What? You Mean the Unemployment Rate isn't 6.1%?
With the jobs report for July due out on Friday, August 1. Fox Business News' Dunstan Prial prognosticated last Friday, July 25:
"The July jobs figures, due out Friday at 8:30 a.m. EST, are expected to show continued momentum in U.S. labor markets. Economists are predicting 230,000 new jobs were added last month and that the unemployment rate will hold steady at 6.1%, its lowest level in nearly six years.
"For most of 2014 labor markets have been a consistent source of strength in the ongoing economic recovery. Monthly average gains this year are well over 200,000 and the headline unemployment rate continues to fall. The economy added 288,000 jobs in May."
We growled about the June jobs on July 3, 2014.
However, Peter Morici, economics and business professor at the University of Maryland raises serious questions about the accuracy of an unemployment rate of 6.1%, writing in his column for Breitbart's Big Government today, "The jobless rate may be down from its recession peak of 10 percent, but much of this results from adults, discouraged by the lack of decent job openings, having quit altogether. They are neither employed nor looking for work."
Morici posits the actual unemployment rate may be as high as 18%, and explains why it is more likely to be 18% rather than the official rate of 6.1%, explaining:
He also explains how Congress has managed to make the unemployment rate irrelevant, or at least an ineffective economic indicator, writing:
"Only about half of the drop in the adult participation rate may be attributed to the Baby Boom generation reaching retirement age. Lacking adequate resources to retire, a larger percentage of adults over 65 are working than before the recession.
"Many Americans who would like full time jobs are stuck in part-time positions, because businesses can hire desirable part-time workers to supplement a core of permanent, full-time employees, but at lower wages. And Obamacare’s employer health insurance mandates will not apply to workers on the job less than 30 hours a week."
"Since 2000, Congress has enhanced the earned income tax credit and expanded programs that provide direct benefits to low-income workers, including food stamps, Medicaid, Obamacare, and rent and mortgage assistance.
"Virtually all phase (out) as family incomes rise, either by securing higher hourly pay or working more hours, and impose an effective marginal tax rate as high as 50 percent. Consequently, these programs discourage work and skills acquisition and encourage single parents and one partner in two adult households not to work. Often, these motivate single people to work only part-time.
"Undocumented immigrants face more difficulties accessing these programs, and lax immigration enforcement permits them to openly take jobs that government benefits discourage low-income Americans from accepting." (emphasis added)
Morici writes about several other aspects of the employment problems facing America, including the intentional or unintentional abuse of H1-B visas, job creation, discouraged workers, and the problems facing young people. He closes by writing:
"New business regulations, more burdensome than are necessary to accomplish legitimate consumer protection and environmental objectives, exacerbate these problems.
"All of this suppresses wages except for the most skilled and talented workers.
"No surprise, average family income, adjusted for inflation has fallen from about $55,600 in 2007 to $51,000 even as the gap between families at the bottom and top widens."
Take a few minutes to read Peter Morici's entire column, and brush up on your college economics class at the same time.
Readers of Growls who are concerned that Congress is not properly focusing on the things that will get the economy working again, but rather getting side-tracked on such issues as the minimum wage, crony capitalism, i.e., reauthorization of the Export-Import Bank, or extending umemployment benefits are urged to contact their members of Congress. Information is available at Thomas (use left-hand column). Readers living in Virginia's Arlington County, should contact:
- Senator Mark Warner (D) - write to him or call (202) 224-2023
- Senator Tim Kaine (D) -- write to him or call (202) 224-4024
- Representative Jim Moran (D) -- write to him or call (202) 225-4376