"In the four years since the recession ended in June 2009, the economy has added 5.3 million jobs, thanks to the resilience of the American people and policies like the Recovery Act, which helped bring the recession to an end and put us on the path to recovery."
Alan B. Krueger, Chairman of the President's Council of Economic Advisers, July 5, 2013
One might expect Barack Obama's chief economist to put a happy face on the state of the economy as he did from the White House lawn with the above statement following the release of the June economic report from the Labor Department. But it probably wasn't all that smart for Alan Krueger to remind us of the $832 billion boondoggle Economic Stimulus, aka: The American Recovery and Reinvestment Act of 2009. For that matter, about the only non-spin shred of truth in Krueger's statement was his reference to the "resilience of the American people." He could have also added that the American worker has been – and still is - "long-suffering."
For while Krueger is technically correct that the recovery started four years ago – meaning the economy stopped contracting – it has been a painfully slow process with still a very long way to go. Political spin aside, economists like Krueger are numbers people. He must have studied the numbers, too, and the data is not on the side of the Obama Administration and their failed economic policies.
The following chart summarizes key relevant data from the Bureau of Labor Statistics comparing figures for the month of June from 2007-2013. The 2007 data provides a baseline of the economy prior to the recession. By June of 2008, the early signs of the downturn were showing up. And, as noted by Krueger, the recovery began in June of 2009.
Employment Data, June 2007-June 2013
(numbers in thousands except percentage ratios)A review of this statistics leads to the following conclusions:
- Over the six year period, the total population available for inclusion in the workforce increased by 13.8 million people.
- Yet, the size of the Labor Force – those either employed or looking for a job – grew by just 2.8 million.
- That caused the Labor Force Participation Rate to shrink to the lowest level in more than three decades.
- Krueger is correct, as far as he goes, that "the economy has
added 5.3 million jobs" – but, he fails to mention that there are still
more than 2 million fewer Americans employed than before the recession
(see Employment Level)– nor, does he account for the 13.8 million people added to the population total as noted above.
- The result of fewer people working in an ever increasing
population is a decline in the Employment-Population Ratio of 4.3% over
the 6 year period. The Employment-Population Ratio has
never been below 60 percent in the last 30 years - except for the last
52 consecutive months during Obama's supposed recovery.
- The painfully slow pace of the Obama Recovery is most evident in
the unemployment statistics. The benchmarks of a successful economic
recovery include returning to pre-recession levels of jobs, economic
growth, and unemployment. However, there are still 4.8 million more
Americans unemployed – nearly 12 million total - than the pre-recession level from six years ago.
- Further, the unemployment rate is a full three percentage points above the healthy economy rate of 4.6% in June 2007.
- Bad as it is particularly for four years after the beginning of
the recovery, the unemployment rate is deceptively low because it
doesn't include the millions that have left the workforce entirely. As
the data shows, the number of Americans classified as Not in the Labor Force
has increased by more than 11 million – or, 80 percent of the
population increase for the period. Hardly a sign of a healthy,
recovering, job-creating economy.
- Obviously not everyone who is work-age eligible wants or needs a
job. Additionally, everyone understands that during difficult economic
times the numbers of people who want work but can't find it increases.
Then as the economy improves the number of unsuccessful job seekers
returns to a more normal level. However, throughout Obama's recovery,
the number of Americans Not in Labor Force who Want a Job Now
has actually continued to increase. As the data indicates, more
Americans have been frustrated in their job search each June since 2007
than in the previous year. The most recent report shows a 35 percent
spike, or 1.7 million more, compared to June 2007. Not at all what you'd
expect in a normal recovery.
- Another worrisome trend is the number of Americans who want full-time work but are forced to accept Part-Time for Economic Reasons.
Not surprisingly, the number spiked at the onset of the recession, as
the data indicates. But it continues to remain virtually flat at about
twice the normal rate. In fact, the 195,000 new jobs that the White
House crowed about in the June 2013 report was due entirely to the
322,000 increase in the part-time jobs figure for the month. Over the
last 90 days, part-time jobs have increased 588,000. Thus, if not for
these hundreds of thousands of mostly low wage, entry level, part-time,
and often temporary jobs there would be little job growth at all. The
employer mandate in ObamaCare, although delayed another year, will
exacerbate this problem as it incentivizes part-time jobs less than 30
hours per week rather than full time employment.
- The most revealing of all the data is the U-6 ratio which accounts for the Total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons,
as a percent of all civilian labor force plus all marginally attached
workers. As the chart indicates, the U-6 is still 6 percent higher than
the same month in 2007. In the twenty years that the Labor Department
has calculated the U-6, the ratio has rarely exceeded 10 percent, and
was above 11 percent for only the first four months of 1994. However,
since Obama took office the U-6 has remained above 14 percent – peaking
at 17.1 percent four different times – with the exception of
March-April-May of this year when it dipped to 13.8 percent. Optimists
hoped that the three month trend was a sign of good things to come.
However, as the chart indicates, the June 2013 U-6 increased
significantly again to 14.3 percent.
- As bad as the data is for the population in general, it's far worse for Black and Hispanic Americans. The Unemployment Rate for Hispanics/Latinos is 20 percent higher (9.1) than the total workforce. Astonishingly, the unemployment rate among African-American/Blacks is nearly twice the total workforce unemployment rate.
A return to normal economic conditions with 5 percent unemployment and slightly more than 66 percent of the population either employed or actively looking for a job would require 10 million more jobs than currently exist in Obama's economy. Allowing for normal population growth of nearly 200,000 per month, at the current rate of job creation, it will take it will take more than eleven years to "recover."
Indeed there has been some steady modest job growth, but as explained earlier, much of that has been low wage, part time jobs. In a previous piece we documented that nearly 60 percent of all jobs created in Obama's recovery have been low wage jobs.
Good jobs are created by expanding economies. The consensus of economists is that a GDP of about 3.5 percent is necessary for significant job creation. However, GDP during Obama's recovery has been barely half that, and now multiple sources are predicting 2nd quarter 2013 GDP will be an anemic 1.0 percent.
Obama was elected in 2008 in large part because he convinced enough voters he knew how to lead an economic recovery. Instead, America got "the feeblest economic recovery since the Great Depression," according to Paul Wiseman of the Associated Press. We're told to be patient; we're heading in the right direction; we need to adjust to a "new normal."
All that spin is nothing more than a pathetic attempt to play us all for fools and avoid admitting their own failure of historic proportions. Sadly, "we" not only suffer the immediate consequences of "their" failure, we're also going to get stuck with the bill.
Rather than lead America back to economic health as Chief Adviser Alan Krueger would have us believe, the policies of this President – Stimulus, ObamaCare, Dodd-Frank, and an explosion of deficit spending – deepened the economic despair and stagnated the recovery.