EDITORIAL: Worst economic recovery, ever – Washington Times

EDITORIAL: Worst economic recovery, ever – Washington Times.

Expect more ‘good news’ just before the election

The Obama administration is hailing the latest economic growth figures as evidence things are getting better. They’re not. As with recent unemployment data, these numbers don’t pass the smell test. In your guts you know they’re nuts.

The Commerce Department said Friday the economy grew at a sluggish 2 percent rate in the third quarter. This may be higher than the anemic 1.3 percent in the previous quarter, but that doesn’t constitute evidence of a booming economy. In 1992, the economy grew at 2.7 percent in the third quarter, and the Bill Clinton campaign denounced that meager performance as one of the weakest economic recoveries since World War II. By the same measure, our current 2 percent recovery must take the title of the worst ever.

The Obama campaign insists the gross domestic product (GDP) data are “more evidence that our economy continues to come back from the worst recession since the Great Depression under President Obama’s leadership.” That’s interesting, considering growth is far below what the White House promised. In his first budget submission, Mr. Obama projected we’d be expanding at a 6.3 percent rate by now. The number the administration sees as evidence of success actually confirms its failure. A third of the GDP growth, and all of the difference from last quarter, came through increased government spending.

It’s just one more “good news” statistic that turns out to be flaky. The weekly first-time unemployment numbers released Oct. 6 showed a remarkable drop to 342,000. This generated hopeful headlines — until people learned the reason for the dip was that California’s numbers weren’t included. The administration even defended the good news number. By the following week, however, the figures were corrected and jobless claims soared to 392,000. That wasn’t a good news day for the White House.

September’s monthly unemployment number showed an unexpected and unexplained drop from 8.1 percent to 7.8 percent, but many noticed the numbers simply didn’t add up. Job growth had slowed that month, but the official unemployment rate still plunged more than it had in years. It turned out the suspicious figure was due more to clever accounting than a realistic appraisal of the job market. The government’s U-6 unemployment rate, which factors out low-paying, part-time gigs, stayed high at 14.7 percent, a much more accurate reflection of the miserable situation most Americans have to contend with.

There’s one more big number on the way. On Nov. 2, the Friday before the election, the Bureau of Labor Statistics will release the official October 2012 unemployment number. There is no empirical reason to believe the jobless situation has improved, but based on past experience, a rosy number would likely provide the sagging Obama campaign a boost in the final weekend of the campaign. Will it be 7.5 percent? Or 7.3 percent? Maybe the Obama team will simply go for it and see what headlines they get from 6.9 percent. If you are going to lie, might as well lie big.

The Washington Times

EDITORIAL: Obama’s fudged unemployment numbers – Washington Times

 

EDITORIAL: Obama’s fudged unemployment numbers – Washington Times.

Official jobless statistics aren’t working

It says a lot when a government jobs report is so out of line with reality that no thoughtful person can take it seriously. At best the new unemployment number is a fluke; at worst it is the product of partisan hacks.

The Department of Labor reported Friday that total nonfarm payroll employment increased by a net 114,000 in September. This poor showing — it reflects a 28,000 drop from the previous month — should have resulted in unemployment increasing by a tenth of a percent. Instead, it dropped by 0.3 percent to 7.8 percent. Call that Chicago-style math.

The official jobless rate is now down to around where it was when Mr. Obama took office, though still higher than what the White House promised it would be after blowing more than a trillion on stimulus programs. Former General Electric CEO Jack Welch was among the first to call shenanigans on the dramatically favorable unemployment figure, echoing a general skepticism from all but the most credulous of Mr. Obama’s defenders.

Labor Secretary Hilda Solis said she was “insulted” by charges that there was something fishy going on. She then betrayed her own ignorance of the facts by saying the 86,000 jobs that the Bureau of Labor Statistics (BLS) discovered in the last two months were private-sector jobs. They were actually government hires. Private-sector employment fell last month by a net of 5,000. Manufacturing jobs were down 16,000. Mrs. Solis threw her underlings under the bus, saying “the information that I received is given to me by our professional, civil service staff in the BLS.” Perhaps these are the same BLS economists whom the Washington Free Beacon reports have contributed thousands to the Obama campaign.

