Saturday, February 4, 2012

The January Employment Situation - Why Gridlock is Good!

Secretary of Labor Hilda Solis gets the “Whopper of the Day” award for the statement she posted on the DOL Website: 

“The national unemployment rate has fallen by 0.8 percent in the last five months. The drop in unemployment has been driven by employment gains, not workers leaving the labor force.”

In the month of January, the number of Americans (according to the government numbers) who are no longer in the workforce increased from the Dec 2011 level of 86.7 million by 1.2 million.  In the previous 10 years, the average monthly increase in the number of Americans not in the workforce was 122,000.  In January the number leaving the workforce was 6 X the 10 year month average.  That’s a lot of babies and retirees in one month.

Five months ago, 86.2 million people were out of the workforce and 13.9 million were unemployed.  In January 87.8 million people were out of the workforce (an increase of 1.6 million) and 12.7 million were unemployed (a decrease of only 1.2 million).  The drop in unemployment rate in January was driven by the exodus of Americans from the workforce, despite the spin feebly attempted by Secretary Solis.

In other words, in the five-month period that Secretary Solis mentions, the Civilian Non-Institutional Population grew by 1.0% but the Civilian Labor Force grew by only 0.47% while the Not-in-Labor Force grew by 1.95%.   It’s great that the number of Americans employed grew by 1.35% in this five-month window, but it’s the devaluation of the denominator that drove the drop in unemployment rate to 8.3%.

Viewed through another lens, during the eight-years of the Bush administration for every 100 person increase in the Civilian Non-Institutional Population (CNIP), the number of people in the Civilian Labor Force (CLF) increased by 55.  Under President Clinton, the CLF increased by 93.  Under the first three years of the Obama administration, for every 100 person increase in the CNIP, the number of people in the Civilian Labor Force decreased by 11… where have these people gone?

The number of Americans in the Civilian Labor force in Jan ’12 (154.3 million) is essentially unchanged from when President Obama was sworn in in Jan ’09 (154.8 million).  But the number of employed Americans on President Obama’s watch decreased 5.5 million from 145.3 million in 2008 to 139.8 million in 2011.  The January data would suggest that we’re now up to 141.6 million… only 3.7 million more jobs to go to break even. 

I don’t hold the president accountable for employment numbers if he does no harm and simply protects and defends the Constitution and allows the free market to operate as unfettered as possible.  I will hold the President to account if the proximate result of his use of the power We the People have temporarily shared with him is damage to the freedom of Americans.  President Obama’s policies have adversely impacted the freedom of Americans.  One can’t be truly free if government policies and regulations gut the job market.  The data speaks for itself.

I guess paying someone to dig a hole in the morning, someone to fill the same hole in the afternoon, someone to supervise the work and three union leaders to organize the workers wasn’t such a good recipe for growth. Chuck Schumer famously said on the floor of the Senate that it simply didn’t matter where the money was spent so long as “aggregate demand” (the Holy Grail of Keynesians) was increased. 

The January employment situation looks more than a little fishy.

Since President Obama began his assault on the American way of life in January 2009, at no time has there been more than 141 million Americans employed until January 2012, according to the BLS data released on Friday.  The month before Obama was sworn in, 140.4 million Americans were working.  In July 2007, 147.3 million Americans were employed.

The January data raises an eyebrow on many levels.  Over the past 10 years the Civilian Non-Institutional Population (CNIP) increased at an average annual rate of 2.45 million – or, about 200,000 per month.  In January, this value increased by 1,685,000 after monthly increases in 2011 15% below the 10 year average.  So, with this adjustment in January, the CNIP was pegged at 242.3 million.

Interestingly, while the total CNIP increased by 1,865,000 in January, the number of Americans reported in the Civilian Labor Force (CLF) only grew by 508,000 – in other words, less than one-in-three people who was added to our population was counted in the CLF. 

But I guess this isn’t as bad as it might appear.  In 2011, when the full-power of the Keynesian spending spree was unleashed, while the CNIP increased by 1.8 million, the CLP decreased by 272,000; in 2010, while the CNIP increased by 2.0 million, the CLP decreased by 253,000; in 2009, while the CNIP increased by 2.0 million, the CLP decreased by 145,000.

In other words, since 2008 when Obama took over the White House, the Civilian Non-Institutional Population (CNIP) has grown by 5.8 million and the number of people in the Civilian Labor Force (CLF) decreased by 670,000… which is why the January data is so startling…. we are being asked to believe that after three years of decreases in the CLF, in January it increased by 508,000.

So, if we stipulate that the numbers haven’t been cooked in January, then we’re faced with the question, “Why was the data so good in January?”

Easy question – one word answer.  “Gridlock”.   Americans needs to get it through their heads that government gridlock is a good thing.  Given that we are born with inalienable rights, among them life, liberty and the pursuit of happiness, when government “does something” it usually results in an erosion of individual freedom.  The House is doing EXACTLY what the Founders had hoped they would do when faced with a President who shows no regard for the Constitution and its limitations.  The Founders never envisioned a president trying to "spread the wealth", "level the playing field", extort the rich to "pay their fair share" or other such abuses of power.  Nope.  The Founders asked the President to support and defend the Constitution - that miraculous document whose function is to protect our freedoms.  This President has the audacity to use “We Can’t Wait” as the theme of his campaign, utterly in defiance of the limitations placed upon his power by the Constitution.  The House Republicans are doing noble work by blocking this usurper.

Markets are gaining a sense that this gridlock will continue and have started hiring.  Business owners sense that Obama’s ability to inflict more harm upon business is being checked and will be checked from this point forward and they are taking the first steps to start growing again.

Next time one of your friends bemoans the gridlock in Washington, remind him / her that gridlock is good…