An Unrecovered Economy and the Growth We Need

America's unemployment rate is higher than you've been told — but real solutions and courageous leadership can get the nation back on track.

By Rob Schwarzwalder Published on October 31, 2016

During the current and, thankfully, almost concluded presidential campaign, economic growth has received little serious discussion. It should have, because the state of the economy and its prospects for a sustained and healthy rebound in coming years do not inspire confidence in the future well-being of our country.

There are almost 160 million people in the civilian U.S. labor force. That’s people who can and should be working. Yet labor force participation is only 62.9 percent, the lowest level since 1982.

Now of course a child of five or a senior of 95 should not be in the workforce. But there are many millions of people who should be and who want to be, but cannot find adequate employment.

We’ve heard in recent days that the unemployment rate is a little over five percent (about 7.9 million people). This measurement is dubious at best. The Bureau of Labor Statistics (BLS), a somewhat obscure but very valuable federal agency, reports the unemployment data monthly, and usually the “unemployment rate” is the statistic that gets the most press coverage.

But there is another point of data within the monthly BLS report that gives a much fuller portrait of how many of us have the kinds of positions traditionally called “jobs:” the BLS U-6.

The Actual Rate of Unemployment in America

The U-6 counts the five percent noted above plus those “marginally attached to the labor force,” defined as “those who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the past 12 months.”

So, last month, the actual rate of unemployment in our country was 9.7 percent, or nearly double the rate reported generally.

The U-6 also counts people who are working part-time “for economic reasons,” or, in other words, who want to work full-time but can only find part-time jobs.

So, last month, the actual rate of unemployment in our country was 9.7 percent, or nearly double the rate reported generally.

Equally troubling is that the average monthly job numbers in 2016 are well below those just last year. “Thus far this year,” the BLS reported in October, “job growth has averaged 178,000 per month, compared with an average of 229,000 per month in 2015.”

High unemployment and sluggish job growth are not what most people associate with “recovery.”

Other major indicators are disturbing, as well. Since Barack Obama became President, the lowest earners have lost income; entitlement spending has gone up significantly; and investment has declined dangerously. These interpretations of data are not the unduly somber warnings of a partisan depressive but the calm analysis of Harvard Business School economists issued last month in their report, “Problems Unsolved and a Nation Divided: The State of U.S. Competitiveness 2016.”

Real Solutions

President Obama’s statist solutions to economic ennui have not helped. Yet the Harvard group that released the new report recognize that our economic strength has long been more steroidal than genuine.

These economists argue that “U.S. competitiveness has been eroding since well before the Great Recession. America’s economic challenges are structural, not cyclical. The weak recovery reflects the erosion of competitiveness, as well as the inability to take the steps necessary to address growing U.S. weaknesses.”

What’s most aggravating about all of this is that there is nothing inevitable about it. In particular:

  • Establishing long-term federal spending priorities, with an emphasis on defense, intelligence, and nationally significant infrastructure improvements is imperative.
  • A simpler and fairer tax code for families and the companies where they work.
  • Modernizing our metastasizing but broken system of federal “entitlements,” Social Security, Medicare, and Medicaid.
  • A trade policy that prioritizes American interests.
  • A willingness to say “no” to valuable but inessential federal programs.
  • A refusal to commit economic suicide through walling-off vast spaces from mineral and energy exploration.
  • Incentivizing entrepreneurs to innovate, open new stores and plants, and create new and better products.

This is not a comprehensive list but at least captures the basics of economic growth, higher productivity, and job creation. It also assumes that the American people and their political leaders have the moral courage and sustained discipline to make these things happen.

Inspirational political leadership like that shown by America’s last great visionary, Ronald Reagan, and a calling of the people to “the better angels of their nature” (Lincoln) and the bracing air of national purpose (Kennedy) is critical to this project.

That such leadership is lacking should encourage those eager to provide it to come forward. And not to care what the reactionary liberal press corps says about it.

Leaders should be inured to name-calling. Being called heartless, mean-spirited, or appellations of the same ilk should not dissuade them from advancing an economic agenda of productivity and employment. Those on the downside of advantage most particularly need their courage.

This goes beyond the presidency. A new generation of leaders who understand the dynamism of the open market, people like Paul Ryan and Ben Sasse, can and should seize this moment to, if nothing less, make public arguments persistently and bravely about the real ingredients of growth. They should not wait.

 

Earlier in his career, Schwarzwalder was Director of Corporate Communications at the National Association of Manufacturers.

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