Friday, October 7, 2011

The Obama recovery is in full swing

Today's employment report from the Bureau of Labor Statistics was, as has become usual, pretty grim.  Between August and September, payroll employment rose by 103 thousand (but 45 thousand of this was accounted for by the end of the Verizon strike) and the unemployment rate was unchanged at 9.1 percent.

There are numbers behind the headlines that need to be controlled for: 
the working-age population is rising; the labor force rises and falls as people become discouraged or encouraged by their job prospects; and, depending on what happens to the size of the labor force, the unemployment rate can fall even when the number of unemployed people rises, and vice versa.  Because of these issues, a better measure of labor market performance during recession and recovery periods is the employment-to-population ratio, which tells us the percentage of working-age people who are employed.
 
During the first month of the recession, in January 2008, just under 63 percent of the working-age population was employed.  By December 2009, this had fallen to just above 58 percent.  This decline had nothing to do with the policies of the Obama administration, which took office in January 2009.  Neither is the administration responsible for the halting of the decline, which was due mostly to TARP and the massive quantitative easing pursued by the Federal Reserve.

From December 2009 onwards, the trajectory of the economy was under the sole ownership of President Obama and the Congress dominated by his party.  Although there was a mild recover of the employment-to population-ratio in early 2010, by September 2011 it stood at 58.3 percent.

So, after (1) a massive stimulus package directed at favored interest groups and riddled with hare-brained schemes like cash for clunkers, (2) imposition of new and onerous regulations on the private sector, (3) health-care reform forced down our throats, and (3) a credit-rating downgrade; the labor market has not improved at all.

Maybe it's time to try something different.