I normally enjoy working for the Cato Institute since it’s a principled and effective organization.
But every so often, my job requires an unpleasant task, and watching the State-of-the-Union Address as part of Cato’s live-tweeting program counts as one my least enjoyable experiences since joining the team.
But let’s make lemonade out of lemons by looking at lessons that can be learned from Obama’s speech. The most jarring part of the evening was when Obama bragged about the American economy.
Since we’re suffering through the weakest recovery since the Great Depression, that was rather bizarre.
Moreover, being proud that we’re doing better than Europe is akin to getting a participation ribbon in a soccer league for kids.
And the chest thumping about the unemployment rate was very misplaced since that piece of data only looks good because so many Americans have given up on finding a job.
I’ve pontificated on that issue before and cited the Labor Department’s overall data, but let’s dig a little deeper to fully understand why Obama should have apologized rather than patted himself on the back.
Here’s the employment/population ratio for the prime, working-age population of those between 25 and 54 years of age.
As you can see, this ratio has improved a bit over the past five years, but it appears that there’s very little hope that the overall employment situation will ever recover to where it was before the recession.
At least not with current policies.
Here’s another way of looking at the same data. It’s labor force participation by age. The lines don’t seem that far apart, but a 3-4 percentage point decline across age groups adds up to millions of people no longer productively employed.
Last but not least, here’s another way of approaching this data.
We have a chart from the St. Louis Federal Reserve Bank showing the number of working-age people not in the labor force.
There are two takeaways from this chart.
First, it’s clear that the problem started well before Obama.
But it’s also clear that the problem has gotten much worse during his tenure.
The bottom line is that the expansion of redistribution programs has lured more and more people out of the labor force, particularly when matched by government policies that have hindered the private sector’s ability to create jobs.
So you’ll understand why I cited labor-force participation (along with stagnant household income) as Obama’s real legacy in this interview.
By the way, one of the perils of live TV is that you sometimes get curve balls. And since the Ted Cruz birther controversy is now big news, I was asked my opinion even though I don’t have the slightest competency to discuss the issue.
Sort of like the time I went on a program for the ostensible purpose of discussing trade and wound up trapped in a discussion on America’s relationship with North Korea.
My only regret from yesterday’s interview is that I wasn’t clever enough to say that I was more worried about Cruz supporting a Canadian-style tax system than I was about Cruz being born in Canada.
P.S. While I’m not happy about Cruz including a value-added tax in his reform proposal, don’t read too much into that grousing since there are warts in the other candidates’ plans as well.
With one exception.
[…] recovered to where it was before the pandemic and it hasn’t recovered to where it was before Obama took […]
[…] recovered to where it was before the pandemic and it hasn’t recovered to where it was before Obama took […]
[…] labor force participation numbers weren’t good under Obama and they improved only marginally under […]
[…] labor force participation numbers weren’t good under Obama and they improved only marginally under […]
[…] statistics being put forth were not accurate considering that much of the decline was simply people not looking for work anymore. However, the official unemployment rate (U-3) only declined by a mere two percent from the time he […]
[…] Though I don’t want to be a Pollyanna. There are very worrisome trends in our economy, especially increased dependency and reduced labor force participation. […]
[…] – President Trump correctly diagnosed the problem of dismal labor force participation. It remains to be seen whether the net effect of his policies is more job […]
[…] you want background data on labor-force participation and younger workers, click here. And if you want more information about unions and public policy, click […]
[…] Falling labor force participation. […]
[…] ** Falling labor force participation. […]
[…] Falling labor force participation. […]
[…] Falling labor force participation. […]
[…] look today on the labor portion of that formula. And since I’ve alreadyexpressed my concerns about the quantity of labor that is being productively utilized, now let’s focus on the quality […]
[…] look today on the labor portion of that formula. And since I’ve alreadyexpressed my concerns about the quantity of labor that is being productively utilized, now let’s focus on the quality […]
[…] look today on the labor portion of that formula. And since I’ve already expressed my concerns about the quantity of labor that is being productively utilized, now let’s focus on the quality […]
[…] look today on the labor portion of that formula. And since I’ve already expressed my concerns about the quantity of labor that is being productively utilized, now let’s focus on the […]
[…] Obama’s two terms. The stimulus was counter-productive. Median income is down, as is labor force participation. Health care “reform” built upon our health care system’s worst aspects. The War […]
[…] had the weakest recovery since the Great Depression. Labor-force participation is dismal. And median household income has […]
[…] NBC doesn’t understand (or deliberately chooses to hide) is that the unemployment rate only counts those “actively” looking for […]
[…] First, there’s a very fair compilation of various unemployment/labor force statistics. Viewers can see the good news (a relatively low official unemployment rate) and the bad news (a lowest-in-decades level of labor force participation) […]
[…] First, there’s a very fair compilation of various unemployment/labor force statistics. Viewers can see the good news (a relatively low official unemployment rate) and the bad news (a lowest-in-decades level of labor force participation) […]
[…] the most sense. Median income, for example, is falling because we are working less, exemplified by record low labor participation […]
[…] productively employed that matters if we want more economic output, so the Minneapolis Fed data is far more important and revealing than the official unemployment rate […]
[…] of government spending, the tax code’s discrimination against income that is saved and invested, declining labor-force participation, changes in economic freedom, and the ever-expanding regulatory […]
[…] government spending, the tax code’s discrimination against income that is saved and invested, declining labor-force participation, changes in economic freedom, and the ever-expanding regulatory […]
[…] other words, he pointed out that a large number of people have left the labor force, which obviously isn’t good since our economy’s ability to generate output (and boost […]
Time left until Obama leaves office:
http://www.timeanddate.com/countdown/generic?p0=263&iso=20170120T00&msg=Time%20left%20until%20Obama%20leaves%20office
Obama’s Legacy? Dismal
What else needs to be said?
[…] Guest post by Dan Mitchell […]
C’mon Dan, you’re had exceptional extemporaneous training. You can take the curveball!
[…] Obama’s Legacy? Dismal and Declining Labor Force Participation by Dan Mitchell […]