By Rick Manning
The headlines read that the unemployment rate has dropped to its lowest point since Obama took office. This is a case where a headline can be 100 percent true and completely wrong in its implications.
If the unemployment rate drop from 7.3 percent down to 7 percent is actually meaningful, the Federal Reserve should immediately end its bond-buying program, called “quantitative easing.” One can assume that the economy is rapidly heating up, and we should all be concerned about inflationary risks created by more monetary pumping. When coupled with the net 750,000 new hires reported by the Labor Department over the past three months, the economy must be on fire.
However, the same report that shows the unemployment rate drop is disastrous when comparing data for the past three months.
The Labor Force Participation Rate dropped by 0.2 percentage points in that two-month period, meaning 666,400 fewer people were in the labor force in November than in September, roughly the equivalent of an entire congressional district.
The number of employed people is almost as grim. If you are to believe the unemployment report, only 83,000 more people were employed in November than in September.
The unemployment rate did not drop because of people getting jobs, but instead due to another massive labor drop-out. If this sounds familiar, it is because our nation has seen a staggering drop in the labor participation rate over the past five years.
Since Obama took office, the civilian non-institutionalized population age 16 years and over has grown by approximately 11.8 million people. However, the labor force has only grown by slightly more than 1 million people. Fully 91 percent, or 10.7 million of the increased population that are 16 years old and over are not only not working; they are not even trying to find a job.
This precipitous workforce participation rate decline of 2.7 percent has reached lows not seen since Jimmy Carter was president in 1978.
And it isn’t old people leaving the workforce in droves. Instead it is a startling drop in participation by teenagers and young adults who are failing to launch their lives.
While the unemployment rate for teenagers is virtually identical today as it was in January 2009, at 20.8 percent, the percentage of teenagers actually in the workforce has declined by 4.5 points. This means that while the unemployment rate for teens is virtually the same, the number of teens who are actually employed has declined by 716,000.
Headline writers love to take the easy unemployment rate top line, but almost three quarters of a million fewer teens have jobs today than when Obama took office, with half a million fewer even looking for work.
This is the reality of Obama’s new normal economy: Carter levels of labor participation and teens failing to even try to get a job. Of course, with revelations that the unemployment rate books may have been cooked by the government, it is probably wise to ignore their reported unemployment rate altogether.
Rick Manning (@rmanning957) is vice president of public policy and communications for Americans for Limited Government and a former public affairs chief of staff at the U.S. Department of Labor.
