The Shrinking US Labour Force: Legacy of Obama?

When people are not working, they cannot build families, buy houses, invest, indulge in tourism and consumerism, and all the other things that help drive modern consumer-oriented economies. Economic policies which discourage business startups and new jobs formation will lead to long term unemployment and a shrinking labour force.

If the same percentage of adults were in the workforce today as when Barack Obama took office, the unemployment rate would be 11.1 percent. If the percentage was where it was when George W. Bush took office, the unemployment rate would be 13.1 percent. _Incredible Shrinking Labor Force

Image Source
If the US economy is shot down by its own president's policies, who is going to rescue the world from global recession this time?

The Labor Force Participation Rate decreased to 63.6% in April (blue line). This is the percentage of the working age population in the labor force and the participation rate is at a new post bubble low. The participation rate is well below the 66% to 67% rate that was normal over the last 20 years _April Employment

Shrinking Labour Force

Mr. Obama has suppressed the private sector economy via energy starvation, strangulating regulation, and a devastating climate of economic uncertainty. At the same time, he has pumped $trillions into the pockets of cronies, favoured activist groups, political pals and hangers on, in the name of economic stimulus, among other misnomers.

Mr. Obama's approach is the equivalent of a physician strangling a patient, while at the same time defibrillating and administering heroic life support to the same patient. Such a love-hate approach to governance could only be tolerated in the context of a cheerleading media that refuses to point out the horrific inconsistencies, weaknesses, and destructiveness of Mr. Obama's agenda.

Mr. Obama did not originate all the things which were misguided and self-destructive about US government policy. He merely made them incalculably worse, and set them on irrevocable autopilot.

Whether Mr. Obama is re-elected or not, he has obtained his golden parachute for life. He will be able to avoid the worst fallout from his own policies -- by either moving away from the worst affected areas, or by using money, privilege, and payback power to insulate himself from the pain he will have caused.

For everyone else: Hope for the best, but prepare for the worst.

Jobs are Scarce Unless You Know Where to Look

FreakingNews

Since Obama Pelosi was put in place, millions of Americans have lost their jobs. The private sector is shriveling before our eyes. Obama has been particularly hard on construction, manufacturing, business startups, the financial sector, the energy sector, and any part of the economy not dominated by labour unions, environmental lobbies, or trial lawyers. The outlook under the current regime continues to be bleak into the indefinite future.

Vanishing of jobs will plague the rest of this decade and more. Meaningful employment is no longer guaranteed to dutiful, studious members of the middle class in the Western world. College education, which was hugely expanded after World War II and sold as a basic right, is doing a poor job of preparing young people for life outside of a narrow band of the professional class. _Chronicle

Government is hiring. And if you want to pick and choose for the best federal jobs, insiders put the US Nuclear Regulatory Commission at the top of the list.

Ordinarily, the government doesn't create wealth, but can certainly regulate those who do. The Obama Pelosi regime has decided to go against tradition, and try to grow wealth by hiring as many government regulators as possible.

So if you can find the right government job, you should be set for life, right? Well, no. You should have thought of that 30 years ago, so that you could be retiring to a life of ease in your early to middle 50s -- with a yearly income that might make many retired millionaires envious.

No, if you are just now getting into government work, you'd better be prepared for some very rude awakenings over the next decade or two. Today's private sector is not what it used to be. There is only so much flogging and ravaging that it can take from an overgrown government sector and overblown government pensions, benefits and mandated entitlements, taxes, and regulations. Things fall apart. Expect it, and prepare for it.

Good Enough for Government Work?

Image SourceYou know a society is going downhill when the most coveted jobs are in government rather than in the productive sector. You saw the same phenomenon in Great Britain as the empire was crumbling. In 21st century America, these highly paid government workers are as likely to be affirmative action hires as not. Peter Principle princes and princesses of preferential treatment.

While many federal workers probably grumble about their jobs (as many private sector workers do), they know that the overall package of wages, benefits, and extreme job security (Table 18 here) is very hard to match in the competitive private market, and so they stay put. _Cato

Under the rules of Obamanation, it is growing ever more difficult to succeed and prosper in the productive sector. The costs of doing business are being cranked up so high, that more people are finding the risks to be too great to chance it.

Tenured government employment, at almost twice the average compensation of the private economy, must seem very tempting to the unemployed, underemployed, and soon-to-be unemployed. Unfortunately for most of them, they may not have the affirmative action credentials to qualify.

Debt + Deflation --> Default

If you find yourself deeply in debt, and wish to avoid default, you should hope for an inflationary environment. Debtors in an inflation can pay off debts with ever more plentiful money of reduced value. But if you owe a lot of money -- like the US government owes -- and find yourself in a deflationary environment, you are up a dirty creek without an implement of propulsion.

By all accounts, the US government and the Federal Reserve, have been anticipating the creation of a "somewhat inflationary" economy following the fiscal stimulus and loose monetary policy. Sooner or later, you almost have to have inflation with US budget deficits in the multiple trillions of dollars per year. But something odd -- and ominous -- happened on the way to the planned inflation.

