Debate Over. ObamaNomics Failed.


When the Labor Department published statistics for February 2014 last week, Administration defenders immediately rushed to the cameras to boast that the unemployment rate had dropped to 5.5%, from 5.7% in January.  But how did that happen? 

The unemployment rate went down because 354,000 jobless men and women were reclassified, from in the labor force and unemployed to “not in the labor force,” so they did not count in computing the February unemployment rate. 

If they were still in the labor force and unemployed the unemployment rate would have gone UP, from 5.7% to 5.8%.  The chart below is updated to reflect February results.

Memo to the establishment media: The jobs crisis is not over.

After six dispiriting years the political-media establishment is campaigning furiously to improve public perception of President Obama’s progressive, big government economic theories.  The President even invented a new slogan, “middle class economics.”  The campaign assertions are that the economy in general and employment specifically have come back, proving that the President’s progressive theories, re-branded as middle class economics “worked.” 

Arc of participation December 14.xlsOur previous article used the government’s own GDP statistics to debunk the economy part of the ObamaNomics-worked myth.  Today, we look at the unemployment rate, down from a peak of 10% to 5.7%, and continuously offered up as proof of Obama and Democrat party success. 

Each month the Labor Department compiles and publishes six statistics:

  1. Total working age population
  2. Total employed
  3. Total unemployed.  Jobless people are not classified as “unemployed” unless they are actively searching for jobs.
  4. Labor Force: the sum of employed and unemployed.  Jobless people who have not actively sought employment in recent weeks are not counted as unemployed and thus not included in the labor force total.
  5. Unemployment rate: Percentage of the labor force that is unemployed
  6. Labor force participation rate: percentage of the working age population that is counted as in the labor force.

In every previous post-recession recovery of the past 70 years the unemployment rate has declined when when people who had lost jobs due to recession became reemployed.  But the Obama post-recession recovery is radically different.  For the first time since government began publishing the above statistics:

  • The labor force participation rate has declined continuously for four years, and
  • The unemployment rate has declined not because unemployed people found jobs, but because millions who are discouraged and don’t look for work very often have been reclassified from unemployed to “out of the labor force.”

President Obama roared into office in 2009 with commanding Democratic majorities in both the House and Senate.  The first order of business was a record shattering increase in government borrowing and spending called “stimulus.” 

The promises made to gain public support for the stimulus were clear and extravagant.  By funding “shovel ready jobs” the government would, in the President’s words, “immediately jumpstart job creation and long term growth.”  That “jumpstart” was to happen immediately, not six years later.  President Bush and the Republicans would be blamed for the recession, President Obama would get the credit for a bounce back to full employment, and Democrats would reign for a thousand years.

Since all recessions end, with or without government intervention, predicting an end to “the Bush recession” didn’t require any particular economic insight.  June 2009 turned out to be the last month of the recession.  The labor force participation rate was 65.7% and the unemployment rate was 9.5%. 

But the predicted resurgence of prosperity and full employment did not happen.  Since June 2009 the working age population has grown by just over 14 million.  But the labor force has grown by only 2.5 million or 17.5%.

If today’s labor force participation rate were still the same as when the recession ended 67 months ago the February 2015 unemployment rate would have been 9.7%.  The jobs crisis is not over.  It has only been masked by deceptive statistics.


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