How Obama Goosed the Jobs Numbers

As long as I can remember, people have always complained about the accuracy of government-reported statistics and claims.  For instance, every year, the government reports that the measure generally regarded as a barometer for inflation everyday Americans face, the CPI, is always much lower than people feel they’re experiencing in their everyday lives.  Sure, while flatscreen TVs and crap toys continue to get cheaper each and every year, we’re paying record prices at the pump, for healthcare and other daily expenses.  And these annual increases are WAY above the low single digit inflation reported in the CPI (here’s the source data from BLS).  Anyway, while those complaints may seem to have merit, the bottom line is that at least the index is based on a pre-set mix of categories and the government can’t really do too much to manipulate them.  And administration after administration has been criticized for using a crappy mix of indicators to consistently report a low inflation rate, so at least it’s not even a partisan issue.  However, the jobs numbers have been grossly manipulated by Obama’s policies and it’s easy to see how, but supporters choose to ignore it.  Here’s how he does it:

  • Definition: First, starting with how the mainstream media reports the “unemployment rate”, they tend to report only the U-3 measure which is the most favorable.  It excludes discouraged workers who have stopped looking for work from the equation.  So, when a long-term unemployed worker throws in the towel because there’s no hope, they no longer count in the equation.  Let’s see how easy it is though to enact policies that entice people to behave in a manner that improves the reported U-3 rate.
  • Artificially Increasing the Numerator – Obamacare: Aside from the monstrosity that will ultimately bankrupt the country, let’s consider for a moment what impact Obamacare has on the unemployment rate.  Because a provision requires that healthcare coverage or penalty kicks in for workers clocking over 30 hours per week, guess what employers do to get around it?  They simply cut all their full-time 40 hour workers down to 30.  Pretty crappy for the employees, but as a business owner, why not?  After all, why would you voluntarily pay for your employees’ health care if there’s this easy solution out there – and if your competition is doing it?  Heck, aside from corporations, even states are cutting worker hours to 29 per week to avoid the costs involved.  What is the net impact?  Well, if you have 100 workers at 40 hours per week, you need to hire a few more if they’re all working only 30, right?  While you might lose some efficiency in training, sick days per worker, etc., roughly, you’d think companies have to hire about 25% more employees in the retail/lower-end sectors to maintain the same coverage.  So, that’s what we’re seeing.  Increased hiring in low-paying jobs, thus artificially increasing the number of people reporting income.  So, that’s a fake improvement in the numerator brought about by Obama, now here’s how the denominator keeps being suppressed.
  • Artificially Decreasing the Denominator with Disability Fraud and Government Gimmes: There have never been more people (net number or as a percentage of any ratio you can think of) on disability.  It’s simple, if you don’t want to work or can’t find work, but want to collect a check, just claim you’re disabled.  In this economy, where the only jobs are crappy ones, you can appreciate why people are incentivized to do this.  If you don’t believe me,  just read about the facts – it’s a giant scam. There’s an example of a whole county in Alabama where 1 in 4 (yes, a full 25% of the population) receives disability checks.  That is insane.  And the states love it.  They actually pay firms to find people they can shift off their own welfare rolls into the federal disability assistance system.  It’s shocking, shameful, and it’s in full-swing.  If people were already not counted, no change, but when people see everyone around them living off disability, they decide to throw in the towel and join up as well – after all, it pays about the same as a crappy minimum wage job anyway.  So, by jumping onto the bandwagon, these people all drop out of the numerator of the equation, artificially improving the reported jobs number as well.

Has the administration done anything to try to combat this abuse?  Of course not!  Why would they?  This sort of handout forces people to get out and vote – they can at least get out of the house to do that!  And it would hurt the reported unemployment rate if, you know, able-bodied Americans actually counted in the equation.

Now, anyone can surmise just what the real unemployment rate would be if able-bodied people were actually looking for work (or working) instead of living off the government dime and whether companies would really be hiring more people if they didn’t have to chop 40-hr/wk workers down to 30 hours per week to avoid Obamacare penalties but the bottom line is, the reported rate would be WAY worse each month.  So bad, that we’d look more like some struggling European countries rather than what you might derive from the rallying US stock market.  People tend to equate strong equity performance with a strong economy and jobs market but nothing could be further from the truth.  You can thank relentless job-cutting and Uncle Ben for investors throwing money at the risk trade since there’s nowhere else for capital to flow.

About Everyday Finance 67 Articles

The author has a background in Chemical Engineering and an MBA specializing in Finance and Biotech Management. Enamored by investing and saving since a teen, the author has been an advocate for optimized investment returns and strategies.

Visit: ETF Base, Darwin's Finance

Be the first to comment

Leave a Reply

Your email address will not be published.