Obama's Employment "Hunger Game" Continues

The sickening crunch heard at 8:30 AM EST on Friday was the sound of the American Job Creation Express crashing into the brick wall of Obama's anti-investment economic policies. The Bureau of Labor Statistics (BLS) reported that total employment (Household Survey) actually fell by 31,000 during March 2012.

The reported decline in the unemployment rate (from 8.3% in February to 8.2% in March) was an illusion. It was an artifact of falling labor force participation, which has been the big, ongoing story of Obama's so-called economic recovery. Adjusted to the labor force participation rate of December 2008 (65.8%), the unemployment rate for March was actually 11.0%, up by 0.1 percentage point from February.

Since Obama took office, labor force participation has declined by a full 2.0 percentage points. This equates to 4.9 million Americans giving up hope regarding finding a job. In the 64 years that the BLS has been tracking labor force participation, nothing like this had ever happened before.

In a sense, the disastrous March employment report was inevitable. It takes economic growth to produce jobs, and the economy has not been growing nearly fast enough to validate the employment gain reported for February 2012.

Total employment was reported as having gone up by 428,000 in February, which represents a 3.63% annualized rate of increase. It would require a real GDP growth rate of 5.0% to 5.5% to support jobs growth at this pace. The March employment number brought the two-month annualized jobs growth rate down to 1.68%. This implies a real GDP growth rate of 3.0% to 3.5%, which may still be unrealistically high.

The March employment report drove another nail into the coffin of Obama's "stimulus" policy. Obama's plan predicted that if we spent $762 billion on fiscal stimulus, the unemployment rate at the end of 1Q2012 would be 6.1%. As noted earlier, if calculated at the labor force participation assumed by the stimulus plan, actual March 2012 unemployment came in at 11.0%. This put the gap between Obama's promises and actual results at 4.9 percentage points, which is the highest for any calendar quarter since the stimulus program was enacted.

March's employment report left America 14.9 million jobs away from full employment (defined as an employment-to-population ratio of 64.7%, which was achieved in April 2000, at the height of the Clinton boom). The full-employment gap widened by 141,000 during March alone.

By way of historical perspective, America's journey to being 14.9 million jobs away from full employment progressed as follows: the last 9 months of Clinton's second term, 0.7 million; Bush 43's first term, 4.5 million; Bush 43's second term, 3.7 million, the first 39 months of Obama's presidency, 6.0 million. During this year's presidential campaign, the Republicans should remember that, while Obama's economic policies have been disastrous, Bush 43's weren't much better.

But wait-there's more! Since Obama was inaugurated, real (CPI-adjusted) average weekly earnings for all private employees have declined by 8.0%. Half of this decline occurred during Obama's so-called "economic recovery", which supposedly began in July 2009.

In terms of economic policies, Reaganomics and Obamunism are the exact opposite of each other. Reagan's policies included a strong dollar, lower marginal tax rates, and reduced regulation. Obama's have been the opposite in every category. And, as one might expect, they have produced opposite results.

The employment peak before the latest recession occurred in November 2007. Total employment for March 2012 was 4.4 million, or 3.0%, lower than it had been 52 months earlier. In contrast, 52 months after April 1981, which was the employment peak before Ronald Reagan's recession, total employment was up by 6.0%.

If we want higher economic growth, wages, and total employment, we must have more capital investment. Obama's economic program features a weak, unstable dollar, higher marginal tax rates, and regulatory strangulation of the economy via Obamacare and energy production suppression. All of these policies have the effect of reducing capital investment.

If you want to see the "bottom line" of Obama's economic policies in one number, look at the March 2012 total employment figure: job creation at less than zero.