Have you noticed that President Obama is now touting the nation’s declining unemployment rate? For him doing so is good politics, but only because the American public is naïve enough to believe politically-motivated distortions and half-truths. When liberal politicians brag about unemployment statistics, thinking people should remember what Mark Twain said about statistics: “There are lies, damn lies, and statistics.” Statistics are easily manipulated—a fact that certainly applies to the unemployment rate; hence its current popularity with liberal politicians.
The American public tends to think that a declining unemployment rate means that more people are finding jobs. This is not necessarily the case. It can also mean and does currently mean that: 1) unemployed people have become so frustrated with their fruitless job search that they have given up and are no longer counted in the statistics reported by the Bureau of Labor Statistics; and 2) people have found jobs but these jobs are part-time or a step-down from the jobs they lost. In other words, they are under-employed. The Labor Department is aware of these two possibilities and even collects data on them. These data are used to produce what the Bureau of Labor Statistics calls the U6 unemployment rate. While President Obama proudly extols the nation’s 6.7 percent unemployment rate, he studiously avoids revealing that the U6 unemployment rate is more than 14 percent (I think it actually exceeds 20 percent).
The U6 unemployment rate provides a more accurate picture of the true unemployment situation—which is why liberal politicians avoid using it—but even it provides an incomplete picture. To get a complete and accurate picture of the unemployment situation, it is necessary to also consider the labor participation rate. The labor participation rate indicates the percentage of people of working age who are actually working. Unfortunately, that percentage has declined steadily since 2000 and experienced its biggest drop during the six years of the Obama administration. A declining labor participation rate is bad news for America because it means there are fewer people paying the taxes that finance an ever-growing government bureaucracy. The obvious and inevitable result of this imbalance is higher taxes for those who are working.
The current labor participation rate is at an all-time low of just 63.2 percent. In other words, of all the people in America who are of working age, only 63.2 percent are actually working. This being the case, the functional question becomes: Why is the labor participation rate so low? Liberals try to cover over the sad truth by offering up such pearls as the replacement of people in the workforce by technology. Although this accounts for a small percentage of the problem, the fact is that in spite of technological advances thousands of jobs go unfilled everyday—particularly in the technology sector—because unemployed people either lack the necessary skills or simply do not want to work.
The real reasons the labor participation rate has fallen so precipitously are these: 1) The so-called safety net provided by the government in the form of extended unemployment benefits has become not a safety net but a magic carpet that the less motivated among the unemployed have learned to ride instead of going back to work; 2) Government entitlement programs have made it convenient and easy to get by without working; 3) There is no longer any shame in being on welfare (EBT cards have taken away the inconvenience and embarrassment of handing food stamps to a cashier); 4) People are choosing to drop out of the labor pool due to discouragement; and 5) People have learned how easy it is to defraud the government and collect disability pay.
The long and short of the decline in labor force participation is this: Why work when the government will take care of you? Why indeed? This entitlement mentality has taken hold of the American psyche and created an attitude toward work that will only continue the decline in labor force participation. But this decline represents a one-way street that will eventually lead to an economic disaster. The time will come and is coming when we will have more people riding in the wagon of America’s economy than pulling it. When that happens, those who have made a career out of living off the government will be the first to drive over the cliff, and the government will not be there to hand out parachutes because it will be too broke to afford them.