Jack Dunn - Reclaiming Common Sense

 Fake Unemployment rate of 4.43% more like 9.5% or 11.5%


Every month the Employment Situation is Released. Most news organizations cover the "jobs" number. This number is the Seasonally Adjusted (SA) Current Employment Statistics (CES) worker number. The other numbers covered in the media are the Seasonally Adjusted Unemployment Rate (U3) and the SA Participation Rate. This data is obtained through the Current Population Survey (CPS) data. The CPS data also measured the number of full-time jobs and part-time jobs created or lost during the month. These are the true jobs numbers. Recently the media started reporting the SA CPS data. Now the media is really starting to question the unemployment rate. This column will help explain, again, why those questions are being asked. This is the next article in the "Four Presidents at ___ months" series. 


There has been some concern that "Fake News" swayed the 2016 Presidential Election. The President even proclaimed that some people, analysts like me, may be "peddling fiction." This is the same President that has been promoting the FACT (False Assertion Considered to be True) that we have had the longest streak of (seasonally adjusted)  consecutive months of "job" growth, based upon the CES data. This column dug into the meme early in its creation. The "Era of the Meme" column during August of 2015.That column was the genesis for the "Four Presidents at __ months" series with the three-part article  "Four Presidents at 81 months." Other others were comparing President Obama's accomplishments with Presidents who had served two complete terms in office. There is a considerable amount of movement that can occur during the final 16 months in office, as President Bush can verify. 


All comparisons from this point with be as of November of the final year of the President's second term in office.


President Reagan created more jobs than workers, as of November 1988. President Reagan inherited on recession from President Jimmy Carter and experienced a second recession . Even with the job loss he experienced he managed to at  18.2 million jobs for  16.1 million workers.  That equates to 193,000 jobs for 172,000 workers a month, every month, recessionary and expansionary.


President Clinton added 20.4 Million jobs for 19.6 Million workers. This was a period of low unemployment and high employment.  If you look at the data from this time you will see that he added 17.3 million full-time jobs and 3.1 million part-time jobs. This equates to 217,000 jobs a month for 208,000 workers a month. A job surplus is a good thing, once again. The surplus was not as great as President Reagan. The jobs growth and worker growth were both better. Everything is relative. Reagan started with a smaller workforce.


President Bush Comes in Fourth Place for Job Creation. President Bush inherited a recession from President Clinton. His job creation peaked during July of 2007. He survived the economic downturn of the "911" attack during September of 2001. He oversaw the recovery after the Hurricane Season of 2005 with Katrina, Rita, and Wilma. Then the Ike Spike of Hurricane Ike hit and the Recession was off an running. President Bush still added 8.4 million jobs for 20.9 million workers.


President Obama Comes in Third Place for Job Creation. President Obama inherited a terrible recession from President Bush. President Obama oversaw the loss of 5 million jobs after he took office before he jobs started adding jobs. This graph only tells part of the story.We lost nearly 15 full-time  million jobsbetween the pre-recession peak of July 2007 and the depths of the recession during January 2010. President Obama likes to promote the FACT that he has added 17 million jobs (since the depth of the recession) and forgets the truth that he oversaw the loss of 5 million full-time jobs. He failed to permanently add jobs until August of 2011, and that was only recovering the jobs lost after he took office. It wasn't until August of 2015 that all of the lost full-time jobs were recovered. Now we are losing those full-time jobs. We have added 4.3 million part-time jobs and 700,000 full-time jobs since July 2007.


The Number of Unemployed workers Has "Dropped" by 9 million workers under President Obama. This is another FACT that will be clarified later in this column. The official number of unemployed workers peaked under President Obama at 16.147 million people. The worst that President Reagan experienced was 12.5 million. President Bush was just entering the worst of his tenure during November when he eclipsed 10 million unemployed workers. President Clinton had only 5.3 million unemployed workers the month leading into his final Christmas in the White House. Has the number of unemployed really dropped that much?


The Number of participants is dropping, again. Participants are those people who are working full-time or part-time jobs or those who are unemployed and looking for work.  President Obama is the only President of the most recent two-term Presidents to lose participants during his Presidency.  All four Presidents had fewer participants at the end of their term after peaking the prior July. This President will experience a similar fate. We see considerable job losses recorded during January every year. The question is whether or not  President Obama will see a drop-off similar to President Bush or if it will be more like President Reagan or President Clinton. Right now President Obama has only added 5.6 million participants. This is nearly 6 million fewer participants than President Bush. This is 10 million fewer than President Reagan.


President Obama has the lowest Participation Rate of the Four Presidents. The number of participants is only part of the story. The workforce population has been growing faster than jobs under Presidents Bush and Obama. This is the reason why there is a worker population gap in their two jobs charts. If President Obama had the same participation rate as President Bush, President Clinton, and President Reagan then we could compare participants to participants.


President Clinton had the highest participation rate. The participation rate improved under President Reagan. The highest participation rate recorded was during President Clinton. The participation rate remained above 65% under President Bush. The common misconception is that the difference between the participation rates can just be added to the unemployment rate to give an effective unemployment rate.  If President Bush was at 66.13% and 4.49%   during November 2007 and President Obama is at 62.64% and 4.43% during November 2016 then just add 3.49% to President Obama's number and we have an unemployment rate that is closer to 8.92% . You are combining a pecan pie with an apple pie. It can't be done .


We are missing 8.1 million to 10.7 million participants. If they are not employed or unemployed, officially, then they are missing. If those missing people are counted as unemployed then the effective unemployment rate is between 9.5% and 12.2%. The official unemployment rate is "fake news."


President Obama's Recovery is incomplete. We are adding part-time jobs at a faster pace than full-time jobs. We have been losing full-time jobs lately. It hasn't been the best recovery.


It's the economy.