Looking deeper into unemployment numbers
The jobs report from July has been met with familar rhetoric from both sides. Republicans, highlighting the fact that this is the 42nd consecutive month with an unemployment rate of 8% or higher, used it as evidence that President Barack Obama’s economic policies are a failure. Democrats pointed to the gains in employment and again urged Americans not to read too much into the lagging job creation.
So who are we supposed to believe? The basics of the jobs report are pretty straightforward. There were 163,000 jobs created in July, which is slightly higher than the number needed to keep up with population growth. However, 150,000 workers left the workforce. Mish Shedlock notes that “those ‘not’ in the labor force rose by 2,027,000” in the last year, which is a concerning number. Shedlock points out that “[w]ere it not for people dropping out of the labor force, the unemployment rate would be well over 11%.”
If that number isn’t overwhelming enough, the Hamilton Project estimates that, given current job growth trends, unemployment will not fall to pre-recession levels until 2025:
The “jobs gap” is, according to the Hamilton Project, “the number of jobs that the U.S. economy needs to create in order to return to pre-recession employment levels while also absorbing the people who enter the labor force each month.”
Now, since the beginning of this year, employment growth has averaged 151,000 per month, about the same as the average monthly gain of 153,000 in 2011, according to the Labor Department.
If we continue adding jobs at that pace — according to the HP’s calculator — we will close the jobs gap until after 2025. Maybe quite a bit after…
Over the weekend, I dropped by a friend’s restaurant to say hello and grab a beer. While exchanging pleasantries, my friend briefly mentioned the presidential election. He said, “Romney is going to win in a landside.” I expressed doubt, noting recent polls. My friend explained how polls were tight in the 1980 election, but Ronald Reagan beat President Jimmy Carter handily.
It’s a valid point. We’re just over 90 days from an election, so anything can and will happen. But over at the American Spectator, Aaron Goldstein makes a really good point on last month’s jobs report (emphasis mine):
[I]t is incumbent upon Mitt Romney to not only convince voters that life won’t get better under Obama but that things will only improve if they elect him instead. His response to the unemployment numbers is okay but needs to be more vigorous. He has said that he will create 12 million new jobs in his first term in office. But he needs to present voters with a stark choice. Romney needs to say something along the lines of, “Do you want another four years of unemployment of 8% or higher under President Obama or do you want twelve million new jobs under President Romney? Do you want to merely survive under President Obama or do you want to succeed under President Romney?”
President Obama is counting on a complacent electorate prepared to accept 8% unemployment as a fact of life. The challenge for Mitt Romney is to shake people out of that complacency and into action.
We have become a much more complacent and distracted society in the last 32 years. Think about it for a moment. Even though unemployment is over 8%, gas prices are beginning to rise against, the budget deficit for the year will again hit $1 trillions; the big issue that has gripped the nation over the last couple of weeks is whether or not Americans should boycott a fast-food chain. That’s disconcerting.
And with the election primed to get incredibly negative on both sides and Romney not really producing much of substance to show what he’s going to do to deal with the economy, Americans may find themselves in an uncomfortable situation at the ballot box come November.