since been dumped down the Left's memory hole because the fashion now is to deny Republicans ever cut spending. But Reagan's 1981 budget cuts reduced Federal spending at the time by nearly 5%. Go back and read newspapers at the time if you don't believe me.

In sharp contrast, the first thing Obama did was pass his nearly $1 trillion so-called stimulus bill. At best, that stimulus did nothing to promote the economy, because borrowing a trillion dollars out of the economy to increase government spending by a trillion dollars does nothing to enhance the economy on net. Most likely, however, because the public sector does not spend and employ money as efficiently and productively as competitive markets do, the stimulus was a net drag on the economy.

The bottom line is that what drives economic growth and recovery is not government spending, as the Obama Administration Keynesian throwbacks imagine. What drives economic growth and recovery is incentives for increased production. That is what Reagan proved, cutting tax rates first 25% across the board for everyone. Then, the tax reform of 1986 cut the top tax rate from 70% when Reagan entered office all the way down to 28%, with the rate for middle income earners slashed to just 15%. Cuts in tax rates, not just tax cuts, expand incentives because producers can then keep more of what they produce.

What most people do not know is that just the opposite, Obama has already led enactment in current law for next year increases in the top tax rates of virtually every major federal tax. That is because the Obamacare tax increases go into effect, and the Bush tax cuts expire, which Obama refuses to renew for the nation's small businesses, job creators and investors. This is on top of the U.S. corporate income tax rate, which under Obama now is already the highest in the industrialized world at nearly 40% on average counting state corporate taxes. Yet, under Obama there is no relief in sight. Instead, he has spent the past year and a half barnstorming the country calling for still more tax increases.

These pending tax rate increases are why so much money is sitting on the sidelines in a capital strike, or fleeing overseas in capital flight, like in a third world country. And that missing investment is why there are no jobs.

Obama is also following the exact opposite of Reagan's policies by vastly expanding rather than reducing regulatory costs, supporting record easy money at the Fed, and restricting rather than maximizing American energy production. If Obama's policies are not quickly reversed, the result without a doubt will be another whopping recession next year.

But the decline and fall of America is not inevitable. The economy is poised to boom again at all time records of capitalist prosperity, if the American people will only free it this fall from the socialism of Obamanomics. House Budget Committee Chairman Paul Ryan's budget basically repeals the tax and spending increases of the Obama Administration, restoring the long term postwar averages for federal taxes and spending. That is the beginning of A Path to Prosperity, as Ryan labeled his budget.

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