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Saturday, May 8, 2010

The Politics of Unemployment

So, why did the unemployment rate rise even though we had our best employment month in four years? It's because our unemployment is calculated in a peculiar manner. If you are actively looking for work and don't have a job, you are unemployed. That may seem like just about everyone but it's not. There is a sub category of so called "discouraged workers". Those are people that aren't even looking for work. They aren't considered unemployed even though they don't have jobs. For instance, both my parents would be classified in the sub category of "discouraged workers". They aren't even looking for work. Fortunately, they both have been frugal their whole lives and so they can afford to now stay unemployed for an extended period of time. How the government figures this out is beyond me but they have all sorts of PhD's at the Department of Labor for this task.

Furthermore, the unemployment rate, now at 9.9%, doesn't include underemployed. Those are people working part time jobs because they can't get full time jobs. For instance, the census is in the middle of a hiring boom but most of these jobs are not only temporary but part time. So, they are often filled by people with other employment. So, while there were about 60,000 census employees hired last month, many of those employees were already employed.

All of this adds up to a real unemployment rate of well over 15%. The rest is nothing more than accounting tricks. As the job market improves, the unemployment rate will likely get worse before it gets better. That's because less people will be discouraged and by extension they will be unemployed.

This means that unless there is a stunning increase in jobs between now and November, the unemployment rate that is calculated by the Department of Labor will hover near 10% no matter what. We'd need increases in jobs of near 1 million monthly to change that. So, Democrats will head toward November with the unemployment rate near ten percent.

So, add that up. We have deficits near two trillion dollars. We have a health care bill that is wildly unpopular. We have unemployment near ten percent. There's no dressing that up. That is a disaster that the president can't pawn off on his predecessor. Remember, he said that unemployment would get to 8% without the stimulus. It will be at 10% as of the election with the stimulus. It's not hard to do the math. We have deeply unpopular policies combined with a deep recession. That means an electoral nightmare for the party in power.

The next round for this is May 18 when John Murtha's old seat is up for grabs and the Republican is currently polling well.

1 comment: said...

There is no chance that unemployment will "hover" at 10%. It will blow passed 10% on its way to 15% and rising.

No one seems to be talking about the collapse of the dollar. It is collapsing here and now along with a lot of paper currencies. Gold is on its way to $1600-$2000 by end of year which is a confirmation of a total collapse of the economy and around the world.

Add to that the credit default swaps that are exploding everywhere because no government can cover the losses fast enough and you have zero chance of a rcovery or improving employment.

By November a democrat will be something you visit in a museum. There will be none left in Congress. The problem then will be Republicans all of the sudden afflicted with democrat-itis.

Make no mistake this collapse of the dollar(fact) and the credit default swaps explosion (fact) will crush any hope of recovery.