This fudged figure allowed Mr. Obama to evade the sort of negative headlines that George H.W. Bush suffered in October 1992 when unemployment was 7.7 percent. Bill Clinton called it the worst economic record of any president in 50 years. Reuters described the 1992 report as “the final nail in the coffin” for George H.W. Bush. The same news service hailed Mr. Obama’s 7.8 percent number as “providing a boost to his re-election bid.” The liberal press seems to have mislaid its coffin nails.

There’s good reason to question the latest fantasy figure. The U-6 unemployment rate, which factors out low-paying, part-time jobs, remains lodged at 14.7 percent. The percentage of long-term unemployed is four times what it was five years ago. There are still 10 million fewer jobs than at the start of the recession. The number of new weekly jobless claims is up. The number of people on unemployment benefits and food stamps is at record levels. People know in their gut that things aren’t getting better. On main street America, “for lease” signs have replaced grand opening signs. Many malls are vacant and warehouses empty. Middle-class Americans see shrinking paychecks and a rising cost of living. A single massaged, distorted and misleading government datum doesn’t change any of that.

 

EDITORIAL: Note to Obama: Unemployment is up – Washington Times

EDITORIAL: Note to Obama: Unemployment is up – Washington Times.

The real U.S. jobless rate is 15 percent

The Obama administration keeps reporting supposed good news on the employment front. Americans sense that something is not quite right about the rosy official numbers, and a series of independent reports confirms their skepticism.

On Feb. 16, the Congressional Budget Office (CBO) released a report on long-term unemployment showing that the past three years have witnessed “the longest stretch of high unemployment in this country since the Great Depression.” The report observes that if the underemployed had not been excluded from official statistics, “the unemployment rate in January 2012 would have been about 15 percent.” The “share of unemployed people looking for work for more than six months,” i.e. the long-term unemployed, has been above 40 percent since December 2009, the highest level since these data have been collected.

One reason for the persistence of long-term unemployment is that people are eligible for unemployment benefits far longer than before the recession. White House senior adviser Valerie Jarrett helpfully reminded America that the Obama administration sees this as a net positive. “People who receive that unemployment check go out and spend it and help stimulate the economy, so that’s healthy as well,” she said Tuesday. Having record numbers of Americans on food stamps is also a form of economic stimulus, according to Secretary of Agriculture Thomas J. Vilsack. The administration is trying to make a virtue of these grim economic necessities.

Those who run out their unemployment benefits are increasingly seeking other forms of “stimulus.” A new report from JPMorgan Chase shows that Social Security disability claims have risen to a record $200 billion a year, with 5.3 percent of the working-age population claiming some form of federal disability payment. Mental-illness claims have particularly increased, which is a metric the White House would rather ignore.

The most sobering reality check comes from Gallup, which reports a daily, non-seasonally-adjusted 30-day rolling average unemployment figure. Lately, these numbers have not been telling a story the White House wants to hear. The official, adjusted numbers show monthly declines in unemployment from 9.1 percent in August 2011 to 8.3 percent in January 2012. However, the Gallup daily figures show unemployment dropping from 9 percent in mid-August to 8.2 percent at the end of October, floating up to 8.7 percent in November, dropping to 8.2 percent in early January and then pushing back up to 9 percent in the past five weeks. Gallup’s measure of underemployment has been tracking generally upward since August, from 17.5 percent to around 19 percent.

One reason for the disconnect between official and independent statistics is that the Labor Department has been gradually trimming the percentage of people it counts as officially part of the labor force. This number has shrunk from 65.7 percent to 63.7 percent since Mr. Obama took office. So while earlier this month the White House highlighted the news that January payrolls had risen by 243,000, the Bureau of Labor Statistics quietly dropped 1.2 million from the calculated workforce. Ejecting people from the labor pool makes it easy for the Obama administration to keep reporting favorable unemployment numbers. The food-stamp nation knows better.

CBO says federal employees rake in much more pay – Washington Times

 

Washington DC - Capitol Hill: United States Ca...

Image by wallyg via Flickr

CBO says federal employees rake in much more pay – Washington Times.

