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Economic And Labor Force Outlook Under Obama: Not So Good

- July 19, 2013

The New York Times’ Economix Blog Headline: “Labor Force Participation Is Not Coming Back” (Binyamin Appelbaum, “Labor Force Participation Is Not Coming Back,” The New York Times’ Economix Blog, 7/18/13)

The Unemployment Rate Has Fallen “Almost Entirely” Because Fewer People Are Looking For Jobs, Rather Than Due To People Actually Finding Jobs. “The unemployment rate has dropped almost entirely because of this decline in labor force participation. In other words, it has not fallen because people are finding jobs. It has fallen because fewer people are looking for jobs.” (Binyamin Appelbaum, “Labor Force Participation Is Not Coming Back,” The New York Times’ Economix Blog, 7/18/13)

45 Percent Of The Decline In The Labor Force Participation Rate Can Be Attributed To Cyclical Factors, Including The Fact That There Has Been An Unusually Large Increase In The Average Duration Of Unemployment. “Since shortly before the Great Recession, the labor force participation rate has fallen roughly 2¾ percentage points, allowing an unexpectedly sharp drop in the unemployment rate despite anemic growth of employment during the ensuing recovery.  Identifying and projecting the sources of recent changes in participation is especially important now because the FOMC has identified an unemployment rate of 6.5% as one threshold for raising the federal funds rate. … The other forty-five percent is cyclical and will gradually abate.  However, the cyclical decline in participation has been larger and more persistent than in past cycles due to the unusually large increase in the average duration of unemployment during this cyclical episode.” (“Where’s Labor Force Participation Heading?,” Macroeconomic Advisers, 7/18/13)

Also Weighing On The Labor Force Participation Decline Is The “Growing Popularity Of Federal Disability Benefits, As They Tend To Remove The Unemployed From The Workforce “On A Permanent Basis.” “It also points to the growing popularity of federal disability benefits, a program many researchers say is functioning as a safety net for people who can’t find jobs – except that it tends to remove them from the workforce on a permanent basis.” (Binyamin Appelbaum, “Labor Force Participation Is Not Coming Back,” The New York Times’ Economix Blog, 7/18/13)

Obamacare Isn’t Helping Reinvigorate The Labor Force

In June, The Number Of Part-Time Workers Hit A Record After Rising For Three Straight Months, While The Number Of Full-Time Workers Fell. “The number of workers holding full-time positions fell in the U.S. in June as part-timers hit a record after rising for three straight months, according to the Bureau of Labor Statistics household data.” (Alex Nussbaum and Jeanna Smialek, “Fed Ponders Part-Time Shift As Obamacare Role Questioned,” Bloomberg, 7/19/13)

Part-Time Employment Has Been Outpacing Full-Time Job Growth Since 2008, Which Some Economists Attribute To Obamacare. “Part-time employment has been outpacing full-time job growth since 2008. Economists cite still-tough economic conditions as the root cause, with some saying President Barack Obama’s 2010 health-care law exacerbates the trend.” (Alex Nussbaum and Jeanna Smialek, “Fed Ponders Part-Time Shift As Obamacare Role Questioned,” Bloomberg, 7/19/13)

Since January 2013, There Has Been An Increase In Full-Time Employment By 80,000 Workers. (Bureau Of Labor Statistics, Accessed 7/19/13)

Since January 2013, There Has Been An Increase In Part-Time Employment By 592,000 Workers. (Bureau Of Labor Statistics, Accessed 7/19/13)

Thus, Part-Time Employees Have Increased Relative To Full-Time Employees By A Factor Of 7 Since January 2013. (Bureau Of Labor Statistics, Accessed 7/19/13)


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