More on economic news

The Heritage Foundation, which I support with my hard-earned money through automatic deductions, has published a whitepaper, "Framing the Economic Debate" which addresses many of the "hot button" issues of this election. One of those issues which the Democrats have attempted to make hay on is "discouraged workers", a term that describes people who have been unemployed for so long that they've given up looking for work.

As it turns out, the Bureau of Labor Statistics actually tracks them.

Some critics contend the current low rate of 5.4 percent is a mirage because it neglects to include all the discouraged workers. The problem with that argument is the fact that BLS counts discouraged workers and even publishes an alternative "underemployment rate" called U-4, which is barely higher than the official rate. There are no more discouraged workers today then there were in the mid-1990s.

So, political rhetoric aside, this claim is bogus.

Another claim that is made is that not as many people are participating in the workforce due to the "problems" with the economy. That claim actually has some validity, but its cause is interesting.

The fallback critique is that labor force participation has declined from a peak of 67.2 percent in January 2001. That's true, but most of the decline was due to 9/11, not the recession. It was 66.8 percent in October 2001, then 66.0 percent in August 2004. Analysts need to consider the reality that labor supply has changed, not just labor demand. Two other points illuminate:

• First, the participation rate of women over 20 is the same as it was in 1997 and higher than every year prior. (Source: Bureau of Labor Statistics)
• Second, the decline in total participation rates since 2001 is largely driven by the unprecedented dropoff in teenagers aged 16-19 who are willing to work, from 52 percent in 2000 to 43 percent in 2004. (Source: Bureau of Labor Statistics)

So it's those pesky teenagers that are causing all the trouble....

One of Kerry's consistent claims is that new jobs being created are not "quality" jobs - that the "good" jobs are being outsourced overseas. BLS statistical analysis decisively refutes his claim.

Worker pay is a sign of job quality. The Labor Department's measure of real hourly earnings is one of many pay statistics and includes all monetary compensation but not benefits. It only counts earnings for non-executive workers, unlike other measures.

• During the 1980 and 1990 recessions, real hourly earnings declined. (Source: Bureau of Labor Statistics)
• But even during and after the 2001 recession, real earnings have risen--by 2 percent since the recession began in March 2001. (Source: Bureau of Labor Statistics)
• Real earnings are higher now than at the height of the dot-com boom in 2000. (Source: Bureau of Labor Statistics)

There's a great deal more information in this paper.

The growth rate is much higher than in the halcyon days of the 1990s when the Clinton economy was supposedly roaring. Business investment increased dramatically after the tax cuts took effect. The US has actually insourced more jobs than it's outsourced. The poverty rate is lower than it was in 1998 and the preceding fifteen years. On and on it goes.

The conclusion?

The economy has added more than 1.5 million payroll jobs over the past year and nearly 2 million jobs on the household survey. Most indicators point towards continued growth. Output is booming, the manufacturing outlook is positive, business confidence is high, and productivity continues to set records. Even such favorites among economic pessimists like data on long-term unemployment, manufacturing employment, and worker discouragement are showing marked improvement. Unfortunately for the pessimists, these are the facts that frame the debate on the economy today.

So when Kerry tells you that the economy is not doing well, it's nothing more than rhetoric.

We're doing much better than we did under Bill Clinton.