Unemployment in the United States increased again last month to 9.1 percent, with the Obama economy adding only 54,000 jobs—the fewest in eight months. Today’s terrible jobs report is much worse than expected. Economists surveyed by Dow Jones Newswires had grimly predicted 160,000 new jobs and an unemployment rate of 8.9 percent earlier this week.
But despite the dismal news that 13.9 million Americans remain unemployed, President Barack Obama is holding a victory party today at a Chrysler plant in Toledo, Ohio, trumpeting the only jobs he can manage to create—those bought and paid for directly by the U.S. taxpayer.
The President’s celebration comes amid word that Fiat SpA will pay $500 million for the U.S. government’s remaining 6 percent stake in Chrysler Group LLC, taking majority control of the company. For the Obama Administration, that’s news enough to signify a corporate turnaround following its bailout of Chrysler and GM in 2009, a bright spot in a day where millions are out of work. But what the President likely won’t mention is the continuing costs of the auto bailout that have fallen on the backs of U.S. taxpayers.
According to the government’s own reports, those costs come up to a staggering $14 billion, out of $80 billion shelled out to bail out Chrysler and General Motors in 2009. Then there’s other subsidies provided to Chrysler, as well as other automakers, including a plea for a new $3.5 billion loan from the Department of Energy to fund retooling of plants for more energy-efficient cars. But if you listen to the President (or an ad from the Democratic National Committee), his actions are responsible for saving an industry. Not so fast.
The Heritage Foundation’s James Gattuso explains that Chrysler and General Motors are where they’re at today because of a bankruptcy process, not because of a costly bailout that could set a dangerous precedent down the road.
President Obama should get credit for finally forcing the two into bankruptcy in early 2009. Unfortunately, however, it was accompanied by a massive inflow of taxpayer cash, government ownership of the two firms, and a manipulation of the bankruptcy process to advantage politically favored interests (notably the unions) at the expense of shareholders.
Going forward, the danger is that this intervention will become a precedent, legitimizing bailouts as a standard tool of economic policy. Such a result would be disastrous not just to taxpayers’ wallets but to the economy as a whole as firms (and investors) evade the consequences of their own decisions.
And if you hear the President brag today about the Detroit Three’s increase in market share in May, take it with a grain of salt. The Detroit Free Press‘ Sarah A. Webster writes that “the gain was largely the result of the sizable setback Japanese automakers endured as a result of the horrific March 11 earthquake and tsunami, which devastated the country and left much of its industry scrambling to get back to work, to try to build microchips and cars, among other products.” That’s no cause for celebration, either.
And when the President brags about Chrysler’s increased sales, keep another thing in mind, too. It’s not the President’s favored green cars that Chrysler customers are snapping up—it’s Chrysler’s SUV, the Jeep Grand Cherokee, that has lifted the automaker.
Then there’s this: Last week, DNC Chairwoman Debbie Wasserman Schultz (D-FL) hyperbolically stated “we would be driving foreign cars” absent the President’s actions. Today, the President will celebrate his hand-picked buyer, Italian-automaker Fiat, taking a controlling stake of Chrysler. But don’t forget that the company’s Italian CEO Sergio Marchionne once called the American taxpayers “shysters” for the high rates on the loans Chrysler demanded.
As always, the devil is in the details, and they likely won’t be invited to the President’s victory party today. You probably won’t hear mention of the other losers in the auto bailout, either, like the shareholders who suffered so President Obama could financially reward his political allies at the United Auto Workers union. Unfortunately, they’re not the only losers in the Obama economy, as America learned with the unemployment numbers that came out this morning.
Federal Data Shows Troubling Unemployment Trends
Less than half of African-American men now have full-time jobs, and less than half of all white men will have full-time jobs in 2018, according to post-2000 trends hidden in federal population and workforce data.
There are roughly 14 million people formally labeled as unemployed, but “there’s probably 22 million to 23 million people who are unemployed, mal-employed or underemployed,” said Andrew Sum, an economics professor at Northeastern University in Boston.
