When ‘good’ news is bad news

The Washington Times Weekly - - Editorials -

The un­em­ploy­ment rate is down, and that’s bad news. Last week’s re­port from the Bureau of La­bor Sta­tis­tics showed the un­em­ploy­ment rate drop­ping to 6.7 per­cent in De­cem­ber, down from 7 per­cent in Novem­ber, with only 74,000 new jobs cre­ated by the econ­omy in the month.

The un­em­ploy­ment rate — “un­em­ployed” de­fined as a per­son who does not have a job, but is ac­tively look­ing for one — fell be­cause thou­sands of the un­em­ployed sim­ply stopped look­ing. This brings the num­ber down, but it’s ev­i­dence only that the econ­omy is still sick.

The la­bor-par­tic­i­pa­tion rate dropped from a his­tor­i­cally low level of 63 per­cent to 62.8 per­cent as the civil­ian la­bor force shrank by 347,000 — the 347,000 wouldbe work­ers who sim­ply gave up look­ing in De­cem­ber. Be­tween Jan­uary and De­cem­ber, 762,000 Amer­i­cans aban­doned hope of find­ing work.

The pic­ture gets even more de­press­ing with the broader def­i­ni­tion of un­em­ploy­ment. The broad­est mea­sure of un­em­ploy­ment stands at 13 per­cent, up from 12.7 per­cent in Novem­ber. This def­i­ni­tion in­cludes not only the un­em­ployed look­ing for jobs, but dis­cour­aged work­ers, those marginally at­tached to the work­force, as well those who are work­ing part time be­cause that’s the only work they can find. This broad mea­sure is an ac­cu­rate yard­stick be­cause it not only cap­tures those who are seek­ing work, but every­body else who wants a job. In a healthy econ­omy, the gaps be­tween the var­i­ous mea­sures of un­em­ploy­ment should be far smaller. If Amer­i­cans were op­ti­mistic about find­ing work, there wouldn’t be so many dis­cour­aged work­ers. The num­ber wouldn’t be go­ing up while the of­fi­cial un­em­ploy­ment rate is go­ing down.

The con­tin­ued fail­ure to deal with the dev­as­ta­tion of the long-term un­em­ployed con­trib­utes to the sad-sack econ­omy. The me­dian length of un­em­ploy­ment has ac­tu­ally in­creased slightly to 17.1 weeks, even as the av­er­age length of time a job seeker stays un­em­ployed has held steady at 37.1 weeks. The num­ber of long-term un­em­ployed has de­clined slightly, to just un­der 4 mil­lion, sug­gest­ing that more of th­ese folk are drop­ping out. Congress will now push for ex­pand­ing un­em­ploy­ment­com­pen­sa­tion ben­e­fits, but this is clearly a short-term fix, a spit-and-bail­ing wire fix that won’t stay fixed. The real prob­lem is the lack of jobs. What the un­em­ployed need is a hand, not a hand­out, and the econ­omy can’t de­liver that in a jun­gle of reg­u­la­tory un­cer­tainty.

It’s a toxic mix of rule by ex­cep­tions and waivers that pre­vents the sus­tained re­cov­ery and job growth that has pulled the coun­try out of ev­ery re­ces­sion since World War II.

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