February 18 2013
A small business owner recently told President Obama that he’d had to lay off several employees because of the lousy economy. President Obama dismissively responded by recalling one of his favorite stories: how Henry Ford had said he paid people good salaries so that they could buy Fords.
That should be really helpful to the business owner, who, unlike President Obama, realizes that not all small, struggling companies are the same as Ford, one of the most amazing economic stories in American history. It also won’t help the unemployed worker any more than the president’s disastrous policies have helped America’s other 12 million unemployed.
Most disturbingly, the remark shows that the most powerful man in the United States, the only one among us with a veto pen, hasn’t the foggiest about how businesses and economies operate. He is utterly clueless. I am worried. The remark, by the way, would have been a super-market scanner moment, if the president were a Republican.
It was also disturbing that in his State of the Union address, the president presented a picture of a nation in economic recovery. Does he really believe that or is he trying to pull the wool over our eyes? Either way, it’s troubling.
Meanwhile, real estate and media magnate Mortimer Zuckerman in a must-read piece in today’s Wall Street Journal notes that the president mentioned jobs 45 times in his SOTU, but that his tenure has not created jobs. Zuckerman, one of the most brilliant economic analysts around—and a former Obama supporter—writes that we are in a “jobs depression as great as the Great Depression.”
In the Great Depression, as Zuckerman notes, there were 12.3 unemployed, whereas today there are 12.8 million unemployed. Of course, the population is larger, so the percentage is lower. But, still, one might ask, how could the president get by with his pretense that we are in recovery?
Zuckerman writes that it’s because, unlike in the 1930s, when we saw heart-wrenching pictures of people in breadlines, our unemployed today are on federal programs that help hide the true nature of our financial disaster. We don’t see people starving because more than 48 million Americans are in the food-stamp program.
Others mask their status as unemployed by collecting Social Security disability checks. There are more than 11 million receiving such checks, half having joined the program since President Obama because president. Does anybody think more people are suddenly disabled? Disability has become the new unemployment insurance for people who have been unemployed so long that their benefits have expired, making this an unemployment program “only this time without end.”
Here is the money quote:
[T]he predicament of our times is worse than that, worse in its way than the 1930s figures might suggest. Employers are either shortening the workweek or asking employees to take unpaid leave in unprecedented numbers. Neither those on disability nor those on leave are included in the unemployment numbers.
The U.S. labor market, which peaked in November 2007 when there were 139,143,000 jobs, now encompasses only 132,705,000 workers, a drop of 6.4 million jobs from the peak. The only work that has increased is part-time, and that is because it allows employers to reduce costs through a diminished benefit package or none at all….
Sometimes the employment numbers that are announced are simply not understood. January was supposed to have seen 157,000 jobs created. The news provoked relief and even enthusiasm in some quarters. But the supposed hiring was based on seasonally adjusted numbers—numbers adjusted to reflect regularly occurring shifts in employment, such as increased hiring of farm workers during crop harvests or retail employees after Thanksgiving.
The real, unadjusted figures for January show that nearly 2.8 million jobs disappeared, which happened to be worse than the 2.63 million lost in January 2012. Even though the 157,000 jobs created were fewer than the 311,000 of January 2012, many commentators cheered because they don't understand the effects of seasonal adjustment.
So there is no solace in the statistics. Job seekers are only one-third as likely to find work as they were five years ago, and a record number of households have at least one member looking for a job, which affects everyone. And most of the newly available jobs don't match the pay, the hours or the benefits of the millions of positions that have vanished.
Even if President Obama took time out from his busy schedule to read Mr. Zuckerman’s column, I doubt if it could pierce the fog of economic illiteracy.