Thus, in a sense, the "best" and certainly the fastest way to reduce unemployment is to have people drop out of the work force and quit looking for work. Today reported statistics about our U.S. employment issues aren't telling the complete story about how bad things are. Not even close.
And as a result, when President Obama says hire more public sector workers as the solution, what he's really saying is borrow more money from the Chinese and go deeper in debt as a nation. Then let future generations worry about how to pay if off. If all we want are temporary jobs to help politically during an election campaign, let's just hire a bunch of people to dig holes and another bunch to fill them up.
But if we want to hire more police, fire fighters and teachers on a permanent basis, we first have to have a highly engaged and productive private sector that's creating the wealth and private sector jobs to be able to pay the taxes which will pay for those permanent public sector jobs.
The private sector pays for the public sector. It's that simple.
SOLID AND SUSTAINABLE ANNUAL ECONOMIC GROWTH OF ~3% AND DRIVEN BY A GLOBALLY COMPETITIVE PRIVATE SECTOR IS THE ONLY LASTING SOLUTION.
Yesterday's unemployment rate was reported at 8.3% and the broader U-6 rate at 14.7%. Add back what used to be a normal labor participation rate, and it's getting closer to 20%.
In order to redistribute income from workers to non-workers, old and young alike, there first has to be income to redistribute. That requires people working and producing goods and services of value to others. Number of people working + time worked + pay for time worked + level of productivity (output for input) = nation's output or GDP. It's that simple.
Share of Men in Labor Force at All-Time Low tells the story in charts accompanied by a brief summary of each:
"Friday’s jobs report for August was chock full of all sorts of bad news. Among the most distressing: The share of men actively participating in the labor force — that is, working or looking for work — was at an all-time low.
Some of this could be attributed to the fact that the country has been aging, so more people are of retirement age. But the participation rate has also fallen dramatically for men of prime working age, 25-54:
For example, a lot of traditionally male jobs, in industries like manufacturing and construction, have disappeared, and many of the men who were displaced gave up looking for work when they couldn’t find similar jobs.
The federal disability rolls have also skyrocketed, and when people go on disability, they rarely return to the labor force:
Conditions in the U.S. labor market are undergoing long term change, especially when factoring in the impact of less construction and manufacturing employment.
In addition, there's the global competitiveness piece of the story, along with the greater educational levels being attained by women over men.
Add in the aging of the population and the greatly increasing number of those going on the federal disability rolls, and we have a real problem.
How much is cyclical and how much is structural is the biggest question of all, of course.
Unfortunately, that's not easily answerable and won't be for many years to come.