By Howard Rich — For the third straight spring, the American economy is experiencing a “failure to launch.” Our nation’s unemployment rate continues to inch lower — from 8.2 percent in March to 8.1 percent last month – but it’s dropping for all the wrong reasons (i.e. people leaving the labor force). And despite the Federal Reserve’s optimistic projections of sustained job growth over the coming months, the fundamentals of the U.S. labor market remain weak.
Record numbers of workers are exiting the job market — 340,000 of them last month alone — and the ranks of the long-term unemployed continue to hover at elevated levels.
During the first quarter of this year 29.5 percent of the estimated 13.3 million Americans classified as unemployed had been without a job for more than a year, according a new report from the Pew Charitable Trust. This rate is more than three times as high as it was during the first quarter of 2008 (when the recession began).
The Pew study also revealed that taxpayers will shell out $90 billion in unemployment benefits this year — on top of the $441 billion spent over the previous four years. That’s a high price to pay for incentivizing joblessness — especially considering that more than half of this year’s tab ($51 billion) is earmarked for these “extended benefits.”
Of course a much bigger problem for the American economy than the swollen ranks of long-term unemployed workers is the soaring percentage of those who have given up looking for work altogether. This is where America’s true jobless situation comes more clearly — and painfully — into focus.
Since Barack Obama took office, America’s civilian non-institutionalized population has expanded by more than 8 million people — however there are 319,000 fewer Americans working today than in January 2009. As a result of this failure to create jobs, America’s labor participation rate is at a 30-year low of 63.6 percent — and still falling.
What does this number mean in human terms? According to the Federal Reserve of St. Louis, 88.4 million Americans are currently not in the labor force — an all-time high. By comparison when Obama took office there were 80.5 million Americans not in the labor force.
This largely unreported statistic translates into less productivity and a bigger burden for taxpayers, but it also means America has a much higher unemployment rate than the one Obama’s administration has been touting. In fact had America’s labor participation rate remained constant over the duration of Obama’s term, the current unemployment rate would be 11.1 percent.
Incomprehensibly, after spending his first year in office blaming his predecessor for the economic malaise (despite their shared support for Keynesian interventionism) Obama has spent the last two years attempting to convince Americans that happy days are right around the corner.
“We can say beyond a shadow of a doubt today we are headed in the right direction,” Obama said two years ago during a speech in Buffalo, New York. “All those tough steps we took, they’re working, despite all the naysayers who were predicting failure a year ago.”
Clearly those steps weren’t working then — nor are they working now.
Despite unprecedented spending, lending, borrowing and bailouts, America’s economy has yet to be “stimulated.” In fact our sustained joblessness has been accompanied by a devalued dollar and debilitating deficits, which means it will become increasingly difficult for individual Americans to make ends meet and increasingly difficult for our nation to dig its way out of debt. Now Obama’s failed policies are poised to push our economy even further off of the cliff (and deeper into debt) — choking off free market expansion (and private sector job creation) in the name of new entitlements and the perpetuation of government’s growing dependence economy.
The cost of moving forward with this failed Keynesian approach? For starters, America will see an estimated $494 billion worth of tax increases in 2013 — a figure which will climb even higher in 2014 if Obama’s socialized medicine monstrosity isn’t struck down by the Supreme Court. Yet even these tax hikes won’t be enough to satisfy the federal government’s insatiable appetite, as the national debt is projected to increase by another $3.4 trillion over the next four years according to Obama’s calculations.
Add inflationary pressure and concerns over the ongoing European debt crisis to this jobless “recovery” and it’s easy to see things getting even worse.
Despite this bleak outlook, America has all of the tools it needs to rebuild its labor force and reclaim its role as the world’s free market leader. Of course achieving this objective will require a dramatic rethinking — and a draconian reduction — of government’s involvement in literally every facet of our individual and economic lives. Sadly, such a fundamental reorienting of our government’s modus operandi has not been embraced by the leaders of either major political party.
The author is chairman of Americans for Limited Government.
