James Pethokoukis

Politics and policy from inside Washington

The New Underclass and Barack Obama

March 4, 2011

Drilling a bit deeper and moving beyond the 8.9 percent unemployment rate and 192,000 jobs created, here is what I found:

  1. The U.S. labor force remains as small as it has been in a generation
  2. More than 5 million Americans have disappeared from the job rolls
  3. If the labor force was currently at 2007 levels, the unemployment rate would be a whopping 12 percent – the worst since the Great Depression.

As it is, the broader unemployment rate, which includes those who are underemployed and discouraged workers, is still an agonizing 15.9 percent. What’s more, the Federal Reserve believes that the high number of people out of work for 27 weeks or longer is creating structural unemployment. (The longer you are out of work, the harder it is to get that next job.) No wonder the Fed now believes the economy’s natural rate of unemployment has increased from a bit under 5 percent to a bit more than 7 percent.

In short, you may have a much larger pool of the long-term unemployed than is historically typical in America, something more akin of what is seen in Old Europe.

This is why it is critical to deal comprehensively with the Axis of Economic Evil: Big deficits, high taxes and onerous regulation. America must get more competitive and productive. I find the below chart from McKinsey particularly scary since it shows how much job growth is happening in unproductive areas of the US economy.

product

Comments

The civilian labor force participation rate seems to be in a secular decline starting around the year 2000. Has anyone attempted to determine how much of the decline is due to an ageing population?

Posted by strega | Report as abusive
 

“Axis of Economic Evil: Big deficits, high taxes and onerous regulation.”

Good phrase, JP.
But do you agree that “dealing comprehensively” with the A-E-E must include a tectonic-like shift in the role of government itself? I assert that any reforms outside the scope of accomplishing a redefinition of government itself will be fleeting at best and harmful at worst.

I believe there is enough experience on the books in my lifetime to come to the conclusion that until the concept of the Nanny State is not just debunked but thoroughly defeated with the resolve and urgency as any corrupt monarch or dictator in history has been the citizenry of so-called free societies shall all continue to be unnaturally and unnecessarily vulnerable.

@DanFarfan
- “The Next 10 Amendments”

Posted by DanFarfan | Report as abusive
 

When a Prez acts more like Henry A. Wallace or Eugene Debs or worse: Chavez of Venezuela, then one knows that his policies resemble nothing like any Dem Prez ; not even FDR. Scoop Jackson JFK, Truman, other Dems would roll over in their graves to see his socialist views on both domestic and foreign policy. No job creation on the private sector level but boy howdy, many bureaucratic public sector jobs. No energy policy except to block our own domestic energy resoures. No border policies that do not kow tow to …illegals. No reduiction of debt or deficits and the Bama-Reid Budget is just a joke and horror. The under-class? That would be all, ALL Americans under this alien Executive who has no ties to American heritage, culture, history or its values.

Posted by phillyfanatic | Report as abusive
 

It’s interesting to note that during an 8-year period (2000-08) when for all but one year we had a Republican administration, manufacturing lost jobs at a tremendous rate while low level health care jobs and government jobs increased at an even faster rate than manufacturing jobs were lost. In other words, during the last Republican administration this country lost manufacturing jobs and increased government and low level service jobs which do not have a similar “multiplier” effect on overall wealth as manufacturing jobs. It’s hard to believe that Obama could do any worse.

Posted by taikan | Report as abusive
 

Obama/Reid/Pelosi and the Dems have no interest in making the tough choices needed to bring the deficit down. They have little understanding of how an economy works and seemingly no desire to learn. Wonder where all Obama’s effusive praise went for Spain’s “Green Economy”? Funny now that they are bankrupt and the alternative energy fiasco didn’t create any new jobs-it cost them jobs- we never hear of the model Spanish economy he loved so much. They always speak of “fairness” as the reason they do what they do. Is it “fair” to have persistantly high deficits and unemployment while wasting trillions? Obama and the Dems seem to think so. As long as they can use it to demonize their opponents,buy off their constituents and cling to power.

Posted by jadams76 | Report as abusive
 

Welcome to Obama Land, the land of “Do what we tell you to say and do, and work or not work, where we tell you to work, and shut up.”
In other words, this is the most arrogant, corrupt, obnoxious, nazi thug govt., with their partners in crime and Treason, the far left Liberal Propagandist Media, and the Public Unions, since Woodrow Wilson.!!!

A Socialist Marxist Authoritarian Totalitarian Obama Regime, plain and simple.!!!

But the question is, will the American People, ALL of the People, want to continue to live in such an Anti-American, Anti-US Constitutional Socialist Marxist Authoritarian Totalitarian world..

Only 2012 will see, as America makes a choice, forever, either Liberty, Freedom, and the US Constitution as the Law of the Land, or Obama, and his Thug Nazi Gestapo, Anti-American, Anti-US Constitutional Socialist Marxist Authoritarian Totalitarian Regime.!!

Posted by Sonny19 | Report as abusive
 

“This is why it is critical to deal comprehensively with the Axis of Economic Evil: Big deficits, high taxes and onerous regulation.”

How are you going to bring down unemployment without addressing our trade and immigration policies?

Posted by Dave_Pinsen | Report as abusive
 

Very odd conclusion: If you actually read the McKinsey report, the suggestions it provides, all but one require more deficit spending as they are all investments that the US has failed to do when it was riding high. The way out of the demographic and global competitive trends is higher productivity: that requires investments in infrastructure, education, information technology, new business processes, and R&D. Streamlining regulatory frameworks definitely needs to be done asap, just think about the amount of energy wasted in the tax system alone, but the US as a whole forgot to invest in its future.

Posted by tomtzigt | Report as abusive
 

Spot on , tomtzigt. Productivity, education, and investment in infrastructure are the keys to digging our way out of the corporatist hole the republicans dug for American over the past 2 decades! All the name calling is just a diversion from the right wing and add nothing to the equation and certainly no solutions!

http://www.mcclatchydc.com/2011/03/06/10 9649/why-employee-pensions-arent-bankrup ting.html

Posted by jlt2 | Report as abusive
 

What a load of crap…. The problem isnt the corp tax rate ninny. They dont pay as much as they do elsewhere. When the president agreed to lower the corp tax rate and eliminate the loopholes boy did you right wing nuts go silent. I guess you havent heard how well lowering the corp tax rate worked in Ireland. The fact is we have been not only allowing our manufacturing to be shipped overseas to slave labor countries without any regard for their own environment (go run a mile in bejing and breathe in heavy) we have provided tax breaks for them to do so. China doesn’t make products, our companies are making products in china. And now the latest blame on the right is with education as well.. Their answer? Cutbacks to education. How do these people sleep at night.

Posted by fromthecenter | Report as abusive
 

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