Something strange happened with the latest jobs report. A few lamestream press outlets woke up from their Obama-induced daze long enough to recognize that although the unemployment figure is purportedly lower than it was in March, and lower than it has been in some time, things don’t seem quite right with the numbers. Just seeing them grapple with the data and begin to recognize its implications has brought on my latest instance of Obamacare Schadenfreude.
Let’s begin with the National Journal. Today its website ran a story entitled “Forget the Unemployment Rate: The Alarming Stat Is the Number of ‘Missing Workers.'” The story begins by summarizing the “unexpected” state of affairs:
The federal government’s latest snapshot of the unemployment rate offered few bright spots Friday. The economy added 165,000 jobs in April—slightly better than March’s revised number of 138,000 jobs. Unemployment went down one-tenth of a percentage point to 7.5 percent; and health care, retail trade, and the food-services industry added positions.
The glaring caveat to this jobs report is the huge number of Americans who remain out of the workforce. Called the “labor force participation rate” in wonkspeak, that number held steady in April at 63.3 percent—the lowest level since 1979.
The story goes on to speculate about the causes behind the decreased labor force participation rate, explaining that some of the number–but by no means all–can be explained by the fact that the first of the baby boomers have now reached retirement age. The article says that beyond retirees, “Roughly 3 million to 5 million of them left because they could not find jobs, economists estimate.”
But the article doesn’t stop there. It recognizes that decreased labor force participation has serious economic implications for government because it decreases revenues coming in from taxes. Suddenly, in other words, the decreasing labor force in the United States is much more of a matter of concern than it was a year ago when Obama was facing re-election, because it doesn’t bode well for the future of the economy or the budget (something that conservatives have been pointing out for years):
If these workers do not return to the labor market, their absence may alter the country’s budget picture. “One of the biggest problems we face with the baby-boomer bulge in retirement is having enough workers behind them to pay their bills,” says Harry Holzer, a professor at Georgetown University’s Public Policy Institute.
Missing workers can translate to a decrease in tax revenue, coupled with an increase in the use of government benefits, such as food stamps and disability insurance. The number of Americans collecting food stamps hit a high of 47.8 million people in December 2012. A similar spike has occurred in enrollments for the Social Security disability payments.
Since the start of 2007, the percentage of Americans in the labor market has dropped from 66.4 percent to 63.3 percent. In the 1970s and 1980s, the number of working Americans grew—because of the dramatic increase in women holding jobs outside of the home.
Nancy Cook ends her article by quoting a very optimistic prediction that unemployment will eventually fall to around 5.5% by 2017, but then she notes, ominously, “Only then can economists gauge if people have left the workforce because of the downturn in the economy, or if they’ve left forever because the economy fundamentally changed. If that’s the case, the U.S. officially will become a place where the labor market has little use for millions of Americans.”
The National Journal article, though, isn’t the only such piece by a lamestream press outlet today. None other than the Gray Lady herself suddenly woke up and noticed the missing workers:
And the decline of labor force participation – the technical term for the share of adults working or searching – is primarily the result of a bad economy.
Baby boomers are aging into retirement. Even before the recession, the government projected in 2007 that participation would decline to 65.5 percent by 2016, from 66 percent. But the April rate of 63.3 percent means the labor force has lost roughly five million additional workers.
Furthermore, the projections were wrong. Participation has actually risen among people older than 55. The decline is entirely driven by younger dropouts.
The federal government counts 11.7 million Americans as unemployed. The real number, it follows, is more like 17 million.
There is always some unemployment. Millions of Americans are out of work at any given moment even in the best of times. But the economy is still roughly 10 million jobs short of returning to normal levels of unemployment and labor force participation. That’s a lot of missing jobs.
That The New York Times is finally waking up and noticing the statistical shift which has been going on over the past four years is noteworthy, though one has to wonder what took them so long.
What’s missing from both articles, though, is any sense of why this is happening or what is causing the decrease in jobs other than simply a “weak economy.” What is also missing from both articles is an acknowledgement of the increase in underemployment in the Obama economy, something that is a consequence not just of the tax and regulatory environment, but more importantly, a consequence of Obamacare. Instead both articles are more worried about the consequences of the decreased labor force on government than they are with actually getting to the root of what is going on and why.
By now articles about workers having their hours cut to fewer than 30 so that their employers don’t have to pay the costs of insurance under Obamacare are fairly common. It’s going on in many lines of work. As he usually does, James Pethokoukis gets to the bottom of these and other conundrums in his response to the jobs numbers (Hat Tip: Sister Toldjah):
While the American economy added 293,000 jobs last month, according to the separate household survey, the number of persons employed part time for economic reasons — “involuntary part-time workers” as the Labor Department calls them – increased by almost as much, by 278,000 to 7.9 million. These folks were working part time because a) their hours had been cut back or b) they were unable to find a full-time job. At the same time, the U-6 unemployment rate — a broader measure of joblessness that includes discouraged workers and part-timers who want a full-time gig – rose from 13.8% to 13.9%.
What’s more, there was a 0.2 hour decline in the length of the average workweek. This led to 0.4 percentage point drop in the index of average weekly hours, “equaling the largest declines since the recovery began,” notes economist Dean Baker of Center for Economic and Policy Research.
Let’s see, more part timers and fewer hours worked. Economist Douglas Holtz-Eakin says what we’re all thinking: “This is not good news as it reflects the reliance on part-time work. … the decline in hours and rise of part-time work is troubling in light of anecdotal reports of the impact of the Affordable Care Act.”
Anecdotal reports like this one from the Los Angeles Times: “Consider the city of Long Beach. It is limiting most of its 1,600 part-time employees to fewer than 27 hours a week, on average. City officials say that without cutting payroll hours, new health benefits would cost up to $2 million more next year, and that extra expense would trigger layoffs and cutbacks in city services.”
So let’s see now: fewer workers, fewer full-time workers, shorter workweeks, lower wages, rising insurance costs, more demand for benefits and services, and shrinking tax revenues. From the looks of things, that train wreck may be arriving ahead of schedule. No wonder Max Baucus and Jay Rockefeller can’t wait to get out of Washington.
And if the lamestream press is finally beginning to cut the spin long enough to acknowledge even a few implications of the latest employment numbers, one has to wonder if they’re starting to grow tired of being whirling dervishes for Obama.