Freedom Line Blog

In this week’s Liberty Update, we mark the fourth anniversary of the end of the last recession in June 2009, noting that the subsequent years have been the most dismal recovery since we began keeping records after World War II.  Today’s unemployment report only served to confirm that reality, as unemployment rose to 7.6% and we only added 175,000 net jobs, which is just treading water.

In an excellent commentary entitled “These Are the Most Important Numbers from the Latest Jobs Report,” American Enterprise Institute’s Michael Strain brilliantly captures the lackluster nature of today’s release.  Setting aside the headline 7.6% and 175,000 numbers, he says, “I encourage you to pay attention to three other numbers which, to my mind, are much more important than 7.6 and 175,000.  They are 2.4, 4.4., and 0.4.”

“We still have 2.4 million fewer jobs than when the recession officially began 66 months ago. Relative to previous downturns, this performance is quite bad.

We still have 4.4 million workers who have been unemployed for six months or longer. This is a very large number. Outside this downturn, the previous post-war record was under 3 million, back in the 1980s. Over 37% of the total unemployed are long-term unemployed. The previous post-war record, also back in the 1980s, was a comparatively low 26%.

When the Great Recession began in December 2007, 62.7% of the working-age population was employed; today it is a staggeringly lower 58.6%. The share of the working-age population with jobs has increased by only 0.4 percentage points since its low point in the official recovery. Though it doesn’t get much attention, many labor economists prefer the employment-to-population ratio as the best measure of the broad health of the labor market. That this measure has improved so little indicates that the economy is creating just a few more jobs than are needed to keep up with population growth. But this is not enough. We need to create enough jobs to handle the growth of the working-age population and to recover the jobs lost in the Great Recession. To put it simply, we are not succeeding.”

So more of the same.  The Obama Administration and its dwindling number of defenders will attempt to characterize today’s numbers in a positive light, but that’s simply not accurate.  A broad economic policy change toward the free-market principles that we know work is necessary, the sooner the better.