April Unemployment 8.1%, Labor Force Shrinks Again
May 04, 2012
At the start of the new year, some economists said we should be “cautiously optimistic” about the 325,000 jobs added in December because of seasonal hiring and the tax incentives employers have to keep people on the payrolls until the end of the year. The latest jobs numbers for April corroborate their warning; it looks like it’s just going to be a slow Spring everybody.
The unemployment rate fell from 8.2% to 8.1%, but not because employers added jobs. Job creators in the United States added fewer workers than predicted for the month of April and the unemployment rate fell because people left the labor force completely. If people leave the labor force, it shrinks the pool. It turns out that a shrinking unemployment rate isn’t something to celebrate.
“The number of long-term unemployed (those jobless for 27 weeks and over) was little changed at 5.1 million in April. These individuals made up 41.3 percent of the unemployed. Over the year, the number of long-term unemployed has fallen by 759,000. (See table A-12.) The civilian labor force participation rate declined in April to 63.6 percent, while the employment-population ratio, at 58.4 percent, changed little.”
Employers only added 115,000, the smallest gain in six months. Economists estimated it would be about 165,000 after there were 154,000 additions in March.
“A slowdown in hiring as corporate optimism cools may restrain the wage growth needed to fuel consumer spending, which accounts for about 70 percent of the economy. Federal Reserve policy makers view unemployment as “elevated” and plan to hold borrowing costs low through late 2014.”
Consumer spending is declining because people have nothing left to spend their money on after they fill up their gas tank. When there are millions of Americans jobless and the cost to fill up their gas tank is higher than their car payment, the economy is going to slow. This is simple economics.
Obama’s economic policy is driving our stagnating economy. His energy policy is making gas more expensive. His healthcare policy is driving up costs. His tax policy is making employers not want to hire anyone. All of these policies may be good for his reelection efforts, but they are bad for business. April’s jobs report is just another proof that Obamanomics aren’t working.
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