Monday, May 21, 2012

The Election will be about Jobs, Jobs, Jobs

It's no secret what this election will turn on: Jobs, jobs, job, jobs, jobs.  The hardest hit group of people in the job market are the young, a third of whom are underemployed, and the older people who have lost jobs and not regained them.  The former were big supporters of Obama in 2008 and he cannot win the election without them this year.  This is pretty  much the only opening Romney has to win the election, since he is a man without character and personality.

But what is the truth about jobs in America?  How did it get to be a crisis, and why hasn't Obama done more?

As background, it is necessary to understand some of the history of US employment, separated from the noise of Republican propaganda.  For instance, a Republican talking point is now taught in high schools, namely that when social security was started there were 7 people paying in for everyone withdrawing, whereas today the ratio is 3 to 1 and falling, and that can only be sustained because so many older people have such pitiful benefit levels.   The implication is clear: we have become a nation of loafers.  But the reality is different.  In 1944 67 million people paid into social security out of a population of 132 million.  In 2010 160 million paid into social security out of a population of 308 million. That is the ratio of "worker bees" to total population has actually slightly increased from 51% to 52%, as the elderly, students, and prisoners replaced children, orphans, mental patients, housewives, and sanitarium residents in the dependent column.  It's just that more of today's dependents rely on social security and less on family support and charity.  Remember when you hear someone complaining about social security tax, how they would have likely had family dependents to support in a previous generation.

Ultimately, the question of jobs is a question of facts and statistics.  The public "feels" unemployment more in 2012 than it did in 2008 or 2009 because it optimistically thought the challenges of those years were temporary blips. Progressives said no, there was a structural problem of too much wealth concentration and a predatory and false global trade regime, and while Obama remained committed to the latter, he at least understood the problems posed by the former.  Republicans do not.  Mitt Romney sees no problem with concentrated wealth and his business partner Edward Conard thinks that the successful are underpaid!  Moreover, Republicans made Obama's stimulus too small and refuse to consider a supplement. Republican governors dragged their feet about spending any of what was available (see high speed rail).  Republican senators have filibustered the president an unprecedented 300 times, and then blame him for inaction!  But they've done worse. A tea party group last fall asked employers not to hire anyone before the presidential election, so that economic sabotage would bring down the president, a scenario - a strike of sorts by employers -  out of Ayn Rand's "Atlas Shrugged."

America's large industrials have boasted they are holding more than $1 trillion overseas, money they say they MIGHT return to America if their taxes were cut.

That second article is particularly amusing for saying that cash held overseas nonetheless "helps" the economy when it brings no dividends or interest home, so much so that the US has fallen into current account deficit, not just trade deficit and we are not benefiting from our overseas investments.

It is interesting that they were able to make such a treasonous boast without fear of retribution from the public, and it is certain that the latter claim is largely bombast.  They keep a lot of money in China because China makes them, and has capital controls that the USA doesn't have.  Yet these companies are eager to invest in Communism while blaming American workers for being too greedy, as did their (Chinese) labor secretary under George W. Bush.

Nonetheless, it is clear that Republicans advocate economic sabotage to achieve political ends, and that they have no love for the U.S. economy apart from it enriching them personally.   Their continued existence in Washington makes the nation unable to fix employment problems.

 For years, the only employment "statistic" that counted was the Unemployment Rate.  This rate has always been misleading as an international comparison.  We were told in the 1980s that unemployment was worse in Europe because the socialistic economies there are "sclerotic" and make it hard to fire people and have unions on the board of directors (Germany). Today Germany employs 5% more of its people than we do.
However, their "unemployment rate" is as high as ours because it is counted differently.  Similarly, Canada employs 5% more of its people than we do but does not usually have lower unemployment.  The unemployment rate, then, has been massaged in the USA to the point of being unbelievable.  In the early Bush II years, for instance, they cut the labor force 2% in order to hold the unemployment rate down. Needless to say, they have not done this for Obama.

But the partisan "professionals" at the Bureau of Labor Statistics have done even worse in their reporting of the employment rate.  Here, for example, is their snapshot of nonfarm jobs in America.

The top table, their "official" results are shocking. They show a flat employment trend from 2002 to 2011, with very slight swings,  yet we know the population increased 27 million during that time.  That's 27 million people who had to be fed, clothed, and supported (22 million of them under Bush) with not a single extra body working.  It was not done with productivity increases as much as it was not done at all, and has been reflected in the rapid increase of poverty.  According to the chart, Obama actually has a net decline in jobs from his 2009 inaugural to the end of 2011, whereas Bush is showing a slight increase from 2002 to 2009 (because 2001, a year of heavy job losses, has been hidden).  This is what Romney is running on.  Add back the last year, however, and you see Obama looks like a giant of economic stimulation compared to Bush, whose Keynsian "stimulus" was in tax cuts and $300 checks to families and government employment, and bubbles in health care, banking, and real estate.

The BLS, it turns out though, is faking to support the Republican story  too.  Some of it is obvious. The top chart is their new number and right under it is a table of previous reports. You can see that the Obama employment totals have been consistently revised upwards after their initial reporting.  But this doesn't seem to have happened under Bush....That means that news reports about employment are always not as positive as the final results apparently are.

Then you look into the methodology and realize that BLS  has rather unprofessional data practices.

Thus we see that they send out employment surveys, which are indifferently processed by companies, but even though they recognize the data is garbage, the assume the month to month fluctuations in the garbage have some "real" validity.  Someone evidently pointed out to them that states collect unemployment insurance data that is comparatively comprehensive and well-policed and better than a survey which is only returned occasionally and which can't follow the turnover in companies declining and starting that states are able to track.  Therefore they take "primarily" state unemployment data and use it to "recenter" their survey results once a year (for unseasonally adjusted numbers) but a full five years for seasonally adjusted numbers.   This makes no sense. If the states have better data, then junk the surveys and get monthly reports from the states!

 Anyone who has taken a statistics class knows that you can't "recenter" bad data and treat it as though it gives an accurate time series.  Bad data is bad data.  Moreover, restating five years instead of leaving the individual benchmarks compounds the error trends in their survey data.

In short, the Republicans are using these numbers because they control them and have distorted them at the source.  Even if you ignore their apparent sabotage, their record on jobs has been poor and their "story" on this issue has no substance.

Until late in George W. Bush's term, few people looked at the employment numbers.

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