Business

'Smoke and Mirrors' Hide a Smaller Work Force in Jobs Report

By: Kenric Ward | Posted: January 7, 2012 3:55 AM
Barack Obama Unemployment

Credit: Jason DeFillippo - Flickr | wavebreakmedia ltd - Shutterstock

The White House boasted on Friday that December's improved jobless report pointed to an economy on the rebound, but skeptics called it "smoke and mirrors."

“While any decrease in overall unemployment should be watched with cautious optimism, today’s jobs numbers offer troubling signs for job creators and hard-working families alike," said Rep. Steve Southerland, R-Tallahassee.

"The Obama administration continues to use smoke and mirrors to insist that his ‘stimulus’ agenda is creating long-term jobs, but any small-business owner will recognize that many of these recent hires are temporary workers for the Christmas holidays," Southerland charged.

Of the 200,000 jobs created in December, 42,000 came from the seasonal "couriers and messengers" category. Work force observers say those positions are usually extinct by the end of January.

Though the official unemployment rate declined from 8.7 percent to 8.5 percent, the December report contained several warning signs:
  • The unemployment rate for blacks increased to 15.8 percent.
  • There are nearly 2 million fewer private-sector jobs today than when Obama entered office.
  • Millions of "discouraged" workers remain off the books, uncounted by the labor statistics and artificially lowering the jobless rate.

Employment analysts estimate that if the private sector was as large today as when Obama was inaugurated, the December jobless rate would be 10.9 percent. And if the legions of people who have given up looking for work were factored into the equation, the current jobless rate would be 15.2 percent.

Nevertheless, Alan Krueger, chairman of the president's Council of Economic Advisers, said Friday's employment report "provides further evidence that the economy is continuing to heal from the worst economic downturn since the Great Depression."

Media reports amplified that upbeat message. Although no U.S. president since Franklin Delano Roosevelt has been re-elected when unemployment exceeded 7.2 percent, pundits suggested that the "trend line" is what counts heading into the fall elections.

With the lowest unemployment rate since Obama's first full month in office -- and down 0.9 points in the past year -- the administration is hoping for continued improvement.

“The good news is that the number of business owners cutting jobs has ‘normalized,'" said William Dunkelberg, chief economist for the National Federation of Independent Business.

"In the past several months, reports of those cutting workers have been at the lowest levels since the recession started in December 2007. Initial claims for unemployment are now running closer to 375,000 -- a great improvement in recent months," Dunkelberg said.

"Given this trend, reports of new job creation should see a slight uptick in the coming months."

Republicans on Capitol Hill maintain that the Obama administration's stimulus and spending policies that have jacked up the federal deficit and added more than $5 trillion to the national debt are retarding economic growth.

"To reduce unemployment below 8 percent for the first time in 35 months, it’s going to take a common-sense agenda that creates permanent jobs. This process can begin with a New Year’s resolution by the president and Senate Democrats to approve the 28 House-passed jobs bills that have piled up on [Senate Majority Leader] Harry Reid’s desk," Southerland said.

In a letter to Obama about another impending increase in the nation's debt ceiling, Sen. Marco Rubio, R-Fla., warned that the administration's policies were turning the United States into a "deadbeat nation."

Rubio reiterated his call for an economic plan featuring "both pro-growth elements and spending restraints, including fundamental tax reform, regulatory reform, meaningful cuts to discretionary spending, a balanced-budget amendment, and reforms to save Social Security and Medicare."

"If we had done this in mid-2011 when we last debated the debt ceiling, we could have set America on a path to economic growth and prosperity. This would have led to more jobs and, in turn, to more duly employed taxpayers generating more growth-driven revenue to help us pay down our debt," Rubio stated in his Friday letter.

Craig Miller, a U.S. Senate candidate seeking to unseat Sen. Bill Nelson, D-Fla., blasted the administration for seeking to further pad the federal payroll with across-the-board raises at the expense of the military.

"As the only candidate in this race that knows firsthand how to create private-sector jobs, I know we cannot grow ourselves into prosperity by expanding government. We need a strong private sector and the economy needs more private-sector job growth, not more government expansion," the former CEO of Ruth's Chris Steakhouse said in a statement.

Young voters -- who were instrumental in Obama's 2008 election -- are increasingly restive about their chronically high unemployment and underemployment rates, said Paul Conway, president of Generation Opportunity.

“Young Americans can no longer wait and trust that change will come. With so many individuals needing to settle for less-than-satisfying employment opportunities and delaying major life decisions, today’s unemployment numbers offer little hope," said Conway, former chief of staff at the U.S. Department of Labor.

"They are now being told that there is a new picture of success that should be sufficient to them -- one marked by short-term fixes, internships, mentorships, and multiple part-time jobs."

A poll commissioned by Generation Opportunity, a nonprofit advocacy group for young adults, found that only 31 percent of 18- to 29-year-olds approve of Obama’s handling of youth unemployment.

By contrast, a new survey by the National Federation of Independent Business's Florida chapter showed 69 percent of its members approving of the job Gov. Rick Scott is doing.

Scott, who has pledged to create 700,000 jobs in seven years, pared government jobs while lowering taxes and reducing regulation on the private sector during his first year in office. Florida's unemployment rate dropped to 10 percent in November, the latest month for which figures were available and the lowest rate in 31 months.

Some analysts say state and national employment rates are depressed by an upside-down housing market.

Jeff Thredgold, former chief economist with the banking concern KeyCorp., one of the country's largest bank-based financial services companies, wrote recently:

“One of the common developments in ‘the olden days’ of five years ago and earlier was the concept that American workers typically had the ability to be mobile … to move from one geographic area to another to fill an open employment position.

“The movement of Americans is at its lowest level since World War II. Weak housing markets of the past four to five years now find millions of people buried in their homes, with no chance of selling at a profit.

“This has profound implications for the American economy, with perhaps the greatest impact on manufacturing firms," Thredgold said, citing a recent survey by Deloitte & Touche and The Manufacturing Institute that found U.S. manufacturers could not fill 600,000 skilled positions, or 5 percent of all current manufacturing jobs.

Whether an underwater housing market is contributing to historically high unemployment rates or vice versa, Krueger cautioned that "monthly unemployment numbers are volatile and employment estimates can be subject to substantial revision.

"Therefore, as the administration always stresses, it is important not to read too much into any one monthly report," he said.

 

Contact Kenric Ward at kward@sunshinestatenews.com or at (772) 801-5341.


Comments (1)

David Lane
10:32AM JAN 7TH 2012
Now where we are jobs galore are being created. If you read the December Forbes Magazine, you will see that Winter Haven FL is on the rebound for jobs creation for the whole United States!! Yes, little Winter Haven (pop 35,000) leads the nation! Legoland alone was projected to creat 1,000 jobs. It now has already created 1200 jobs. Businesses in such fields as technology are expanding, and besides that WH is gaining many brand new businesses moving into town. We're feeling the pulse of jobs creation here. Funny thing our fancy jobs creator, Rick Scott, can't take credet for the new jobs being created. He's not a jobs creator he is keeping Florida from advancing. Time to be thinking about a new approach. Lets see what happens along these line in Tally this session. Don't hold your breath for overall improvement in Florida this legislature will be out for blood again. Just my thoughts, what do you think?

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