By John Sykes
Things are really lousy in the job market. It even seems that many Democrats and administration economists are seeing the light – and even admitting it. But the White House continues to push out bogus stimulus numbers and specious claims for steady improvement. They get away with this by using seriously flawed BLS employment numbers. We need to look at these numbers from a more realistic basis, not one that doesn’t count people who have given up on looking for employment. Paul Godek at The Wall Street Journal suggests the following:
One simple alternative would be to measure the labor force as the number of people with jobs. Unemployment would be determined based on increases or decreases in the number of people employed relative to historic job growth.
Concerning the very clear graph above, Godek goes on:
What we see is astounding. For almost 25 years—between 1984 and late 2008—the level of employment never fell to more than 3% below the trend line. Over that period, total employment grew by more than 36 million.
Employment fell briefly to about 6% below the trend during two previous recessions: in 1975 and again in 1982-1983. During those periods, the unemployment-rate peaks were 9% (in 1974) and 10.8% (in 1982). The unemployment rate in 2009 peaked at 10.1%.
By 2010, however, employment had fallen to about 10% below the trend, far below any previous level in the last half-century. These figures indicate that as of the first half of 2010, the economy has generated about 12 million fewer jobs than expected. In other words, things are not as bad now as they were in the early 1980s; they are much worse. Recall as well that the unemployment rate of the early 1980s was the result of the ultimately successful battle against inflation.
The Keynesian statists keep telling us that government spending snuffed out another Great Depression. That’s not true of the 1930’s or now – or we wouldn’t have suffered then or now – and would have after WWII. Europe and Greece would be economic utopias.
If we don’t quit killing jobs and the economy with multiple +2,000 page bills promoting statist utopias, we may end up in the “Greatest” Depression. Using real employment numbers is one place to start examining the truth of our situation.