Journalists and politicians are still touting new unemployment claims as evidence that our economy is still strong despite the declining stock market, evidence signaled by the bond market, and that the rest of the world is clearly going into recession. We are not going into recession because our economy has “decoupled” from the world economy and workers are, presumably, not being laid off in droves. Today’s political candidates are hoping that theory holds up through the elections.
Unemployment is a “lagging indicator” moreover, meaning that the numbers are affected after the fact rather than beforehand, and economists know that. So to be using the unemployment numbers as a predictor of the economy is ignorance, stupidity or outright dishonesty.
In any case, our economy in terms of the working class is not strong and never even came close to any kind of “strong recovery” from the 2008 recession.
Ian Welsh, who is Canadian and is therefor guilty of a certain degree of honesty seldom found in this nation, presents a graphic depiction of the working class “recovery” in this country. It is striking and has great impact because he presents only the facts that are needed to paint a complete picture, using three graphs.
First he shows the graph of the official percentage of the workforce unemployed as calculated by the government’s Bureau of Lies and Scams, whereby if you are disgusted with the job market and are no longer looking for a job you are not unemployed, even though you do not have a job and are living with your parents and eating their food. Most journalists and politicians pull this graph out and wave it around, pointing to how the line plunges from a high of 10% down to its current 5% and claiming that it proves how wonderfully the economy has improved.
This graph is rather dramatically countered with another graph showing the percentage of the work force which is currently employed. Politicians and journalists never show or refer to this one because it drops from a high of 65% prior to 2008 down to below 59% in 2009, and it never significantly goes back up. There are fewer ways to cook these numbers, because whether you are looking for work or not, you are not participating in the work force if you do not have a job.
Notice, too, how the line did not start to drop noticeably until some time after the recession started, further evidence that unemployment cannot be used as a predictor of economic conditions.
One commentor promptly claimed that the reduced participation in the workforce was caused by illegal immigration which is, of course, utter nonsense. The work force is counted using Social Security numbers, and illegal immigrants don’t have Social Security numbers. The growth in the work force is caused by eighteen-year-olds, who are not in the work force, turning nineteen and becoming part of the work force.
His last graph provides the change in income for various wage groups between 2006 and 2014, which completes the picture that leads to the title of this piece.