A Second Hand Conjecture

According to the Bureau of Labor Statistics there are 11.6 million unemployed persons in the United States today. Meanwhile, the current estimate of the total cost of the spending package passed to alleviate this distress is $827 billion.  President Obama has framed his defense of this expenditure largely on job loss grounds. Lately he has gone so far as to warn that without passage of the package in full, the unemployment rate  (currently at 7.6%) could hit double digits.

Let’s assume he’s right. Let’s even assume the total unemployment figure doubles to 23.2 million persons — a number which would likely require massive business failure and the collapse of entire industries to achieve. But for the price of the recovery package to head this off, we could afford to pay each of these 23.2 million future unemployed persons over $35,000 a year…which is almost exactly what the average individual income in the United States was in 2008. But here’s the thing, we wouldn’t have to pay them that, because there aren’t 23.2 million persons unemployed yet. Maybe there will be at some point in the future, but then again maybe there won’t.

The staggering expansion of government spending we are witnessing from those who used to restrict their advocacy to social safety nets for if someone happened to fall, is enough to make you nostalgic. Nostalgic for the days of profligate and wasteful welfare benefits, which seem positively frugal compared to this new invoice. Bring back the caricature welfare queen says me, with her Cadillac in a public housing garage. Incidentally, the base price for a Cadillac CTS is about $35,000 too. We could buy every currently unemployed person two of them with that recovery bill’s price tag.

Looking backward, the great value of the welfare system is that it is reactive, individual and conditional. That is to say, you have to personally lose your job in order to receive federal benefits. Now we’re apparently shifting to a model where massive indirect economic assistance is rendered for people who are currently still employed, because they might become unemployed at some point in the future. I prefer the old model in retrospect.

2 Comments »

Looks like the “Day Without a Gay” civil rights protest intended to send a message to the country about the importance of gay employees and consumers…had no effect whatsoever. Thus the congenitally counterproductive leadership of the gay rights movement can notch another embarrassing disaster onto their totem pole of failure.

Why can’t this movement find effective leadership? Flippantly shirking your presumably safe job for political messaging, when people of all sexual orientations are struggling to find jobs, was no way to inspire national sympathy for the cause. Would it not have been more logical and positive to have a ‘day with twice the gay’? Say, encouraging gay Americans to double their daily purchasing, or work twice as hard?

No Comments »

When the most recent unemployment numbers were released, the media bleated about the highest percentage increase in the jobless rate since 1986. For example, The New York Times lamented:

The unemployment rate surged to 5.5 percent in May from 5 percent, the largest monthly spike in more than two decades, as the economy shed 49,000 jobs for a fifth month of decline, the Labor Department reported on Friday.

Economists construed the weak monthly jobs report as an indication of the pain assailing tens of millions of Americans amid an economic downturn that most experts assume is a recession.

The labor market is continuing to deteriorate, eroding the size of paychecks, just as gasoline and food prices surge, and as the declining value of real estate erodes the wealth and credit of many households.

Ed Morrissey was quick to point out why the numbers don’t support what the media narrative claims:

Up to now, employment had held steady through a rocky economy barely staying out of recession. In May, that changed for the worse, as unemployment rose to its highest level since October 2004. However, only 49,000 workers lost their jobs, which doesn’t nearly account for the four-tenths rise … The real story here is unemployment among entry-level workers to the employment system. In summer, teenagers and college students enter the marketplace looking for seasonal and part-time work. This accounts for the significant rise in job-seekers and the 0.4% increase in unemployment. Otherwise, an overall job loss of 49,000 jobs would account for a 0.04% increase in a market of 138 million workers.

King Banaian also took a look at the May numbers (in comparison with April), and while he disagrees somewhat with Ed’s account for the number of new entrants to the job market, he finds validity with respect to the rise in the unemployment rate: (more…)

6 Comments »

Morgan Stanley expects a “mild and short” recession in 2008, with peak unemployment of 5.6% or 5.7% in early 2009. Mark Perry points out that would make it the mildest and shallowest recession since the second world war.

2 Comments »

Many people argue that we are experiencing no more than a mid-cycle slowdown. Certainly that was a potential outcome I considered likely if a full blown recession didn’t occur. The recent job numbers on the surface can certainly provide a prima fascia case for that. There are a number of issues, but Paper Economy explains some of the reasons why those numbers may not be as comforting as some claim.

No Comments »