Wednesday, July 23, 2014

What Is Good For The President Goose Is Also Good For The Governor Gander

'You Got A Job! Good For You!
Rob Christensen, political observer and commentator for the Raleigh News and Observer, wrote a column on Sunday, July 20 downplaying the efforts of Governor Pat McCrory and the North Carolina General Assembly to reduce unemployment in the state.

We have written about this before because it is one of our extreme pet-peeves: 'Gilding the lily' when it comes to describing what one political person has done versus another depending solely on whether the writer agrees with the politician philosophically or not.

Or flat-out 'lying' so the already confused American voter can be further confused by being told so many times by so many politicians: 'Vote for me and I will set you free!'

Especially in the confusing world of unemployment statistics.

Question: 'What is the most important thing about any debate on 'unemployment'?'

Answer: 'How we can enact policies that will allow the private sector to employ the highest number of people without igniting inflation'

The key thing to keep in mind is the difference between the 'official unemployment rate' and the number of people who are working at any snapshot in time.

The official unemployment rate put out by the Bureau of Labor Statistics measures the number of able-bodied people who are not working relative to the number of able-bodied people who are actively looking for work.

It does NOT count the number of people who have stopped looking for work.  And it is all based on a monthly statistical survey so there is some variance up-or-down from the stated monthly rate.

The 'labor participation rate' DOES count the number of people who are actively looking for work.

We think a better way would be to buy a super-duper Jumbotron scoreboard the size of any scoreboard in any NFL stadium and put it over the Commerce Department with the following tally every day:

'How many people are working today?'

We need to focus on the number of people who are actually employed, not on the number unemployed. That number can more easily be manipulated than an absolute number declaring how many people are actually working.

Today the scoreboard would read: 146,221,000 PEOPLE ARE WORKING TODAY!

Tomorrow, hopefully it would read: 146,222,000 and so on.

At least it would be more easily understood by an American public which understands who wins and who loses by looking at a scoreboard.

Below is a re-write of Mr. Christensen's column with our edits in red to show where he could have just as easily applied the same line of reasoning and facts to President Obama when the White House touts the reduction in the unemployment rate lately.

You hardly ever see such a distinction in the major newspaper and media outlets, yes? The main reason is that journalists and people in the media tend to be supportive of President Obama and they tend not to be enamored of Republican Governors and policies country-wide. It is almost 100% predictable each time the new unemployment numbers come out each month.

(To his credit, Mr. Christensen did write back to me soon after I sent him an email Sunday pointing out this discrepancy and said I had a 'valid point'. The only problem with that is that only one person saw those words, 'You have a valid point' whereas thousands of others just bought what Mr. Christensen had to say hook, line and sinker)
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Rob Christensen's column of July 20, 2014

'Before we get too far down the road of the McCrory presidential boomlet, we should perhaps take a closer look at the claims.

Varney noted that North Carolina’s unemployment rate, which was 8.8 percent when McCrory took office in January 2013, had dropped to 6.4 percent in May. The rate remained the same when June data was released on Friday.

McCrory touts the sweeping reforms in North Carolina’s unemployment laws that went into effect last July as a major reason why the state’s unemployment rate is declining.

President Obama touts his economic policies as the major reason why North Carolina’s unemployment rate is declining.

The cuts lowered the maximum benefit checks from $535 a week to $350 a week, while the maximum length of benefits was cut from 26 weeks to a sliding scale that is now 14 weeks – the lowest in the nation.

To put that in historical perspective, Gov. Kerr Scott signed a bill lengthening unemployment insurance from 20 weeks to 26 weeks in 1951. So we are essentially back to an era when men wore caps and denim bibs to work as far as the laws trying to provide some cushion for the average working person who loses a job through no fault of his or her own.

Labor force declining

The number of North Carolina workers who receive unemployment benefits has dropped from 90,858 in May 2013 to 42,382 this May. Now this means one of two things: Either there are thousands of people suffering, or there are thousands of people who have found employment.

McCrory thinks it’s the latter. So does President Obama.

“People are taking jobs that are being offered, whereas in the past, employers were telling us people were not taking, especially, entry-level jobs because they were waiting for the unemployment to be extended,” McCrory told Varney.

I asked Patrick Conway, the Princeton-educated economist who is chairman of the economics department at UNC-Chapel Hill, about what the numbers show.

Conway said the evidence suggests that the sharp drop in the unemployment rate is being driven, in part, by people no longer looking for work, and therefore no longer counted as among the unemployed. Only those who apply for unemployment insurance are counted in the unemployment rate, Conway said.

The labor participation rate has dropped steadily every year since President Obama took office in January 2009 from 66% to 62.8% today. Part of it can be explained by demographics and Baby Boomer retirements. Most of it can not be explained away by demographics. (see http://blogs.wsj.com/economics/2014/07/17/white-house-economists-see-few-labor-force-dropouts-returning/)

North Carolina’s unemployment rate has dropped since the law was changed, but there has been no sharp increase in people in the labor force. In fact, Conway produced a graphic, showing a rapid decline in the size of the North Carolina labor force relative to the U.S. labor force.

“The (North Carolina) labor force has been falling throughout that period,” he said. “The only explanation that makes sense is that people who were unemployed stopped looking for work. When that happens, what we call the unemployment rate is picking up that fact and registering that as a fall in unemployment.”

No better than neighbors

North Carolina was particularly hard hit by the recession, as were other Southeastern states. During that time, North Carolina saw its unemployment rate rise from 4.6 percent in February 1996 to 11.1 percent in April 2010.

It had declined from 11.1 percent to 8.8 percent by the time McCrory took office as governor in January 2013. By the time the changes in the unemployment insurance laws had taken effect in July 2013, the unemployment rate had fallen to 8.1 percent.

Even if the drop in the unemployment rate was real – that is people who were formerly unemployed are now holding down jobs – North Carolina’s experience is hardly extraordinary. It fits into what has been going on in the region.

I looked at what was happening during the same period in three states, in part because the U.S. Bureau of Labor Statistics has an interactive chart comparing North Carolina, South Carolina and Georgia over time.

If the unemployment law changes were spurring people to go back to work, you would expect a major difference between North Carolina and its neighbors. But that wasn’t so.

If the policies of President Obama were spurring people to go back to work, you would expect to see a major increase in the number of people actively looking for work.

As North Carolina’s unemployment rate dropped from last July’s 8.1 percent to June’s 6.4 percent, South Carolina’s rate dropped from 7.7 percent to 5.3 percent. Georgia’s declined from 8.3 percent to 7.4 percent.

So North Carolina’s unemployment picture has been pretty much performing like that of its neighbors, rising and falling as the recession came and went.

So before we move from Mayor Pat to Governor Pat to President Pat, we need to make sure the unemployment improvements are both real and something special – and not just another case of the crowing rooster claiming he made the sun rise.

So before we move to the coronation of President Obama as the ‘Jobs President’, we need to make sure the unemployment improvements are both real and something special – and not just another case of the crowing rooster in the White House claiming he made the sun rise.

Christensen: 919-829-4532 or rchristensen@ newsobserver.com

Read more here: http://www.newsobserver.com/2014/07/19/4014727/christensen-will-unemployment.html?sp=/99/102/105/#storylink=cpy


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