The hidden data shows that “we’ve got an overwhelming job gap that effects men more than women, less-educated men more then better-educated men, and the group aged 25 to 29 the most,” he said.
One startling result, he said, is that only 43 percent of African-American men aged 18 to 29 have a full-time job.
This trend is obvious to T. Willard Fair, head of the Urban League of Greater Miami. He recently advertised two janitorial jobs via the unemployment office in his local town Liberty City. The city is 85 percent African-American, yet “only 2 of the 33 applicants were African-American,” he said. “The remainder were Hispanics or Haitians.”
“People want to work, and if they can find jobs, they would take those jobs … [but] blacks are no longer even applying for those kinds of jobs, or have concluded they’re not going to get those jobs,” he said.
There’s recently been a run of bad news about unemployment trends. That’s damaged the White House’s poll ratings, but the federal government’s unemployment estimate — now 9.1 percent — counts only a portion of the nation’s non-working population. That’s because the 9.1 percent counts only people who have sought work in the last four weeks, and have failed to find employment of 35 hours or more per week.
The count obscures the fact that many people have unwillingly ended their participation in the workforce.
The “employment population ratio” is a standard economic term that describes the percentage of work-ready people people who do have jobs. It ignores people who can’t work because they are in prison, nursing homes or full-time education.
In practice, the ratio of working people can’t go much higher than 85 percent because some of the people who can work chose to retire, or to consume savings or to rely on government payments.
In 2000, the employment-population ratio for male, black university graduates reached a high of 81 percent, or 87 percent if the calculation included graduates working in part-time jobs. That full-employment came at the tail end of the dot.com bubble — which burst in 2001 — and before the midpoint of an immigration wave.
At least 15 million legal and illegal immigrants, mostly young and unskilled, entered the country between 1994 and 2007.
Since 2000, for most groups, for most of the time, the employment population ratio has continuously fallen to levels far below 80 percent, even before the current recession, according to the government data that was analyzed and sent to TheDC by Northeastern’s Sum.
The full-time employment population ratio for white men fell from 62 percent in 2000 to 55 percent by 2010. That’s a drop of 7 percent in 10 years, or 0.7 percent a year. If that drop continues at the same rate, less than half of whites will be working by 2018.
If part-time workers are included, the ratio started at 74 percent in 2000 and fell to 67 percent in 2010.
Among all African-American men aged more than 16, the full-time ratio fell from 56.9 percent in 2000 to 46.4 percent in 2010. The inclusion of part-time work bumps the ratio upwards, but the ratio still fell from 67 percent to 58 percent in 2010.
Public opinion polls show that all the Republican presidential hopefuls are clustered in single- or teen-digit approval ratings. It should be no mystery why no one is breaking out of the pack: no one has answered the number-one political question.
Why did millions of good blue-collar jobs go overseas and what is your plan to restore them? Who and what is responsible for this national disaster?
We now have a combination of 10 percent unemployment, much more chronic underemployment, and heavy personal debt incurred to prepare for jobs that do not exist. Middle-class voters have been badly hurt both by job losses and by stagnation in living standards.
Underemployment has been described by examples in the Wall Street Journal. They include the man who lost his $150,000-a-year job as a money manager and is now making cappuccinos at a Starbucks for $8.85 an hour, and the former manufacturing manager with two master's degrees who is now working as a janitor at $9 an hour after he was turned down for 1,000 other jobs.
Are we losing, or have we already lost, the American middle class, which is the socio-economic factor that long distinguished us from other nations? Whatever happened to the jobs that enabled middle-class men to support a fulltime homemaker taking care of their own children?
This huge voting constituency is up for grabs in 2012. But Republican presidential candidates have failed to offer solutions.
The opportunity is ripe for Republicans because Obama continues to pander to his constituencies who receive government handouts for their living expenses. He even caved in to the feminists' tantrum that he give the majority of Stimulus jobs to women, not to the men who had lost their jobs.
