It is very easy to forget in the midst of a half decade recovery from recession, that historically (from 1948 until 2012) the United States unemployment rate averaged 5.8%. For this reason, our our ongoing unemployment rate will be central to the Obama vs. Romney debate this evening.
During that time period of war, peace, prosperity, and recession unemployment reached an all time high of 10.8% in November of 1982, and a record low of 2.5% in May of 1953. In August of 2012, the unemployment rate fell to 8.1% from 8.3% in July.
People who are out of work are counted as unemployed only if they’re looking for a job. In August, America’s labor-force participation rate stood at 63.5%. It was down from 63.7% in July and down nearly 3% from its levels at the beginning of the recession in December of 2007. Since the beginning of the recession America has had more individuals drop out of the labor force, (4.1 million,) than find new jobs (2.8 million).
The Federal Reserve Bank of Atlanta has created a very useful non-partisan Jobs Calculator website that allows users to calculate the expansion in jobs necessary to reach any level of unemployment.
As an example, you can go to the site punch in 6% unemployment within three years and find out – assuming no changes in labor force participation rate – you need an average monthly gain of 193,000 jobs to reach your target.
Conversely, if you change the labor participation rate to what it was in 2007 you find you need almost double that total, 370,000, to reach the same 6% unemployment level.
It is this change in assumptions that leads conservative to contend the recovery is actually farther behind than unemployment levels reveal. At a 66% labor participation level, August’s unemployment rate would have been 11.6% rather than 8.1%.
I could waste your time and agree or disagree with the 100 plus economists who have made their predictions on what America’s unemployment rate will be initially reported as this Friday, but I don’t think anyone reading this truly believes there will be much change.
What America needs to know is how President Obama and former Governor Romney plan to move September’s unemployment rate to something closer to our historic level of 5.8%.
At this point it would benefit anyone not fluent in understanding how America’s Gross Domestic Product is calculated to review the six-part series on this subject available in the Business section of PolicyMic. But to save time, what we all need to hear tonight are specifics by both candidates on how their policies can enhance our economic recovery.
We need to hear how and why Governor Romney’s proposed tax cuts, reductions in regulations and expanded trade policies would boost investment in private sector capital expansion and enhance America’s competitive advantage in the global economy.
We need to hear why President’s Obama’s ongoing fiscal stimulus which supported AIG, assisted in the auto recovery, and rescued nearly a million under-water mortgage holders laid down a foundation for recovery that he believes has put us on a path toward long-term recovery.
We need to hear how both or either candidate plans to address economic recovery in the context of our growing entitlement liabilities which have fueled a rapid growth in the national debt.
Why is September’s unemployment data important? Because America’s economic future is only limited by how effectively our nation employs its most valuable resources.