Aug 22 2010
Bombshell Update Below!
Powerline has a post out today discussing evidence the stimulus bill did not lessen unemployment, as the Obama administration and Democrat Congressional Leaders claim:
Those who tout the bill point to a study by liberal economists Alan Blinder and Mark Zandi purporting to show that the fiscal stimulus enacted under Presidents Bush and Obama lowered the unemployment rate by approximately 1.5 percentage points. However, asÂ Lawrence Lindsey points out in the Weekly Standard, this study assumed that the recent stimulus has been roughly as effective, dollar for dollar, as past programs. It then multiplied past measures of job creation by the number of dollars spent this time around.
This simplistic methodology assumes, rather than measures, the efficacy of the most recent incarnation of stimulus. It thus begs the question it purports to answer.
Let me provide the coup de grace on this matter.
If the Â stimulus bill saved or created jobs it would have kept the unemployment low WHILE keeping the workforce in place. If the recession was so bad that the workforce shrunk due to workers giving up (instead of workers finding jobs), then there is no wayÂ the stimulus bill lowered unemployment. It would mean all the lessening of the unemployment figure was due to dejected workers, not saved jobs.
The proof of this is provided by the federal government labor statistics. Here is a graph (click to enlarge) of the work force levels for July throughout the last decade. As can be seen, the number of people working each year steadily and slowly grows year-to-year as the general population grows – until 2008. In 2008 the workforce started to shrink and accelerated its losses during the period of so called ‘save and created’ jobs.
It is clear as day the recession hit so hard it literally chased workers out of the workforce (not just out of their jobs).Â Even the unemployment benefits in the stimulus package did not stop the damage, since people on unemployment are considered ‘in the workforce’. The red line illustrates a simple linear extrapolation of the last decade’s July growth in the economy. It shows that under normal conditions the workforce should be around 156 million, instead of the 153.5 million being reported by the federal government.
So what does that missing 2.5 million workers mean to the computation of unemployment for July 2010? If you recompute the July 2010 work force level (138.9 million) as a percentage of 156 million workers, you find only 89.1% of the workforce is employed. That means July’s unemployment rate is really 10.9%!
That is 1.4% higher than July’s 9.5% unemployment computed using the deflated workforce. Which is also magically close to the 1.5% the liberals’ claim the stimulus bill lowered unemployment.
If the stimulus bill had ANY effect it would have kept people in the workforce, either by ‘saving or creating’ jobs or extending unemployment so people remained counted in the ‘workforce’ while on unemployment benefits. This data proves the lie (or misinformation) being peddled by backers of a failed , liberal economic policy.
Bombshell Update: It is amazing when a State government produces a report which completely supports one of my posts. Today the state of Nevada recomputed its 14.3% unemployment rate reported by the Feds using the same basic facts as I did above:
The actual unemployment rate in Nevada through the second quarter of 2010 is 21.5 percent, according to data compiled by the U.S. Bureau of Labor Statistics.
The agency said the difference in the two numbers is due to the fact that the monthly jobless report underestimates the number of unemployed. The monthly report only estimates unemployed workers who are actively seeking employment. It does not include workers who are too discouraged to seek employment and have given up searching, or workers employed part time for economic reasons.
H/T Battle ’10 at NRO. The fact a state employment agency is making the same kind of honest mathematical adjustments to report an accurate picture of unemployment is heartening. Maybe it means government’s will stop spewing political spin and get back to accurate, unbiased and transparent reporting. And the irony of this being Nevada, home of the Senate Majority leader once again proves God has a wicked sense of humor.