Irving Fisher explained why the self-correcting mechanism of economies breaks down in his Debt Deflation Theory of Great Depressions in 1933: “Over indebtedness to start with, and deflation following soon after”. Most of the West has exactly that, but worse – debt is much higher. _Telegraph_via_NakedCapitalism

Many people are predicting huge new blows to the US economy from commercial real estate foreclosures, and from another round of residential mortgage foreclosures driven by growing unemployment. Hundreds of additional US banks are in danger of folding, and the FDIC can't take much more. The US government is hiring, but few other employers are doing so. The private sector is in danger of shriveling before our eyes.

If economic activity continues to shut down from the grass roots upward -- despite the exploding indebtedness of government at every level within the US -- the prospects point toward a cascading avalanche of government default.

No one really wants to look at what happens should the US government default on its debts.

US Unemployment Soars, Benefits Running Out

Image SourceWith a real unemployment rate of 16% and rising, the US is finding its federal unemployment insurance benefits starting to run out.

Underemployment is a more comprehensive measure of labor market slack that includes not just the unemployed, but also “involuntarily” part-time workers (workers who want full-time work but can’t get the hours) and marginally-attached workers (jobless workers who want a job but are not actively seeking work and are therefore not counted as officially unemployed). Underemployment data as currently measured are only available since the mid-1990s, so it is not possible to compare the current recession to the recession of 1981 on this measure. Table 4 shows underemployment over the current recession. In particular, the number of involuntarily part-time workers has increased by approximately 90%, from 4.6 million to 8.8 million. Over this time, the underemployment rate has increased from 8.7% to 16.3%, so that now nearly 26 million people—one out of every six US workers—are either unemployed or underemployed. Figure D shows the components of underemployment over the course of the recession. _EPI_via_NakedCapitalism

Go to the original story for all the charts and figures.

The US government is putting the squeeze on small businesses at the same time it is growing its own bureaucracies to monstrous proportions. Labour unions -- friends of Obama -- are receiving sweetheart deals today that Americans will regret for decades to come.

Obama and Pelosi are preparing to put the squeeze on the biomedical, pharmaceutical, and medical technology sectors of the economy -- which will virtually exterminate innovations from US medicine and biotech. All in the name of government controlled health care.

Under Obama and Pelosi's "Cap N Trade", US energy will be constricted from all directions. Since US industry runs on energy, it is US industry that will be choked off by the Obama / Pelosi grand energy plan.

All of these policies will reap a harvest of unemployment of historic size.

With unemployment comes default on debts, cutting back on spending and future investment, and a self-propagating constriction of economic activity.

There are those who claim that Obama has nothing to do with this depressed economy. That it is not his fault. How they can say this with a straight face is a mystery, perhaps known only to themselves and their psychoanalysts. But as Obama and Pelosi proceed to place their stamp upon this age of unemployment, people who once looked to Obama for hope and change are starting to see something else.

More on Unemployment and its Repercussions

....“it is unlikely we will see meaningful reductions in the foreclosure and delinquency rates until the employment situation improves.” Mr Brinkmann expects the peak in foreclosures to lag the peak in unemployment by around 6 months. _FinancialTimes

Informed analysts are beginning to see unemployment as a leading indicator of things to come, as well as a lagging indicator. This makes their work much more difficult, and casts the US government's so far extravagantly ineffectual interventions in a much more tragicomic light.

The unemployment rate stood at 9.4 percent in July but is expected to peak above 10 percent. That means more foreclosures, which will put a drag on recovery.

"It will definitely slow down the housing market a bit, which will have a corollary effect on the overall economy coming back" to life, Sharga said. _McClatchy

Oh, it will do more than slow down the housing market a bit. The effect of unemployment-caused home foreclosures will reverberate throughout the financial sector and spill over to affect all other sectors dependent upon credit -- including the government.

An interesting article with plenty of accompanying charts to illustrate the problem.

More on housing market woes (via SimoleonSense)

Backers of Obama -- including most of the media and large numbers of big money speculators and investors -- are growing frantic at their Prince's inability to instantly solve economic problems which are increasingly built into the US welfare state. Obama merely promises to enlarge the welfare state, and to integrate even greater self-destruct mechanisms into the works. It is all he knows.

Others who are growing frantic include the oil barons of Russia, Iran, Venezuela, and other dictators who overextended themselves on credit -- based upon spring 2008 oil prices. These blood-on-their-hands gents have to have higher oil prices. But they are stuck between supply and demand. They have many options for cutting oil supply, but how can they crank up demand in a world of economic downturn? It is likely that as supply is artificially cut, oil importing economies will find substitutes for oil, and increase conservation -- as well as cut economic activity even more.

China is beginning to hurt from lack of export markets as well.

So we have all of these unlikely bedfellows who want to jump-start economic activity in the western economies, but don't quite know how to do it.

Well-connected speculators and media barons have been trying to push the market upward using hype and massive denial. Watch the price of oil trying to reach its target of $100 a barrel. Oil supplies have been slowly choked, by dictators and the Obama / Pelosi reich. Pundits have been talking up the price of oil for many weeks now, with very slow progress to show for it.

