Roger, a big league slugger, has a .250 batting average. He gets a hit one-in-four times at bat (excluding walks), and he also strikes out 25 percent of the time. His team, in an effort to hype appearances and fan enthusiasm, decided to ratchet up Roger’s average by excluding strikeouts from the equation. Pulling strikeouts out of the denominator worked wonders. Roger’s average instantly jumped to .333. Sound stupid? Sure does, but that’s our unemployment numbers mess in a nutshell.
Last week’s announcement that the November unemployment rate had dropped to 8.6 percent (finally something less than nine percent) triggered big headlines. But what generated the rate drop were seasonal employment boosts (the small factor) and those 315,000 people who were pulled out of the equation last month because they had given up their search for a job (the big factor). Like Roger’s new batting average math, the official unemployment rate is calculated by excluding the strikeouts – those who have thrown in the towel on finding a job.
Beyond those who have completely given up are the 2.6 million who are considered “marginally attached” to the workforce. These are folks who would still like a job but who haven’t bothered to look for one in four weeks. They too are excluded from the calculation. When just this “marginally attached” crowd is thrown back into the mix along with those who want real employment but who must settle for crappy part-time work (another whopping 8.5 million), the unemployment rate jumps to a shocking 15.6 percent.
These chronic ugly numbers take a heavy toll. It’s little wonder that our food stamp rolls have ballooned to over 40 million (up 50 percent from pre-recession levels); that the number receiving unemployment benefits has jumped four-fold (400 percent) since 2007; that over 4.4 million are now on welfare (up 18 percent); that Medicaid costs have leaped 36 percent in two years; and that an additional 750,000 people (an increase over normal projections) are permanently checking out of the workforce by claiming that they’ve been hit with a misfortune that entitles them to Social Security disability benefits for the balance of their working days. And add to all this the hard reality that nearly 50 percent of America’s households now do not pay a dime of income taxes.
Meanwhile, Washington does nothing. We have no budget, insane deficits, a disgraceful subpar credit rating, no fiscal plan of survival, and an expanding stack of House-passed employment growth bills that Harry Reid and the White House completely ignore. Obama’s focus is on giving political speeches, advocating remnants of his defunct jobs plan that never had any hope of creating jobs. His latest gig to blow another quarter trillion on a one-year extension and expansion of the payroll tax holiday holiday is designed to just put a few bucks into the pockets of those who already have a job during an election year. It would do nothing for the unemployed, would further weaken the economy, and would exasperate a serious Social Security funding mess. It’s nothing more than a quick-fix, election year ploy to fuel his class warfare rhetoric.
To gain a perspective on the numbers, it helps to look forward and back. Looking down the road, we know that it’s going to take roughly 11 million real new jobs over the next five years to return to a decent employment rate and absorb those who are entering the workforce. That will require at least 275,000 bona fide new jobs every month. With the current anti-business policies, fiscal and tax uncertainties, and regulatory machetes now in place, it just won’t happen. Playing with numbers and celebrating illusory trends will only deceive.
How about looking back? The official projections that were the centerpiece for Obama’s all-important 2009 stimulus bill, that massive spending spree that eagle-eye Biden was going to meticulously administer, predicted an unemployment rate of six percent by the start of 2012. Sure missed that one by a mile.
Or did we? Maybe there’s still some hope. It’s the kind of thing that could take Roger’s batting average to .500. If somehow just another four million people could be classified as strikeouts (those who had given up) and yanked out of the equation, the official unemployment number would instantly plunge to that wonderful six percent mark.
December 15, 2011