Hidden Context Around Headline Job Numbers

The Labor Department announced that employers created 175,000 jobs in May.  Alan Kruger, Chairman of the President’s Council of economic Advisers, gave us the White House’s upbeat spin:

Today’s report from the Bureau of Labor Statistics indicates that private sector businesses added 178,000 jobs last month. Total non-farm payroll employment rose by 175,000 jobs in May.  The economy has now added private sector jobs every month for 39 straight months, and a total of 6.9 million jobs has been added over that period. So far this year, 972,000 private sector jobs have been added.

Mr. Kruger has to emphasize private sector jobs because the president’s  various “stimulus” programs, while spending more than a trillion borrowed dollars, failed to live up to his promise that government jobs would not be lost due to the recession.

Kruger starts counting jobs 39 months ago, in March, 2010, because that was the the Obama Administration’s first month of positive, job growth after two years of recessionary job losses.  He presents his numbers without any context hoping we’ll think they’re impressive.  This chart provides some of the context the White House withholds.Job growth during the last 8 post recession economiesAs the chart shows the current post-recession job market turned out to be the weakest out of the past eight.  In fact, it ranks dead last when compared to every post-recession job market since the Labor Department began compiling monthly data in 1939!

The “employment population ratio” is the percentage of working age Americans with jobs. In May of 2007, just before the recession started the ratio stood at 63%.  Since then the working age population has increased by 14 million men and women.  In a “break-even” job market employers would have added enough jobs to retain the ratio at 63%, or about 8.8 million jobs.

But instead there were 2 million fewer jobs in May 2013 than May 20007.   Today only 58.6% of working age adults are fortunate enough to have a job, and tens of millions of them are working part time and/or at lower wages than they earned before the recession.

Why is our economy suffering this tragic loss of human capital?  President Obama roared into office in 2008 announcing his intention to “fundamentally transform” America.  A major consequence of his transformation has been a host of new barriers to job creation including:

  • ObamaCare with its punitive cost increases and penalties on small to medium sized businesses, the very employers who have always created most of the net new jobs.
  • A massive regulatory offensive that adds needless complexity and risk to every business decision and every business start-up or expansion;
  • Tax increases on employers and on investors who have always provided the seed capital that funds start-ups and business expansion.  Indeed two-thirds of the taxpayers who are subject to the infamous “fiscal cliff” tax hike of last January are small to medium sized business employers.

As we demonstrated here, there is no historical experience to validate the administration’s core economic principles, that increasing government’s power and control over the private sector, coupled with spending massive amounts of borrowed money, will cause the private sector to create more jobs than it does in the absence of government supervision and “stimulus.”

A few of the President’s supporters in the media try to sell the notion that the statistics above reflect a retiring baby boom generation rather than an increase in joblessness among those who want to work.  We researched and compiled the relevant data, and it turns out that baby boomers are the only age group bucking the trend with increasing rates of employment.

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