The economy is so rosy, the statistics tell us, we are at what economists call full employment. “Full employment is a situation in which everyone who is willing and able to work can find a job. At full employment, the measured unemployment rate is still positive.” Economists have argued for years that the full employment number was somewhere “near 5 percent unemployment.”
President John F. Kennedy tried to commit the federal government to a target rate of 4 percent unemployment but it was rejected as being too unrealistic and overly ambitious.
To prevent another Great Depression, an unemployment insurance system was put in place after 1933 as a temporary cushion. Through this insurance which gives money to those who become unemployed, unemployment insurance props up aggregate demand during recessions.
Unfortunately, unemployment insurance replaces about one half of the lost income of the unemployed persons who are insured. Economists agree that “fewer than half of the unemployed actually collect benefits” and the lost output that could have been produced had these people been working cannot be replaced.
The system of payroll taxes and unemployment benefits helps spread the cost of unemployment over the entire population, or so it was thought. But it does not eliminate the basic economic cost nor does it prevent the shrinking working population from shouldering an unfair burden of support resulting from bad economic policies that have failed to create jobs and increase aggregate demand.
When Gross Domestic Product (GDP) is below its potential, and it is under this regime, unemployment is above “full employment.” This begs the question then, is the reported unemployment of 5.5 percent accurate? The answer is no because discouraged workers are no longer counted as if they had disappeared, and many unemployed have shifted from the ranks of the unemployed to the ranks of the disabled and of those on welfare.
A discouraged worker is an unemployed person who has given up looking for work and is therefore no longer counted as part of the labor force. Currently, it is hard to pin down the number of abled-bodied individuals that comprise the American labor force given the fact that we have so many illegal aliens in this country that are gainfully employed but work under the radar of statistics. We do know that we have the lowest labor force participation (62.7%) since the late 70s.
The World Bank lists the 2013 U.S. labor force as 158,959,242 persons. “Total labor force comprises people ages 15 and older who meet the International Labor Organization definition of the economically active population. … The labor force includes the armed forces, the unemployed, and first-time job-seekers, but excludes homemakers and other unpaid caregivers and workers in the informal sector.” http://data.worldbank.org/indicator/SL.TLF.TOTL.IN
In 2013, Brad Plumer told us that the shrinking labor force is caused by: “1) The Ageing of America; 2) The bad economy is keeping workers in school and out of the labor force; 3) More workers are going on disability insurance.” http://www.washingtonpost.com/blogs/wonkblog/wp/2013/11/08/the-u-s-labor-force-is-still-shrinking-rapidly-heres-why/
The victims of high unemployment or forced partial employment due to Obamacare are paying a high financial and psychological price, costs that are borne quite unevenly by different groups of the population.
Instead of addressing the sluggish economy, the lack of job creation, the job-killing Obamacare, the job-killing EPA draconian regulations, the regime is offering grants to the unemployed, the disabled, and discouraged, and the generational welfare recipients.
On April 6, 2015, under the heading,” U.S. Government wants to help you,” Resource Depot sent out an email that said, “Did you hear the news? The U.S. economy isn’t getting better anytime soon. Thankfully, benefits may be available if you qualify for them.” (See if you qualify) “You may be eligible for a government grant. Many Americans never requested their piece of the $787 billion Recovery Stimulus. If you believe you may be entitled to some of these fund(s), please review your options.” (Click here to review your options)
If you are unemployed, discouraged, partially employed, or on welfare, do not worry, there are now grants to assure that you get your undeserved, unearned piece of the pie bought and paid for by someone else who does not mind supporting you financially – it’s the socialist way of spreading the wealth, take from the productive and give generously to the unproductive.
While we keep printing, spending, and giving away billions of dollars like there is no tomorrow, can anybody mathematically comprehend what $18 trillion of national debt means? Does anyone even care anymore?
Copyright: Ileana Johnson 2015