Celebrating The Labor Force On Labor Day

Yesterday The Washington Times posted an article about America‘s shrinking labor force. Although the unemployment rate is reported at 5.1 percent, that does not take into account the number of Americans who have given up looking for work.

The article reports:

The “unemployment rate” most often cited in the news media is U-3. But U-3 ignores everyone who hasn’t actively looked for work within the previous four weeks. So if you can’t find a job and give up looking, you don’t count as “unemployed” in the U-3 rate.

If we calculated the illiteracy rate that way, we wouldn’t count someone as illiterate unless he had attended a reading class in the past four weeks. In other words, the U-3 figure is fake, because it ignores whether the labor force participation rate has dropped.

According to Diana Furchtgott-Roth, former chief economist at the Labor Department, if America today had as high of a labor force participation rate as we had in 2006, then “last year’s average unemployment rate would have been 11.4 percent instead of 6.2 percent.”

So the U-3 measure of unemployment creates the illusion that the economy is serving American workers roughly twice as well as it really is, when you consider all the persons who’ve given up looking for jobs.

Today’s labor force participation rate is 62.6 percent, a 38-year low. That depressed number wipes out all the gains in employment made during the Reagan era, a time when women by the tens of millions moved into the workforce.

Today, more women are on food stamps than have full-time jobs.

If the economy is doing so well, why are more women on food stamps than have full-time jobs?

The article goes on to explain that before the housing bubble burst, the American economy grew at a rate of about 3.1 percent a year. Since President Obama has been in office, the growth has been slightly over 2 percent. Slow growth is expected to continue due to President Obama’s policies–ObamaCare and excessive Environmental Protection Agency regulations on energy production are expected to have a serious negative impact on economic growth.

The article concludes:

Even worse: That idea of a “new normal” 2.1 to 2.2 percent annual growth rate may be overly optimistic. We have yet to see the effect of many recent and proposed anti-growth policies — for example, Obamacare, which is being phased in over a period of years, and the Environmental Protection Agency’s proposed plan, not yet final, to make the price of electricity “skyrocket.” If anti-growth policies push the economic growth rate down to around 1.6 percent a year, that’s like cutting the size of the 2063 economy in half. Long before that, government finances will collapse.

Welcome to Greece.

Elections matter. Unless we change those making policy in Washington, D.C., we will become Greece.