By Stephen Dinan – The Washington Times

Buoyed by generous benefit packages, federal workers earn significantly better compensation than similarly educated workers in the private sector, according to a report released Monday from Congress‘ chief scorekeeper that threatens to reignite at the national level last year’s state battles over public-employee rights.

Overall, federal workers earn 16 percent more in total compensation — including wages and benefits — than comparable private-sector employees, according to the Congressional Budget Office. Only private-sector workers with the highest levels of education, such as doctors and lawyers, earn more than their public counterparts.

The finding is incendiary at a time when Republicans in Congress are fighting for a freeze on federal worker salaries and the Obama administration is balking, arguing that after two years of freezes, it’s time to ramp up pay.

The CBO said federal workers do better in wages at the low education end, are about equal in the middle, and fall behind the private sector at the top end.

But the key difference is in benefits, where federal workers average more than $20 per hour in compensation — 48 percent higher than the $13.60 in prorated hourly benefits in the private sector. Added together, CBO said, that means significantly higher pay for government employees.

“For workers at all education levels, the cost of total compensation averaged about $52 per hour worked for federal employees, compared with about $45 per hour worked for employees in the private sector with certain similar observable characteristics,” CBO analysts said in their report.

Unions that represent federal workers said the CBO’s comparison was pointless.

The CBO looked at workers with equivalent education levels, but John Gage, president of the American Federation of Government Employees, said the better approach is to compare specific jobs. On that measure, Bureau of Labor Statistics figures show that federal employees make less than those working equivalent jobs in the private sector.

“Salaries and wages should be a function of the job, not the job-holder — and that’s the case in the federal government,” Mr. Gage said.

He also said the federal government doesn’t consider race, age or sex in employment, and questioned whether discrimination may play a role in holding down pay for some in the private sector.

“The logical implications of a study such as CBO’s can border on the absurd. Assessing the cost of hiring certain numbers of whites and racial minorities, young and old, women and men might lead to the ridiculous notion that since the private sector pays, on average, lower wages to women and racial minorities, then to cut costs, the government should hire more people with those demographic characteristics, rather than hire according to skill,” he said.

Emboldened by the 2010 elections, new Republican governors and legislative majorities in some states last year battled public workers in attempts to curtail benefits and in some cases strip collective bargaining rights.

The fight was most pointed in Wisconsin, where Gov. Scott Walker is likely to face a recall vote this year over his push, and in Ohio, where Gov. John Kasich’s effort to curtail public employee unions’ bargaining power was overturned by a referendum in November.

In Washington, the battle has been less heated — in part because Republicans haven’t gone as far as their state counterparts, and in part because the GOP and Democrats agreed on halting cost-of-living increases for federal civilian workers in 2011 and 2012. That did not rule out pay increases for merit or promotions, but both sides said it amounts to a freeze.

The House has a vote slated for this week to continue that freeze through the end of 2013 for federal workers, members of Congress and their staff.

EDITORIAL: Obama cooks the unemployment books – Washington Times

EDITORIAL: Obama cooks the unemployment books – Washington Times.

Don’t believe bureaucrats, unemployment is really 11.4 percent

The White House has trumpeted recent rosy employment figures, but in their guts Americans know things aren’t getting better. They should trust their instincts.

Jobs are the No. 1 issue going into the 2012 election, which makes the unemployment rate a particularly important indicator. Lately, the trend seems to be favoring the White House. The December unemployment numbers showed a drop to 8.5 percent, down 0.2 percent from the previous month and over half a percentage point from August. In the “jobless recovery,” small moves like that take on outsized significance.

According to the Bureau of Labor Statistics, in the last 12 months, a net of 1.5 million more Americans found work. This sounds like good news, but the civilian non-institutional worker population increased by 1.7 million over the same period, and the raw percentage of Americans working has basically flatlined at 58.5 percent. To the extent there are new jobs, it has more to do with the fact that there are more people creating more demand, not with any fundamental expansion in the economy.

This raises the question why the unemployment rate continues to improve. The answer is that the “official” workforce is shrinking. Only those working or actively seeking employment “count” in the unemployment statistics. The discouraged, the dropouts and those who don’t even bother trying to find work aren’t included in the official unemployment rate. The 30-year average participation rate – that is, the percentage of Americans in the workforce – is 65.8 percent. During the last three years, this number has fallen sharply to around 64 percent. While the potential worker population rose last year by 1.7 million, the official workforce only went up 275,000. Counting like that makes it easier to report better employment numbers.