The US has a government that doesn't understand the very basics of solid economic prosperity. It only understands bubbles and facades. Consequently, bubbles and facades are what the government has in mind, to serve the public. Government enablers, who stand to profit from the grand-scale scam, stand in line to assist in the deception.

As Unemployment Grows, So Do Foreclosures

The country's growing unemployment is overtaking subprime mortgages as the main driver of foreclosures, according to bankers and economists, threatening to send even higher the number of borrowers who will lose their homes and making the foreclosure crisis far more complicated to unwind.

Economists estimate that 1.8 million borrowers will lose their homes this year, up from 1.4 million last year, according to Moody's Economy.com. And the government, which has already committed billions of dollars to foreclosure-prevention efforts, has found it far more difficult to help people who have lost their paychecks than those whose mortgage payments became unaffordable because of an interest-rate increase. _WaPovia_News Alert

Unemployment is growing, and it is driving the steady rise in home foreclosures across the US. What started as a financial crisis driven largely by defaulting subprime mortgages, is turning into something deeper and much harder to repair.

Last year, about 40 percent of borrowers who sought help at NeighborWorks, a large housing counseling group, cited unemployment or a pay cut as a primary reason for their delinquency. Now it is about 65 percent. The number citing a subprime loan fell significantly.

"Rising unemployment, for the sake of this downturn, has magnified things considerably," said John Snyder, manager of foreclosure programs for NeighborWorks. "It's less about the payment adjustment."

When a subprime borrower becomes delinquent because of a hefty payment increase, the fix often involves lowering the interest rate to its original level. Unemployment poses a more difficult challenge, industry officials and consumer advocates said. During extended periods of joblessness, the borrower accrues large late fees that drive up monthly payments. And a new job often comes with lower pay, making it more difficult to catch up. _WaPo

Wags will try to dispel worry by telling you that "unemployment lags the stock market in a recovery." What they say is generally true -- unless, of course, it is unemployment itself which is driving the recession. In that case, it may be the stock market that lags unemployment -- on the way down.

Banks and financial institutions across much of the US are already in trouble, sucking up hundreds of billions of dollars of US government hijacked funds. And that sucking noise? It could be getting louder soon.

We are seeing what happens when investors and speculators use stimulus and bailout money to try to artificially jump-start markets -- and secondarily the economy. The great "recovery" appears to be fizzling out, for now. As ever more funds and resources are diverted from the private sector to the politically connected sectors (Obama supporters), the sucking sound keeps getting louder. And jobs continue being lost.

When a country is ruled by clowns and incompetent fools, the fundamentals of a sound economy are forgotten and ignored. A healthy economy is healthy from bottom to top. Artificial bubbles of the type Obama has been attempting to inflate, look good on paper if you can pull them off, but tend to suck wealth from the middle class and convey it to political insiders on the way to the upper class.

Public Sector Unions Are Killing United States

Some five million private-sector workers have lost their jobs in the last year alone, and their unemployment rate is above 9% according to the BLS. By contrast, public-sector employment has grown in virtually every month of the recession, and the jobless rate for government workers is a mere 2.8%. For anyone who thinks such low unemployment numbers are good news, remember that the bulging public sector must be paid for with revenues that most governments don't currently have. This is one reason for a spate of state and local tax increases, such as $5 billion in tax increases New York state passed in April, and $12 billion in tax increases California's legislature agreed to in February that will only become law if voters pass a series of ballot initiatives next week. _WSJ_via_NewsAlert

If you are a member of a government employee public sector union, enjoy your job security while it lasts. And try to keep a low profile. Because there are a lot of angry, unemployed people out there who are hurting because of your unions. For now, your unions can keep these angry citizens and other taxpayers from upsetting the applecart. Unions have government officials and elected representatives in their pockets. Union PR flacks can hold off any voter initiatives that threaten the gravy train -- for now.

...powerful and savvy, public unions have moved effectively to quash antitax movements. In New Jersey, public unions derailed a taxpayer revolt in 2005 by using their legislative clout to water down a bill that would have created a state constitutional convention to enact property-tax reform. Meanwhile, under pressure from unions, state legislatures in places like Florida have been tightening rules and requirements for passing voter initiatives and referenda -- blunting a favorite tool of antitax groups.

In states like Iowa where public unionization rates are still low government workers have had to accept concessions. But allies of the unions in Washington are working to rectify that situation with union-friendly legislation like the card check bill, which will make organizing much easier.

In the private sector such efforts will still be subject to the demands of the marketplace. Employers who are too generous with pay and benefits will be punished. In the public sector, however, more union members means more voters. And more voters means more dollars for political campaigns to elect sympathetic politicians who will enact higher taxes to foot the bill for the upward arc of government spending on workers. That will be the pattern for the indefinite future unless taxpayers find a way to roll back the enormous power public workers have acquired.

Are you thinking that this huge union power grab is likely to lead to violence? Eventually, of course it will. For now, if you can grab a piece of the loot -- including some of the most ungodly generous pensions in the country -- go ahead. Obama and Pelosi are on your side. But watch your back. More and more people every day are beginning to watch it, and you may not like what they are thinking.