Wednesday, April 15, 2009

America's 20% Unemployment Rate

America’s 20% Unemployment Rate

By Carlton Meyer

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Measuring unemployment is an art that can result in widely varied rates. Not surprisingly, the U.S. Government uses a method that excludes millions of Americans seeking employment. This lower rate is used to prove that America’s economic system is superior to those in Europe. Their higher unemployment rates are blamed on unions and socialism, which guarantee workers health care and paid vacations. The implication is that while many American workers lack such benefits, at least they have jobs. This argument is faulty since unemployment is measured differently.

In the USA, 35% of healthy Americans ages 16-64 are unemployed, but what does that word mean? Millions of women are unemployed as they choose to stay home to raise families. Nevertheless, 25% of healthy American men ages 16-64 are unemployed, yet the U.S. Government reports an unemployment rate of just 8.1%.[1]

The 25% rate is from an annual federal survey last conducted in June 2008, well before the current economic slump added millions to the “official” unemployment rate of 8.1% for March 6, 2009. The 25% rate is the ratio of healthy American men ages 16-64 not working. This is misleading because it includes the two million Americans behind bars, while most 16 and 17-year olds remain in school. It also includes millions of Americans who voluntarily retire before age 65 and house-husbands who care for children while their wife works.

Nevertheless, an honest man would count anyone who would like to work as unemployed. The U.S. Government compiles data on these uncounted unemployed Americans, but does not mention it in news releases. It can be found in Table A-12 on the Department of Labor’s website where it shows an unemployment rate of 16% for Feb. 2009.[2] It explains why these unemployed Americans are not included in their official unemployment rate:

“Marginally attached workers are persons 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 recent past. Discouraged workers, a subset of the marginally attached, have given a job-market related reason for not looking currently for a job. Persons employed part time for economic reasons are those who want and are available for full-time work but have had to settle for a part-time schedule.”

In typical government doublespeak, it notes they are not “looking for work” but want work and “have looked for work in the recent past.” As a result, these people who want to work are not counted as unemployed. This 16% figure does not include a few million Americans who excluded by the survey parameters for these reasons:

-Students seeking work are never counted as unemployed. So anyone taking college classes at night and seeking a full-time day job is not counted as unemployed.

-Pensioners seeking work are never counted as unemployed. This includes those who receive a minimal monthly pension because they retired early, often forcibly. Soldiers in the U.S. military can retire with a small pension as young as age 37, yet they must find work to support their family. However, they are classified as retired and not counted as unemployed.

-Anyone seeking a full-time job who works a few unpaid hours a week at a family farm or small business is not counted as unemployed.

-People seeking their first job, such as recent high school and college graduates, and housewives are excluded. The logic is that since they were never employed, they are not unemployed.

These games allow the U.S. Government to report a current unemployment rate of just 8.1%, even though its own data of unemployed Americans who want to work indicates an unemployment rate of around 20%. This should concern all Americans because the unemployed burden society by collecting welfare or resorting to crime. A recent surge in Social Security Disability claims indicates another path the desperate unemployed are seeking.

Temp Jobs

The Obama administration is boosting economic activity with a massive spending package that will add two million jobs. Unfortunately, most of these are temporary jobs. President Obama and the U.S. Congress have dismissed the idea of a future stimulus since this year’s trillion dollar spending package has resulted in objections from America’s major creditors.

While America’s trade balance improved as Americans spend less, foreign nations hold trillions of dollars in American notes and bonds. China is the largest creditor, and has openly stated that it would like to reduce its holdings of dollar-based securities. The U.S. Congress has appropriated a trillion dollars in extra spending for 2009, yet most of the money has not been spent so the U.S. Treasury has yet to borrow all the funds.

There were concerns the Treasury would have to offer sharply higher interest rates to attract enough money to cover this year’s planned borrowing. Concerns ended when the U.S. Federal Reserve recently announced that it would buy another $300 billion in U.S. Treasuries.[3] The Fed can create all the money it desires with a few computer keystrokes, which is normally described as “the power of the printing press.” This made foreigners uneasy and dollar fell sharply.

Unemployment is expected to increase this year, despite the benefits of the current economic stimulus. Moreover, these jobs are temporary while the economy is threatened by a continued decline in home prices, a fall in commercial real estate values, and increasing consumer bankruptcies. As a result, the Obama administration must look at other options to increase employment.

American Jobs for American Workers

President Obama can instantly create 65,000 high-paying jobs for Americans each year by eliminating the H1-B visa program. An Internet search turns up hundreds of stories about corporate abuse of this program. It allows them to import skilled workers without proving they are unable to find American workers. Thousands of Americans have been laid off after corporations imported foreign workers, who are paid less and can’t complain about long hours because their work visa is only valid for the corporation that sponsored them. In cases where shortages of skilled American workers exist, like nursing, federal money should be devoted to training Americans.

