The technical definition of a recession is when the nation’s Gross Domestic Product (GDP) declines for two successive quarters. From a private sector worker’s standpoint that appears to be a reasonable definition because as the economy contracts, employment contraction occurs simultaneously. However, utilization of the same data for determining when a recession ends – two successive quarters of growth in the GDP – does not find a corresponding increase in employment. The net result is that while private sector workers almost immediately feel the brunt of the beginning of a recession, the technical end of a recession seldom brings any degree of relief to them. That is particularly true in this most recent Bush-Obama recession.
A recent article in Tuesday’s Wall Street Journal indicated that the United States Bureau of Labor Statistics tracks what is known as the Jobs Opening and Labor Turnover Survey (JOLTS) which tracks hirings, firings, and job openings. While JOLTS is far less known than the unemployment statistics, it provides a more accurate picture of employment than the more popular unemployment statistics – the popularity of which is most likely because the unemployment survey is a single number and doesn’t require the media to think or ask questions about the numbers.
The WSJ noted:
“Look back to the second half of 2007. From June to December, there was a modest rise in the number of unemployed that was hard to call a trend. At the same time, Jolts reports showed job openings falling markedly from nearly 4.7 million to below 4.3 million. Put the two together and there was a one-fifth rise in the number of unemployed per available job. A recession that Wall Street economists wouldn’t recognize until months later was about to begin.”
Just as the JOLTS report indicated that private sector job loss preceded the technical recognition of the recession, it also demonstrated that the job recovery (modest as it was) trailed the technical recognition of the recovery by months. The modest gains in the ratio between unemployment and job openings have continued until recently. The WSJ reports that the JOLTS report showed April witnessed the largest monthly fall in private sector job opening in four years. The JOLTS report issued Tuesday morning for the month of May indicated that private sector job openings remained largely unchanged – down substantially from the previous quarter.
All of these dry and dreary numbers are simply a demonstration as to why a new definition of recovery from a recession must be found – one that includes a calculation demonstrating that private sector jobs have likewise recovered. (These numbers are dry and dreary to the reader but if you are one of the statistics the effect is devastating.)
President Barack Obama responded to the dismal job reports issued last week showing that only 80,000 jobs were created during the month of June by declaring that the country was on the right track and bragging that his administration had created 4.4 million jobs over the last 28 months. That averages about 157,000 jobs per month which is significantly below the commonly accepted estimate of 200,000 jobs needed per month to just keep pace with population growth let alone make a dent in the massive private sector job loss occasioned in this recession. (Of course Mr. Obama has also been quoted as saying that the private sector was doing just fine and it was government employment that was suffering – so much for understanding anything about the real economic picture of America from a worker’s standpoint.)
While Mr. Obama’s financial supporters on Wall Street have witnessed nearly a ninety-five percent increase in stock valuations since the depths of the recession, America’s private sector workforce has not been so lucky. And while Mr. Obama enjoys another round of golf with his wealthy friends, and Mrs. Obama jets off for another holiday in the playgrounds of the rich and famous, Joe Sixpack is left to worry whether his unemployment benefits will terminate before there is any actual job recovery in his field.
Three and one-half years into Mr. Obama’s presidency America’s private sector workers are still waiting for not just a plan for economic recovery that will include them, but any recognition that Mr. Obama understands what drives an economy. To date Mr. Obama has spent nearly a trillion dollars on salary and benefit increases for public employees, highly subsidized alternative energy projects (many of which have already failed) and unprecedented expansion of welfare programs. Having run the table on government spending without economic stimulation, Mr. Obama sole current initiative is to raise taxes on America’s wealthiest.
Leaving aside the class envy sentiment upon which Mr. Obama hopes to capitalize, what possible benefit could that tax increase generate? Will it stimulate job creation? Absolutely not! The Congressional Budget Office has estimated that Mr. Obama’s proposed tax increases (those making over $250,000 and increasing estate taxes) will generate about $1.7 trillion over ten years – $170 Billion per year. That removes $170 Billion annually for possible investment to stimulate job growth. Not even Mr. Obama suggests that the tax increase will provide any job creation.
Will it reduce the country’s staggering debt load? Absolutely not! Such an increase might be tolerable if it were used for reducing the nation’s mounting debt but Mr. Obama has made no such proposal and, in fact, he has proposed increasing that debt by nearly $2 Trillion in just the next year.
So what is the purpose of Mr. Obama’s proposed tax increase? Only class envy is left and there will be a significant number of voters who will fall for this red herring. And even if Mr. Obama is successful in obtaining his tax increases, those in the private sector without jobs will remain without jobs or any appreciable hope for a job in the future.
So what is Mr. Obama’s plan? Before you can have a plan, you must have an understanding of what drives an economy and how jobs are created. Mr. Obama has neither the education nor the experience to understand either. His actions speak volumes about his fitness for the presidency.