The Truth of the Employment Situation in America

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Well, the unemployment rate fell from 7.9% to 7.7% in November.  Great news, isn’t it?  No, because another 350,000 workers disappeared during the month of November.   However, when you read the mainstream media, not once would you find any mention to the fact that 350,000 workers left the labor market.  The entire focus is on the headline that the unemployment fell to 7.7%.  To make matters worse, the employment data by the four age brackets (16-19, 20-24, 25-54, and 55-64) are horrible.  That is, the largest gainer for the month of November was the group between the ages of 55 to 64.  This group added 177,000 jobs.  As for that key segment of the workforce, which would be the 25-54, jobs declined by a whopping 359,000 in November.  And this is construed to be good news?  Yes, if you only focus on the headlines that state the unemployment rate went from 7.9% to 7.7%.

Economist Casey Mulligan of the University of Chicago has documented that the huge increase in government benefits for not working, i.e., food stamps, disability payments, and unemployment insurance, are increasing the incentive not to work.  Welfare payments that redistribute income from workers to mostly non-workers now exceed $1 trillion a year.  In other words, fewer workers mean less tax revenues, more welfare benefits paid out, and, of course, larger budget deficits.  (See the following chart that depicts what has really transpired over the pass three years in regard to the labor participation rate.)  Oh, my the way, get use of these numbers, because the employment situation is going to get any better any time soon.