Michael Carnuccio | October 10, 2014
Free Market Friday: Recovery or surrender?
Is it time to celebrate? A week ago, the federal government announced the unemployment rate finally, if only slightly, dropped below 6 percent. That number is misleading.
The unemployment rate is based on people actively looking for work. The rate goes down either because people get jobs or they give up looking. Much of the so-called recovery over the last few years has been due to the latter – people losing hope and giving up.
This week, the Liberty Foundation of America and 32 state-based organizations released a more telling analysis – the labor force participation rate, which measures how many people are employed or actively looking for work as a percentage of the entire population. It reveals what the unemployment rate conceals.
Last week’s government data shows the labor force participation rate has dropped to 62.7 percent, the lowest share of Americans working since 1978. Digging further, the data is even more discouraging and a wake-up call to those who believe the promises of big government politicians.
In many states, a disproportionate share of those who have left the labor force are minorities. In California, the overall labor force participation rate has dropped 2.9 percent since 2008. At the same time, the labor force participation rate for California’s African-Americans plummeted 6.8 percent.
Here in Oklahoma, a stronger economy has insulated us only partly from the national trends. While the overall labor force participation rate has declined 1.7 percent since 2008, the drop has been more severe for women (2.2 percent) and African-Americans (4 percent).
In 2008, then-Sen. Barack Obama won the presidency in part by appealing to Americans concerned about their economic prospects. He promised a million so-called stimulus jobs and another million new jobs in manufacturing. Obama won huge margins among minority voters, having promised programs that provide capital to minority-owned businesses, support outreach programs that help minority business owners, and so on.
Obama did start new government programs, expand existing ones, and spend (and borrow) trillions of taxpayer dollars. It just didn’t work – especially for minorities. It will never work. Although government can create conditions that allow economic growth, it can’t create economic growth.
Declining labor force participation rates are a stark reminder of the damage government can do when it tries to do too much.
Former OCPA President