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  • How Weak Was Friday's Jobs Report?

    Upside surprise: Employers add 151,000 jobs in October , the USA Today reported about the Bureau of Labor Statistics Friday. And it is true: the establishment survey of U.S. businesses did report that 151,000 jobs were created last month. But as The Heritage Foundation’s James Sherk and Rea Hederman note there was also some troubling news in Friday’s report:

    Taken in isolation, the October household survey paints a worrying picture of the U.S. labor market. It reports that employment fell by a net 330,000 jobs and that the number of unemployed workers grew by 76,000 in October. The median length of time workers stay unemployed rose from 20.4 weeks to 21.2 weeks.

    The unemployment rate remained unchanged at 9.6 percent only because a net 462,000 Americans dropped out of the labor force and thus do not count as unemployed. The labor force participation rate fell by 0.2 points to 64.5 percent. That is the lowest rate since November 1984, a time in which fewer women participated in the labor force. Over one in four adult men (26.2 percent) are neither working nor looking for work—the highest rate of labor force non-participation recorded in the entire postwar era.

    So how can the jobs report show both 151,000 jobs created and 333,000 fewer jobs? Hederman and Sherk explain:

    The household survey has greater statistical error than the establishment survey and typically reports much more volatile numbers. For now, that gives greater credence to the modest signs of recovery in the establishment survey. If the household survey continues to show a weakening labor market, then policymakers will need to pay closer attention to it.

    Even if the establishment survey is correct, however, it only shows signs of a tepid recovery. At this rate, it will take years for the economy to recover the nearly 8 million jobs lost during the recession. Policymakers need to improve the business climate to encourage businesses to expand and hire.

    Unfortunately, President Obama appears bent on making the business climate worse. Sherk and Hederman again:

    Before Tuesday’s election, President Obama wanted to raise taxes on those who make over $250,000 a year and claim that other Americans would not be affected. However, raising taxes on entrepreneurs and small businesses affects everyone. When taxes on saving and investment are increased—which the Obama tax hikes do by increases in capital gains, dividends, and the death tax—businesses do not expand as fast or as much, and other businesses are never created, because they are no longer seen as profitable.

    The Obama tax hikes on the “rich” would result in 238,000 fewer jobs in 2011, and the U.S. economy would average 693,000 fewer jobs each year over the next decade. The loss of potential jobs affects other workers as wages do not increase as fast. For a typical family, disposable income would be $1,000 lower each year for the next five years. Business investment and personal savings would fall by over $70 billion each year for the next five years. These lost jobs and incomes would make it even harder for the economy to reach its full potential.

    Posted in Economics [slideshow_deploy]

    5 Responses to How Weak Was Friday's Jobs Report?

    1. Pingback: How Weak Was Friday’s Jobs Report? | The Foundry | Cogito Ergo Blog

    2. Randy131 from Florid says:

      Why not have the Republicans give Obama what he wants with an add on to the bill that they believe it will cost hardship on the American people by causing businesses to lay off more people, and they will go along with it only because of what Obama and the Democrats claim the people want from Congress, bipartsanship, but in a year if the bill proves to fail in producing jobs, as they believe, they will restore the bush tax cuts to everyone. This will give Obama and the Democrats a chance for the people to see their policies fail without a great publicity fight that might harm the Republicans. Then the Republicans can become heroes to the American people by restoring the tax cuts to everyone and causing more jobs to be created without losing more than what was created.

    3. Barton L. Bedwell of Independence, Mo. says:

      I thought your article was very informative. I understand that when people get off the radar of the “unemployment” numbers they simply leave the report as if they never did exitst. Likewise when they produce an amount of new jobs they never do tell you how many jobs just fell off the scene. I know that the media will do whatever it takes to make their man “Obama” look good and to make the people of the U.S. think that his policies are working but the press forgets one thing. They forget that the American people are not stupid. At least not yet. Once the “Baby Boomers” are off the scene then maybe if things go on the way that the generations behind us is doing now we will see them reach their goal of having complete power to accomplish what the Democrats have been doing for over 50 years now. So we of my generation are the last of the “Great Americans” that love our freedom and will strive to keep it that way while we are still alive. May the next generation wake up before they lose what we have today.

    4. texastuxguy, texas says:

      The jobs reports have become so marginalized that they really bear no comments. We all know that the government practice of putting out a "new jobless claims" number and then correcting the number 30 to 60 days later makes the whole reporting scenario meaningless. Further, who is stupid enough to believe numbers that don't count people who have been out of work past the time they would receive benefits? Why should we listen to more government propaganda that is meant to manipulate our thoughts and buying habits? The Bureau of Labor Statistics should be disbanded and the money put toward something useful, like sending the Obama entourage to India or building a tunnel they'll take down an hour later. The whole system is bogus. Let it burn!

    5. John R Bloxson Jr Da says:

      Isn't so strange how the Democrats spin bad economic news, 440,000 dropped out and stopped looking fo work. I believe the pure precentage of unemployed nationwide is around 15%. The Democrats keep saying we're in a jobless recovery if no jobs are being made my friends we aren't in a recovery at all!!! So to the Democratic Party Aristocracy/ Bolshivics stop lying to the American people. To the Unions stop lying to us, and to the left since you hate us so much go live in the socialist Counties. To George Soros, and His secular prgressives since you're so unwilling to invest in economically in helpping America, and will not invest in American Companies or Amerian Employees get out you don't belong in here and should take your ill gotten and illicit finances elsewhere you would feel more comfortable. LEAVE AMERICA ALONE!!!!! To George Soros stop trying to ruin our nation since most assuridly it isn't yours go back to the old country.

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