For months, the media has been all over the U.S. unemployment situation—keeping up the illusion that Americans are returning back to work.
The media has cited official U.S. Bureau of Labor Statistics (BLS) numbers, reporting that unemployment of the civilian non-institutional population on a seasonally adjusted basis has improved from 7.9 percent in January 2013 to 6.6 percent by January 2014.
The media has neglected to report, however, that the 6.6 percent unemployment rate does not include workers that have dropped out of the labor force. Including discouraged workers and those that are working part-time, the unemployment rate increases to 12.7 percent by the end of January, according to the BLS table, “Alternative measures of labor underutilization.”
Furthermore, the media rarely mentions the labor force participation rate, a number that tells the public how many people are working—versus how many are not. In January 2004, that rate was 66.1 percent, and by January 2014 that rate had decreased to 63 percent.
Another number that is rarely mentioned by the media is the weekly increase in new unemployment claims. New claims increased by 14,000 in just one week—that’s 4.19 percent—during the week ending Feb. 22. That data was published by YCharts and reported in the BLS Unemployment Insurance Weekly Claims Report.
The BLS numbers do not include reduction or increases in U.S. federal government employment. The total reduction in government workers—including federal, state, and local governments—amounted to 29,000 during the first month of this year.
The federal government cut 12,000 people from its payroll in January, with 8,500 of those pink slips coming from the U.S. Postal Service. State governments decreased their workforce by 6,000 workers, and local governments shed 11,000 people from their payrolls.
Defense Hands Out Pink Slips
The federal government is not the only sector on a reduction. Secretary of Defense Chuck Hagel told the press on Feb. 24 of the Department of Defense’s (DoD) plans for reduction in troop strength and force.
“To meet reductions of the scale required, we had to carefully examine the military’s force structure,” said Hagel.
The Marines are to cut about 8,000 individuals. However, depending upon Congress’s sequestration plans beyond 2016, it might have to reduce its forces by another 7,000 people.
“Sequestration requires cuts so deep, so abrupt, so quickly, that we cannot shrink the size of our military fast enough,” said Hagel at the Pentagon Press Briefing Room.
The Army faces the largest reduction of forces. Presently, there are 520,000 active-duty soldiers. The plan is to reduce that number by between 60,000 and 80,000 soldiers. However, if the sequestration goes beyond 2016, the Army will reduce its forces to 420,000 soldiers.
“The scale and timeline of continued sequestration-level cuts would require greater reductions in the military’s size, reach, and margin of technological superiority,” said Hagel. “Under sequestration spending levels, we would be gambling that our military will not be required to respond to multiple major contingencies at the same time.”
The Army National Guard would reduce its numbers, including active-duty soldiers and reserves, by close to 11 percent if the sequestration went beyond 2016.
“We have protected the National Guard and Reserves from cuts to the extent possible,” said Hagel, “but to maintain a ready and capable force at a time of fiscal constraints, no component of DoD can be entirely exempted from reductions.”
According to Human Events conservative news, the proposed cuts will reduce the American forces to pre-World War II size.
The DoD cuts come at a highly inopportune time, when many Americans have given up looking for a job.
Dismal Outlook For Job Creation
The year 2014 started off better than 2013 ended with 113,000 new job openings, versus 75,000 in Dec. 2013, according to the BLS.
The Brookings Institution’s Hamilton Project issues a monthly publication, “Closing the Jobs Gap,” which looks at how many jobs need to be created in order to achieve pre-recession employment levels, based on 2007 numbers. The calculations include an approximation of how many additional people need to be absorbed into the labor force monthly.
The report states that the United States had 7.5 million less jobs at the end of February than pre-recession levels in 2007. It states that if the economy were to create 208,000 jobs per month—the best average monthly rate since 2000—it would take until September 2018 to reach pre-recession employment levels.
To reach pre-recession employment levels by Sept. 2016, America would need to add 321,000 jobs each month, which was the best monthly rate in the ‘90s, according to the report.
Even though U.S. media reports isolated upswings in the country’s job situation, it is not always an accurate reflection of the overall employment situation.
In Nov. 2013, electronics news website Pocket-lint reported that Apple Inc. would create 2,000 new jobs. According to an Aug. 2013 Investor Place article, General Electric Co. would bring 150 jobs to Ohio plants. Such additions to the job market are mere drop in the bucket, adding less than 1 percent of the monthly jobs needed in order to close the gap. They are also less than 1 percent of the total workforce in each of those companies.
As shown by Brookings, it is going to take years to get the U.S. job situation under control.