Then he appointed General Electric's CEO Jeffrey Immelt as his jobs czar (director of the Council on Jobs and Competitiveness). As CEO, Immelt reduced the value of GE's stock by half, closed GE's U.S. plants, laid off the workers (including all those who made Edison light bulbs), and by 2010 had 54 percent of GE's employees overseas.
During the 1990s, U.S. multinationals added workers everywhere on a two-to-one ratio of American to overseas jobs. However, U.S. Commerce Department data show that in the 2000s, U.S. multinationals cut their American work forces by 2.9 million while creating 2.4 million jobs overseas, many of them for high-skilled employees.
In the recession year of 2009, multinationals cut 5.3 percent of their workers in the U.S. and only 1.5 percent of their jobs overseas. Reporters say company executives are very squeamish about revealing or talking about how many of their workers are overseas.
The U.S. Chamber of Commerce pointed out that 26 percent of its member companies say they are hurt by China's "indigenous innovation" policies. The Chamber's survey also found that more than half of U.S. companies say that non-Chinese enterprises simply cannot get the same licenses that are given to Chinese companies.
Even the American Chamber of Commerce in China, a big supporter of free trade, is now complaining that China is violating free-trade pledges by limiting market access and shielding its industries from competition. Beijing demands that foreign companies hand over U.S. technology, openly brags that China favors Chinese companies when buying computers and other technology, and orders banks and other companies to limit their use of foreign security products.
The Chinese government is helping local Chinese businesses in technology, energy, aviation and other fields in order to establish Chinese dominance in those fields. The U.S. Chamber says those policies are "a blueprint for technology theft" and force non-Chinese firms to hand over their ideas, patents, trade secrets, and know-how as the price of doing business in China.
Why is anybody surprised? China has a Communist government and is aggressively protectionist.
The American Chamber of Commerce in China's annual White Paper reported that China clearly supports domestic companies at the expense of non-Chinese companies by regulations on "indigenous innovation, licensing, standards, government procurement, competition law, and IP enforcement." These regs, combined with forbidding non-Chinese access to major industries, show that China, despite World Trade Organization membership, has no intention of allowing free and open markets.
Last December, U.S. trade negotiators (who are always outwitted by the Chinese) thought they were getting a promise that Chinese local governments would not be required to buy locally developed technology products and that China would stop using stolen software. There is no evidence that China complied; U.S. negotiators had failed again.
The question that should be asked of all candidates is: Do you support the globalism and free-trade policies that require Americans to compete for jobs with Chinese who work for only 40 cents, or even $2, an hour?
Today, President Obama sent Congress a $3.73 trillion budget that destroys jobs by spending too much, taxing too much and borrowing too much. The House and Senate Budget Committees, led by Chairman Paul Ryan (R-WI) and Ranking Member Jeff Sessions (R-AL) respectively, have provided an overview of how President Obama’s budget will make it harder to create new jobs today and mortgages the future of our children and grandchildren. For example, the Obama Administration wants to:
Increase spending by more than $8.7 trillion, despite the recommendation of 150 economists who have told the White House that spending cuts are needed to create a better environment for job creation;
Impose $1.6 trillion in new taxes, imposing higher costs on job creators and creating more uncertainty at a time when our unemployment rate has been at or above nine percent for 21 consecutive months; and
Add $13 trillion to the national debt, doubling the debt over the President’s first term and tripling it in the 10 years after he first took office.
In a statement on the President’s budget today, House Speaker John Boehner (R-OH) warned that “by continuing the spending binge and imposing massive tax hikes on families and small businesses,” the president’s proposal “will fuel more economic uncertainty and make it harder to create new jobs.” The 150 economists who signed a statement to President Obama agreed, arguing that immediate action is needed to “eliminate unnecessary federal spending, prevent tax hikes, stop regulatory threats to job creation, and enact reforms to put our nation back on a true path to prosperity.” That’s why the new majority will continue keeping its Pledge to America and working to create a better environment for job growth by voting this week to cut $100 billion in discretionary over the next seven months, with more cuts to come – including what Boehner calls a “comprehensive budget for the next fiscal year that will contrast sharply with the president’s job-crushing FY12 budget.”
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