Conservatives woke up two days after one of our best debates since Bush/Kerry to hear that despite slower job growth than economists were expecting, the unemployment rate had dropped to 7.8%. This is magically .1% lower than it was when Obama took office. Most Americans don’t understand the details of the jobs report, but they understand 7.8%.
If you’ve ever played the game “which of these is not like the other”, the 7.8% rate would qualify. Economists expecting 142,000 new jobs (the actual number was 114,000 according to the Establishment Survey) expected the rate to stay the same or go up to 8.2%. However, there are two surveys used to measure the rate as I will explain later.
This is pretty wonky stuff and I don’t want to lose you, so let me get to the point then we will discuss the details. The reason the rate dropped is because the economy added 583,000 part-time jobs. But the U-6, which measures unemployed and under employed remained unchanged at 14.7%. In other words, 583,000 people got part-time jobs they didn’t want. Why?
Now for the background. In 2012 we saw some major changes to the way unemployment benefits are paid out. First, for anyone who loses their job after the beginning of the year, states only pay for 26 weeks. Second, in states with high unemployment the federal government cut back payments from 99 weeks to 73 weeks. They cut to 63 weeks for low unemployment states. So here is the question:
What do you do when your unemployment benefits run out and you still can’t get the job you want or need? Well, in my family’s case when I was a kid, my Mom got two part-time jobs while my Dad kept looking. We had to eat.
Can Obama take credit for the 7.8% unemployment rate? Only if he wants to take credit for cutting off the government’s new pseudo-welfare program of never ending unemployment benefit extensions and forcing some of the 47% to get off the government dole, even if it means flipping burgers for the King during the day and the Clown at night. How does that sound for the narrative of Obama’s soon to be released “I fixed jobs” ad.
Actually, based on many of the revisions up from previous months, government jobs make up the majority of the growth. How about that, they can work for the King and the Clown at the same time. But of course this time I’m not referring to fast food chains.
But even the part-time job growth leaves many rightfully scratching their heads. Did unemployment really just have its biggest one month drop since 1983? If the economy is really about to come roaring back, why did Bernanke just promise QE-Infinity where he prints $40 billion a month to pump job growth? Perhaps Bernanke is a terrible economist and should be canned.
Well, there is one more discrepancy to be mentioned in this jobs report. The 7.8% rate is based on two surveys. The Establishment Survey asks 390,000+ businesses about their hiring and extrapolates a national figure based on that. The Household Survey asks 50,000 households if they are employed, searching, or gave up looking. The Establishment Survey gave us the 114,000 job number.
The Household Survey indicated that 873,000 more people are employed. That’s a little bit of a variance. So although the surge in part-time/temporary hires certainly makes sense, the 7.8% figure is still suspect.
Filed under: Issues, Unemployment | Tagged: 114k, 47%, 7.8%, benefits, burger king, burgers, CNBC, debate, Debates, economists, is the unemployment number right?, job growth, jobs, jobs report, mcdonalds, msnbc, obama, part-time, qe infinity, qe3, Romney, santelli, scarborough, u-6, underemployed, unemployment, welfare |