Over 500,000 jobs would open for U.S. citizens if visa programs for unskilled foreign workers are eliminated. H2 work visas have been issued for decades at the request of major corporations, who claim that a shortage of American labor hampers their operations. There is obviously no labor shortage now, so visas should no longer be issued. Running these programs requires intensive manpower to review and conduct background checks of applicants, and to ensure that employers do not abuse their “indentured servants.”[4] If this burden were eliminated, Department of Labor employees could help American citizens find work with these corporations.

Corporate interests pressured the Bush administration to encourage the flow of illegal cheap labor over the southern border with amnesty efforts and limited enforcement. As the recent stimulus package was debated, some Congressmen expressed concern that up to 300,000 of the estimated two million jobs it would create may go to illegal aliens. However, Democratic leadership in Congress stripped a measure requiring employers who receive stimulus money to use the new federal Internet-based E-Verify program to ensure they hire only legal workers.[5] While this was explained as concern for minorities, it will deny jobs to thousands of poor minorities who are U.S. citizens.

Campaign contributions from corporations to keep cheap labor flowing is the real reason the millionaires occupying seats in Congress favor open borders. While compassion for desperate foreign economic refugees is understandable, every job they fill is a job denied to a poor American citizen. With 25% of American men ages 16-64 not working, it is impossible to argue that workers cannot be found. To evade debate, corporate spinmasters invented a derogatory term for those who believe Americans should be given preference for American jobs -- Nativists. This implies they are anti-immigrant, racist, and ignorant, so rational dialogue is unnecessary.

Given the dismal economic situation in Mexico, President Obama is foolish to encourage more illegal immigration with talks of another amnesty, disguised as “immigration reform.” Requiring employers use the simple E-verify system would open millions of jobs for citizens and encourage illegal immigrants to return home. A study of factories raided by U.S. Immigration enforcement in 2006 found that illegal workers were promptly replaced by higher paid legal workers.[6]

The federal government could create thousands of good jobs for American citizens by pressuring federal agencies and contractors to hire U.S. citizens when possible. The State Department staffs most its embassies with foreign workers. Some of this is necessary because of language requirements, but in most cases it is easier or cheaper to hire locals. Even if Americans must pay relocation expenses, the State Department could fill thousands of positions with Americans. The Department of Defense employs thousands of foreigners at its overseas bases; some 18,000 in South Korea alone. It should review each position with the idea of hiring U.S. citizens for these jobs, even if costs are slightly higher. A better idea is to close hundreds of outdated Cold War military bases overseas and move those jobs and related spending back to the USA.[7]

Tweaking the Workforce

There are systemic methods to reduce unemployment. For example, France cut its workweek to 35 hours, with the idea that employers must hire more people. The results are difficult to measure. Economists and businessmen prefer to measure success based on Gross Domestic Product (GDP), but that is a measure of economic activity, not quality of life. For example, the U.S. Government could boost GDP, reduce spending, and improve productivity by eliminating the 12 federal holidays, which provide paid days off for half of American workers. The economic benefits are indisputable, yet American workers would object to this “improvement.”

At one time, elderly Americans had their social security payments reduced if they continued working. This saved the system money and discouraged them from working, which opened jobs for younger workers. This was unpopular and eliminated as unfair, but it should be resurrected. A law that would ban social security retirement payments to anyone earning over $2000 a month in wages would save billions of dollars annually. This would be unpopular, but those who continue working in higher-paying jobs past age 65 do not need social security “retirement” checks. Those who object can retire so their job opens for others.

Some 20% of Americans are unemployed and want to work. As this number grows, governments are burdened by greater welfare costs and higher crime rates, while the unemployed pay little in taxes. Moreover, mass unemployment threatens the lives of all Americans with more crime, riots, and possibly a violent revolution. President Obama must demonstrate the leadership to help enact laws unpopular with small groups in order to help the entire nation.

[1] “Labor Force Statistics from the Current Population Survey”, U.S. Dept. of Labor, June 2008.

[2] “Table A-12. Alternative measures of labor underutilization”, U.S. Dept. of Labor, Mar. 6, 2009.

[3] “Dollar plunges after Fed plan to buy Treasurys", MarketWatch, Mar. 18, 2009.

[4] “Indentured Servants, Circa 2009”, Consortium News, Mar. 18, 2009.

[5] “More Puget Sound area employers are checking if workers are legal”, Seattle Times, Mar. 15, 2009.

[6] “Study shows wages rose after immigration raids”, The Hill, Mar. 18, 2009.

[7] “The Generals Have No Clothes”, SRA, Nov. 25, 2008.

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