Add 400,000 More to the Unemployment Count

The official unemployment figures count the conventional number employed, those on involuntary part time, and discouraged workers. The official unemployment rate is 8.2%. If other categories are added, the unemployment rate rises by more than one percentage point.

Now we have another category: People who take early social security (and sacrifice higher pensions from later retirement) due to the fact that they cannot find jobs.

According to an analysis by Steve Goss, chief actuary for the Social Security Administration, about 200,000 more people filed initial claims in 2009 and 2010 than the agency had predicted before the recession, and he said the trend most likely continued in 2011 and 2012, though that is harder to quantify. The most likely reason is joblessness. If we assume that as many people were forced into early retirement by unemployment in 2011 and 2012, the total number of “forced” early retirements would be 400,000.

If these forced retirements were added to the unemployment rate, it would rise by two tenths of one percent; namely, from 8.2 to 8.4 percent.

Add Disability to Obama's Anti-Jobs Policies

As the election draws closer, the two most closely watched economic indicators are the unemployment rate and the number of jobs created.  On June 1, the Bureau of Labor Statistics issued bad economic news. The number of jobs created was only 69,000 and the unemployment rate increased from 8.1 to 8.2 percent. In a presidential campaign, the difference between an 8.2 and a 7.5 percent unemployment rate or a month of 250,000 jobs versus 69,000 can be the difference between re-election and defeat.

The die is already cast. Obama bet all his money on Keynesian stimulus propped up by super-expansionary monetary policy, the Detroit bailout, and extensions of unemployment insurance. He has nothing left other than infrastructure projects, subsidies for state teachers and first responders, and a feeble jobs credit for small business. The one move that could turn things around quickly — extension of the Bush tax cuts – would deprive Obama of his prime campaign message that “the rich must pay their fair share.”

In a piece dated August 28, 2011 Why Obama Cannot Support a Real Jobs Program, I laid out an anti-Keynesian jobs program to create jobs and lower the unemployment rate. The third point in my program read “to create economic conditions that encourage businesses to hire and the unemployed to seek and accept jobs.” To do this, I advised not to extend unemployment benefits and to reduce the minimum wage, particularly for youths. The President did not follow my advice and look where he is now.
I wish to throw the social security disability into the mix of anti-job programs. The disability program is not the creation of the Obama administration, but Obama appointees have set and interpreted its policies for more than three years. Let’s examine their record:

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Those CBO Growth and Budget Projections: Just Forget About Them

The CBO 2012 and 2013 projections grabbed a lot of attention when they were released earlier in the week. The headlines were that growth will slow to two percent in 2012 and one percent in 2013, unemployment will rise to over nine percent by 2013, but the deficit will shrink dramatically. All of these calculations are based, as I pointed out in a recent blog, on discredited Keynesian models anyway.

None of these things will happen because the policy assumptions on which these projections are based will never materialize. The Bush tax cuts will not be dropped in their entirety (a slight possibility if Obama is reelected). Discretionary spending will not decline in absolute value over a five year period, and the various cuts in Medicare will not take place.

Actually the CBO points all this out, but commentators look only at the headlines and ignore the crucial details that tell us: “Never mind.”