Part-Time America:Unemployment Rate of Little Value
Posted by Larry Doyle on July 14, 2014 9:30 AM |
If the employment situation in our nation has improved so markedly, then why isn’t our economy growing more rapidly? I mean with an unemployment rate of 6.1%, wouldn’t it make sense that our economy would be generating a higher level of GDP?
If we were to simply rely upon the prognosis of those paid to spew a party line, then yes we should expect that lower unemployment levels would be highly correlated with an increased level of GDP. But when did we start to rely upon the party line to decipher what is truly happening as we navigate the economic landscape?
Not in the past, now, or in the future should we or will we take that tact at Sense on Cents.
So then why hasn’t the admittedly improved rate of the “officially” unemployed correlated to an improved rate of economic growth? A few specific reasons:
1. our overall labor force participation rate is at multi-generational lows.
2. part time labor is an increasingly larger percentage of our overall work force
3. overall growth in wages remains anemic
Let’s navigate as Mort Zuckerman puts some detail behind these points this morning in writing in The Wall Street Journal,
There has been a distinctive odor of hype lately about the national jobs report for June. Most people will have the impression that the 288,000 jobs created last month were full-time. Not so.
The Obama administration and much of the media trumpeting the figure overlooked that the government numbers didn’t distinguish between new part-time and full-time jobs. Full-time jobs last month plunged by 523,000, according to the Bureau of Labor Statistics. What has increased are part-time jobs. They soared by about 800,000 to more than 28 million. Just think of all those Americans working part time, no doubt glad to have the work but also contending with lower pay, diminished benefits and little job security.
On July 2 President Obama boasted that the jobs report “showed the sixth straight month of job growth” in the private economy. “Make no mistake,” he said. “We are headed in the right direction.” What he failed to mention is that only 47.7% of adults in the U.S. are working full time. Yes, the percentage of unemployed has fallen, but that’s worth barely a Bronx cheer. It reflects the bleak fact that 2.4 million Americans have become discouraged and dropped out of the workforce. You might as well say that the unemployment rate would be zero if everyone quit looking for work.
Last month involuntary part-timers swelled to 7.5 million, compared with 4.4 million in 2007. Way too many adults now depend on the low-wage, part-time jobs that teenagers would normally fill.
No surprise that in the face of this reality that increasing numbers of our fellow citizens are relying on payday lenders, student loans, and car title loans in an attempt to make ends meet.
The Obamacare mandate that employers provide healthcare to all those working more than 30 hours may not be the only reason for the increase in part time vs full time employment but there is no doubt that it is a very real factor.
What is the ultimate consequence? People look at the 6.1% rate of unemployment and dismiss it as being of little real value in assessing the overall health of our economy.
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