Real unemployment rate is at least 18 percent

[Paul Krugman Lies A Lot]

Friday, the Labor Department is expected to report the economy
added 235,000 jobs in July, and the unemployment rate remained
steady at 6.1 percent, but that hardly tells the story.

The jobless rate may be down from its recession peak of 10
percent, but much of this results from adults, discouraged by
the lack of decent job openings, having quit altogether. They
are neither employed nor looking for work.

Only about half of the drop in the adult participation rate may
be attributed to the Baby Boom generation reaching retirement
age. Lacking adequate resources to retire, a larger percentage
of adults over 65 are working than before the recession.
Many Americans who would like full time jobs are stuck in part-
time positions, because businesses can hire desirable part-time
workers to supplement a core of permanent, full-time employees,
but at lower wages. And Obamacare’s employer health insurance
mandates will not apply to workers on the job less than 30 hours
a week.

Since 2000, Congress has enhanced the earned income tax credit,
and expanded programs that provide direct benefits to low-income
workers, including food stamps, Medicaid, Obamacare, and rent
and mortgage assistance.

Virtually all phase out as family incomes rise, either by
securing higher hourly pay or working more hours, and impose an
effective marginal tax rate as high as 50 percent.
Consequently, these programs discourage work and skills
acquisition, and encourage single parents and one partner in two
adult households not to work. Often, these motivate single
people to work only part-time.

Undocumented immigrants face more difficulties accessing these
programs, and lax immigration enforcement permits them to openly
take jobs that government benefits discourage low-income
Americans from accepting.

Employers can, intentionally or unintentionally, abuse the H-1B
visa program, which permit businesses to employ foreign workers
when qualified Americans are unavailable. Americans may be
overlooked, because they demand higher wages, or are not
networked with immigrants that are already employed in technical
and managerial positions.

The economy has created only about 6 million new jobs during the
Bush-Obama years, whereas the comparable figure during the
Reagan-Clinton period was about 40 million. A recent study by
the Center for Immigration Studies indicates that virtually all
the new jobs created since 2000 went to immigrants, whereas none
were created for native-born Americans.

Adding in discouraged adults who say they would begin looking
for work if conditions were better, those working part-time but
say they want full time work, and the effects of immigration,
the unemployment rate becomes about 15 percent—and that is a
lower bound estimate.

Many young people are being duped both by unscrupulous for
profit, post-secondary institutions—as well as accredited
colleges and universities with low admission standards—to enroll
in useless programs. They would likely be in the labor force now
but for easy access to federally sponsored loans and will end up
heavily in debt.

Adding in these students, the real unemployment rate among U.S.
citizens and permanent residents is at least 18 percent.

Since 2000, GDP growth has averaged 1.7 per year, whereas during
the Reagan-Clinton years, it was 3.4 percent. The reluctance of
both Presidents Bush and Obama to confront Chinese protectionism
and currency manipulation and open up offshore oil for
development have created a huge trade deficit that sends
consumer demand, growth and jobs abroad.

New business regulations, more burdensome than are necessary to
accomplish legitimate consumer protection and environmental
objectives, exacerbate these problems.

All of this suppresses wages except for the most skilled and
talented workers.

No surprise, average family income, adjusted for inflation has
fallen from about $55,600 in 2007 to $51,000 even as the gap
between families at the bottom and top widens.

Morici is an economist and business professor at the University
of Maryland, national columnist and five-time winner of the
MarketWatch best forecaster award. He tweets @pmorici1

http://thehill.com/blogs/congress-blog/economy-budget/213834-
real-unemployment-rate-is-at-least-18-percent