Neil Grossman
The Employment Twinkie & What the Government Doesn’t Show You

The Employment Twinkie & What the Government Doesn’t Show You

Unemployment

It’s like 15 to 20 million jobs have gone missing; so what’s the deal?

We prefer to ignore or re-define the economic truth rather than confront it; something I affectionately refer to as “Ostrich Economics”.

People who have given up and can’t find gainful employment and part-time workers have been moved into a different category of unemployment; U-6. (Note this statistic was not even reported prior to 1994). This does not mean they aren’t there, but it does let policy makers ignore them. Sort of like being the un-dead. Traditional metrics, which require that about 125,000 jobs be created each month to maintain a stable unemployment rate, suggests today’s unemployment rate should be closer to 14%. (As Winston Zedmore once quipped in Ghostbusters, “that’s a big Twinkie”)

Unemployment & Under Employment

As you can see, in the last 12 years population growth has far outpaced job growth; a fact belied by the unemployment rate itself.

During the Clinton Presidency, the economy added over 23 million jobs on an initial population base of 110 million. This caused the unemployment rate to drop 3.5 percentage points from 7.4% to 3.9%. During the Bush Presidency the economy added a modest 1.9 million jobs (with the unemployment rate rising to 6.9%). In President Obama’s first term, after a wild roller coaster ride, the economy lost 400,000 net jobs and the unemployment rate settled at 7.8%.

The modest increase in the rate over the last four years, less than 1%, is comparatively inexplicable.

Older workers, unable to afford retirement, have extended their stay (or over-stayed their welcome) in the workforce. Now retiring, they are no longer members of the workforce nor counted as unemployed. At the other end of the age spectrum, we have a lost a half-generation of young people. Unable to find jobs, many have not even bothered to enter the workforce and also go unaccounted for.

So when you add this all up, it serves as a fair warning that many hurdles still remain in front of us. It will not be a quick fix under any circumstance. And the more we sweep the big problems under the rug or try to ignore them, the bigger these challenges will become.

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Written by Neil Grossman

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