The right can't handle the truth that the economy is healing


IF ANYONE had doubts about the madness that has spread through a large part of the American political spectrum, the reaction to Friday’s better-than- expected report from the Bureau of Labor Statistics should have settled the issue. For the immediate response of many on the right – and we’re not just talking fringe figures – was to cry conspiracy.

Leading the charge of what were quickly dubbed the “BLS truthers” was none other than Jack Welch, former chairman of General Electric, who posted an assertion on Twitter that the books had been cooked to help President Barack Obama’s re-election campaign. His claim was quickly picked up by right-wing pundits and media personalities.

It was nonsense, of course. Job numbers are prepared by professional civil servants at an agency that currently has no political appointees. But then maybe Welch – under whose leadership GE reported remarkably smooth earnings growth, with none of the short-term fluctuations you might have expected (fluctuations that reappeared under his successor) – doesn’t know how hard it would be to cook the jobs data.

Furthermore, the methods the bureau uses are public – and anyone familiar with the data understands that they are “noisy”, that especially good (or bad) months will be reported now and then as a simple consequence of statistical randomness. And that, in turn, means that you shouldn’t put much weight on any one month’s report.

In that case what is the somewhat longer-term trend? Is the US employment picture getting better? Yes it is.

Some background – the monthly employment report is based on two surveys. One asks a random sample of employers how many people are on their payroll. The other asks a random sample of households whether their members are working or looking for work. And if you look at the trend over the past year or so, both surveys suggest a labour market that is gradually on the mend.

On the employer side the current numbers say that, over the past year, the economy added 150,000 jobs a month, and revisions will probably push that number up significantly. That’s well above the 90,000 or so added jobs per month that we need to keep up with population. (This number used to be higher, but underlying workforce growth has dropped off sharply now that many baby boomers are reaching retirement age).

Meanwhile, the household survey produces estimates of both the number of Americans employed and the number unemployed, defined as people who are seeking work but don’t now have a job. The eye-popping number from Friday’s report was a sudden drop in the unemployment rate to 7.8 per cent from 8.1 per cent, but, as I said, you shouldn’t put too much emphasis on one month’s number. The big point is that unemployment has been on a sustained downward trend.

But isn’t that just because people have given up looking for work, and hence no longer count as unemployed?

Actually, no.

It’s true that the employment/population ratio – the percentage of adults with jobs – has been more or less flat for the past year. But remember those aging baby boomers – the fraction of American adults who are in their prime working years is falling fast. Once you take the effects of an aging population into account, the numbers show a substantial improvement in the employment picture since the summer of 2011.

None of this should be taken to imply that the situation is good or to deny that we should be doing better – a shortfall largely due to the scorched-earth tactics of Republicans who have blocked any and all efforts to accelerate the pace of recovery. (If the American Jobs Act, proposed by the Obama administration last year, had been passed the unemployment rate would probably be below 7 per cent.)

The US economy is still far short of where it should be, and the job market has a long way to go before it makes up the ground lost in the Great Recession. But the employment data do suggest an economy that is slowly healing, an economy in which declining consumer debt burdens and a housing revival have finally put us on the road back to full employment.

And that’s the truth that the right can’t handle. The furore over Friday’s report revealed a political movement that is rooting for American failure, so obsessed with taking down Obama that good news for the nation’s long-suffering workers drives its members into a blind rage.

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