An analysis posted last week at the Zero Hedge website looked at what the unemployment picture would be if participation rates were held steady. Using more realistic long-term average participation rates, the study calculated a current unemployment rate of 11.4 percent. While the Obama administration’s numbers keep getting better, rates based on long-term participation do not. Factor in the number of Americans who hold down two or three jobs just to get by, and those who are chronically underemployed make the picture even grimmer.

It’s twisted that President Obama benefits from a flawed formula that generates a positive outcome when frustrated potential workers simply give up. This is what passes for progress in the jobless economy. A lower official unemployment statistic makes a good headline and a good talking point, but it would be better if more Americans were actually finding good jobs. The Zero Hedge analysis notes that by extending the logic of reporting progressively fewer labor-force participants, “America will officially have no unemployed when the Labor Force Participation rate hits 58.5 percent, which should be just before the presidential election.” Sounds like excellent timing, which exposes what the government statistics are intended to do: Get Barack re-elected.

The Washington Times

EDITORIAL: Create jobs by cutting red tape – Washington Times

GIMME SOME OF THAT GOOD 'OLE OBAMA DOUBLESPEAK

Obama Double Speak

EDITORIAL: Create jobs by cutting red tape – Washington Times.

Radical reform is needed to improve the dire unemployment situation

Finally some positive economic news: The official unemployment rate dropped one-tenth of a point to 9 percent. It would be cause for celebration, except the gains are far too modest to make any serious dent in the problem of joblessness in America.

There’s even less cause for optimism after considering the figures are for October, when seasonal hiring begins to inch up in anticipation of the holiday season. Sure enough, much of the increased employment is found in the service and hospitality industries, according to the Bureau of Labor Statistics (BLS). Anecdotal evidence suggests that in many cases when people lose jobs and are re-hired, they accept pay cuts. This is consistent with the broad data trends which show that wages and salaries grew only 0.3 percent in the last three months, using BLS numbers.

The third-quarter boost in gross domestic product (GDP) and the quasi-positive job numbers are keeping a double-dip recession at bay. It’s a sign of how far behind this country has fallen to rejoice with such low expectations. As of today, some 13.9 million Americans remain in the ranks of the officially unemployed, of which 5.9 million are considered to be long-term unemployed. A 2.5 percent growth rate is not sufficient to expand the economy enough to accommodate these lost millions. It’s also not enough to fund the staggering budget deficits coming out of Washington.

Nor is the American Jobs Act proposed by President Obama a solution. A new study by the Phoenix Center in Washington crunches some 50 years of data to conclude the regulatory burden imposed by the federal government has a severely adverse impact on private-sector GDP and job creation. Using sophisticated econometric techniques, the authors determined that a 5 percent reduction in regulatory burden – a small $2.8 billion cut – could result in an increase of $75 billion in private-sector GDP, freeing these companies to create 1.2 million productive jobs.

The effect works both ways. Increases in government regulatory burden cost the economy private-sector jobs. So Mr. Obama’s stimulus scheme, which is designed to create a lot of government jobs, would have a negative impact on private-sector employment. The authors provide a concrete example in terms of the new Consumer Finance Protection Bureau (CFPB), which has a budget of at least $500 million. Their simulation, assuming the CFPB will employ 2,200 bureaucrats, concluded that its regulatory toll would destroy 238,000 jobs per year in the private economy. That’s exactly the opposite of what America needs right now.

These results are consistent, at least in terms of direction, with a study from the Small Business Administration last year which found that economic regulation imposed a significant burden on businesses, and a disproportionately large burden on small businesses, which are the engine of job creation in the economy. If Congress and the Obama administration are serious about creating jobs, they need to start looking at ways of really reducing the regulatory burden – and implementing those cuts in red tape – now.

America will never escape the 9 percent unemployment trap if we only improve by a tenth here and a tenth there. The president tried government stimulus and it was a massive failure. Regulatory reform will give this economy the boost it desperately needs.

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