The jobs numbers for May come out Friday, and as you read them, remember, they hardly tell the full story.
That’s because, as former Bush economic adviser Edward Lazear makes clear in a superb piece today in the Wall Street Journal, the proper measure of employment is not unemployment, but, well, employment.
That is, the unemployment rate you will see Friday, as many of you are aware, doesn’t count those who are “discouraged” and have stopped looking for jobs, taking them out of the officially counted workforce. This had contributed to the recent declines in the unemployment rate.
But a better term than “discouraged” for many of them may be “encouraged” – as in, ENCOURAGED TO DO SOMETHING OTHER THAN WORK.
Lazear notes that in an unprecedented turn of events, the unemployment and the employment rate are not moving inversely to each other. That is, unemployment is declining, but employment is not increasing:
The better measure of a strong labor market is the proportion of the population that is working, not the proportion that isn’t. In 2006, 63.4% of the working-age population was employed. That percentage declined to a low of 58.2% in July 2011 and now stands at 58.6%. By this measure, the labor market’s health has barely changed over the past three years . . .
Over the same period, the unemployment rate has declined from 9 percent to the current level of 7.5 percent. In fact, as the unemployment rate has declined from its top rate of 10 percent in October 2009, the employment rate has remained uncannily steady at around 58.5 percent.
So let’s think. Fewer people are unemployed, but employment doesn’t rise. Where on earth are these nice people going? Someone’s feeding them. Who’s feeding them?
. . . because government benefits are lost when income rises, some people forgo poor jobs in lieu of government benefits—unemployment insurance, food stamps and disability benefits among the most obvious. The disability rolls have grown by 13% and the number receiving food stamps by 39% since 2009.
The Obama administration has been aggressively “reaching out” to sign up seniors, illegal immigrants – anyone who might need it – for benefits like food stamps and disability. And lo and behold, this seems to be one thing government is good at – nourishing its own growth.
Ironic, isn’t it? The White House touts the decline in the unemployment rate, perhaps the most recognizable symbol of the health of a capitalist economy. And yet, the reason the rate is improving is because socialism is expanding.