OPINION:
President Obama and his advisers must think unemployment or the economy won’t matter to the average voter next year. About 1 in 6 Americans either find themselves in the unemployment line or are stuck flipping burgers to get by. Wages declined last month as unemployment and inflation ticked up. The economy isn’t growing, the job market is worsening, and Mr. Obama is threatening more of the same economic policies.
Although the official unemployment number is scary enough at 9.2 percent, it doesn’t take into account people who’ve just lost hope of ever finding work and have fallen out of the Labor Department statistics. Just 64.1 percent of the population is at work - the lowest participation rate since 1984. Had this figure stayed at the same level where it had been two years ago, 65.7 percent, the official unemployment figure would actually be 11 percent. Add in the number of those stuck in part-time gigs, and the broadest measure of the situation rises to a whopping 16.2 percent underemployed.
The bad news for American families doesn’t end there. The average weekly work hours declined last month, as did the average hourly wage. Over the past 12 months, hourly earnings increased a bare 1.9 percent in nominal terms. Those gains are wiped out by nearly twice as great an increase in the U.S. Consumer Price Index over the past 12 months of 3.6 percent. The bottom line is that real incomes are dropping.
Things aren’t likely to get better. The latest U.S. Chamber of Commerce survey shows that almost two-thirds of small businesses do not plan to hire any workers in the coming year. Those who want to hire some help cited economic uncertainty and expected lack of demand as the top two reasons that they can’t. Small businesses provide almost half of all private-sector jobs, so it’s a bad omen when entrepreneurs choose to sit on the sidelines and wait out the indefinite regulatory future. There can be no sustained recovery, no sustained job creation unless small businesses are convinced it’s safe to invest and hire once again.
Oddly enough, some European nations have been dealing with the global economic turmoil in a far more rational manner. Germany weathered a much deeper recession - a 6.6 percent dip in gross domestic product - with almost no loss in employment. The country had been working on cutting back its generous unemployment insurance programs and increasing the flexibility of its labor markets before the recession hit, but it didn’t flinch. The reforms stayed in place, and the country recovered more quickly, without massively inflating its debt burden.
Germany didn’t have a housing bubble, and its government-directed effort to “stimulate” the economy was limited to relatively modest federal government infrastructure spending. Most important, the German government did not have its businesses big and small guessing what major new prohibitions, rules and regulations would be imposed next. Mr. Obama loves to imitate Europeans; perhaps he should look at some of these reforms instead of cribbing from his muse Jimmy Carter.
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