Notes From Norm, January 12th: Lies and Statistics

American actor and writer, Stephen Wright, once said, “I'm writing a book. I've got the page numbers done.”

In many ways Wright’s commentary would mirror the philosophy of the current Administration when it comes to the issue of jobs.  For the President, the most recent job numbers and unemployment figures amounts to their own sense of accomplishment: “We’re creating jobs.  We’ve got the unemployment rate down.”

Yet, numbers and statistics have always been damn things, and while sometimes they don’t outright lie, they can mislead one into thinking that something dramatic has changed in in the U.S. economy – and specifically, in the employment picture in America.

Sadly, for millions of Americans, there’s not much that’s happened that will open the door to a flood of job opportunities.

It’s estimated that there’s somewhere between 1 job for every 4 or 5 unemployed Americans seeking a job. 

And, as former Secretary of Labor Robert Reich pointed out in a piece he did for National Public Radio yesterday,” If all the potential workers who have dropped out of the job market over the past two years were counted, today's unemployment rate wouldn't be 8.5 percent. It would be 9.5 percent. That's only a bit down from the 9.9 percent unemployment rate two years ago.”

Combine this reality with the fact that, according to Financial Times' Ed Luce, “If the number of Americans that "wanted jobs" was the same today as it was back in 2007, the "official" unemployment rate put out by the U.S. government would be up to 11 percent.”

Despite the good news for 200,000 Americans who found a job in December, the estimates that getting to pre-recession job levels won’t occur until 2019 (according to Reich) – although I’ve seen some estimates that put that timeline well into 2020 and beyond.

Numbers offer us guidelines for how we think things are shaping up in the future by analyzing what we know from the past.  They don’t, clearly, provide us with any serious insight into the impact that unemployment and underemployment makes on a family that is looking every single day for some silver lining that would encourage them to keep on looking for work.

Which is where the problems will occur, again, for this Administration.  Reich points out that while the unemployment rate may have “fallen” to its current level of 8.5%, it is a truly illusory figure.

Because we know that the unemployment rate only counts those actively looking for work, much of its decline can be attributed to people who have simply given up working.  If you aren’t actively looking for work in America, the Bureau of Labor Statistics does not count you in the unemployment rate.

Reich points out that seemingly good news for job seekers, is likely to result in bad news for the Obama Administration in the coming months.

According to Reich, “…This little bit of good news is likely to raise the hopes of the great army of the discouraged - many of whom will now start looking for work.  And what happens when they start looking? If they don't find a job (and, let's face it, the chances are still slim) they'll be counted as unemployed.  Which means the unemployment rate will very likely edge upward in coming months. This will be bad for the President because it will look as though the trend is in the wrong direction again”

This clearly provides the rational for why this Administration did not yell from the nearest podium its success in creating jobs in America.  They know all too well that the unemployment rate may be good headlines in the short-term, but unemployed and underemployed Americans know the difference between a statistic and a job.

According to the Bureau of Labor Statistics, 16.6 million Americans were self-employed in December 2006.  As of September 2011, that number has shrunk to 14.5 million.

There are fewer payroll jobs in the United States today than there were back in 2000 even though we have added 30 million extra people to the population since then.

And, in December 2011 alone, it was estimated that 315,000 Americans left the workforce – in other words, they simply are no longer looking for work. 

When the labor participation rate shrinks, and there are fewer and fewer jobs for those that are actually looking for work, the long-term ramifications are severe.

Fewer jobs means fewer paychecks and fewer mortgage and rent payments being made.  Smaller payrolls mean less in tax collections for local, state and federal governments, resulting in cutbacks – or, unfortunately, tax increases by those governments unwilling to share in the pain of those they were elected to serve.

The daunting task of getting America’s economy back on track remains with us today even as 200,000 of our fellow citizens can feel some relief in acquiring a job last month. 

The implications of the economic failure of this Administration will be felt by generations of Americans to come in the form of a reduced quality of life, greater threats to our economic freedom and security.  Most importantly, as we are seeing now, in our inability to make the investments we need in defending ourselves from the growing threats of those across the world who wish to do us harm.