We don't need any more immigrants: Population increases have outpaced labor force increases for a decade

Before the Great Recession the growth rate of the labor force easily exceeded the growth rate of population for decade after decade, but since then the situation has reversed dramatically.

Population has been increasing at a rate 75% higher than the labor force over the last decade. The increased population is not assimilating to work.

THERE IS NO LABOR SHORTAGE.

Increasing the population of the non-working has been the number one drag on the economy, causing GDP to fall and debt to rise, negatively impacting every standard measure.

Alan Greenspan's tight labor market is fake news: Unemployment is really 8.4%

In September 2018, the civilian labor force was just 62.7% of the civilian noninstitutional population (161.958 million X 100 / 258.290 million = 62.7).

Not seasonally adjusted, this yielded an unemployment rate of 3.6% (5.766 million unemployed X 100 / 161.958 million = 3.56, before rounding up).

Unfortunately that's only because the labor force shrank by 8.5 million since 2008. The labor force then averaged 66% of the civilian noninstitutional population, not today's 62.7%.

Taking 66% of September 2018's civilian noninstitutional population means a labor force of 170.5 million instead of the not quite 162 million we've actually got. Where'd all those 8.5 million go? New Zealand?

Add 'em back in on both sides of the equation, both to the size of the labor force and to the unemployed, because they are obviously not working, and unemployment soars to . . . 8.4% (14.266 million unemployed X 100 / 170.458 million = 8.36).

All this labor slack is the reason wages fail to go up at rates of 3-4% as in previous recoveries.

It's not a tight labor market.

If we had 66% of the population in the labor force like we still did in 2008, it would be 8.5 million larger in 2018 than it is

dailyvaluewatch.blogspot.com

It's a myth that we need more immigrants when the share of population increases joining the labor force is down 59%

Noah Smith embraces the Trump narrative: "There’s no doubt that the U.S. economy is in a boom"

Here for Bloomberg.

After examining several indicators, which, however, are not unequivocal for their interpretation despite saying "no doubt", Noah Smith comes down on the side of improved sentiment as the cause of the current "boom".

On that we agree. There's a boom in sentiment.

The problem is, too many people are importing that improved sentiment into their reading of the data, and into their choice of the data.

For example, Smith focuses on job openings to unemployed, which is a tiny measure (6.66 million in June) of what's really going on in the labor market. But the broadest measures of unemployment still show 15.9 million unemployed, underemployed, and no longer counted in the labor force. There is still huge slack in the labor market, which is one reason why wages for the vast majority of workers are not rising like they would in a real economic boom (2.7% y/y in July vs. in the 4s in 2006/7).

Similarly Smith discusses the percent of population employed aged 25-54, but clearly misses that it's most definitely not "back to 2006 levels" as he claims (H1 2018 is at 79.2%, still below the 2006 average of 79.8% and also below the average of either half of 2006). The broadest measure of the percent employed, on the other hand, still shows a huge gap between now and the pre-Great Recession average when over 6 million more were employed than are at present (60.5% now vs. 62.9% then, on average).

The case is similar with domestic investment.

Smith chooses to highlight "Shares of gross domestic product: Gross private domestic investment: Fixed investment: Nonresidential (A008RE1Q156NBEA)" to show that "investment as a percentage of the economy is at about the level of the mid-2000s boom". But the current level in H1 2018 at 13.7% is also identical to H2 2014. Was that indicative of a boom? Did we blink and miss it? How about in H1 2008 when it was again at 13.7%? Was that indicative of a boom? If so, why did the economy then promptly crash in H2 2008?

A broader measure of domestic investment, however, "Shares of gross domestic product: Gross private domestic investment (A006RE1Q156NBEA)", shows us well off the 2006 peak and even the more recent 2015 level. Whatever we call what we have right now, the current 17.7% is still far below the 19.8% level of H1 2006, which itself failed to equal the boom level of the year 2000 (19.9%).

With all that cash unleashed by the tax reforms and sloshing around in the economy, one would think things would look a lot better than this, which simply shows that most of that money indeed went elsewhere.

GDP has been temporarily goosed by the tax reforms in concert with a fresh gusher of federal deficit spending. But those are one-offs. They will not, and cannot, be repeated over and over again in short succession.

We know what comes next.

Author finds cost of housing and daycare to be the main drivers of the middle class "squeeze"

From the transcript of the podcast here:

Middle-class life is 30% more expensive than it was 20 years ago. ... The main problem is the cost of housing. ... The second problem was the cost of daycare. A lot of it had to do with wages that were just not keeping up with other kinds of expenses. ...  [R]eal estate is no longer a place to live, but it’s an investment vehicle. That has driven up the cost of housing for ordinary people or the precarious middle class, as I call them. 

Unstated here is the new necessity of two incomes once women entered the labor force in quantity after the 1960s under the influence of feminist ideology. For the first twenty years of the post-war this was not so. When you dramatically increase the size of the labor force, the cost of the labor naturally comes down. The result was that women entering the workforce increased their average real income, but only just enough over time to pay for the cost of daycare, a wash. Meanwhile real male incomes stagnated.

Women working in large numbers naturally put pressure on the future growth of the labor force as well. Because they were not having the children who would become the country's next workers, a future labor shortage was inevitable as the post-war 4-child families transformed into 2-child families.

Enter the pressure to increase immigration, wink at low-labor-cost illegal immigration, and export jobs, a new era of which was inaugurated under George H. W. Bush in 1989, who doubled the level of legal immigration overnight, and under his son George W. Bush in 2001, who presided over the export of 3 million manufacturing jobs, a trend continued under Barack Obama who exported 3 million more. Manufacturing jobs had been the most important anchors and hubs for middle class jobs in American communities, the absence of which turned college from an option into a necessity in order to maintain what was formerly possible with only a high school diploma. Increase the demand for college, and you increase its price, and with it the pressure on stagnating pocketbooks.

Housing prices rose dramatically from the late 1990s in consequence of the fateful decision under Bill Clinton to unleash the savings hidden in the nation's housing stock for sixty years. Clinton signed in 1997 the libertarian Republican legislation rewriting the tax laws which had forced homeowners to stay in their homes or move up to avoid large capital gains tax hits. Large economic forces were behind this, not the least of which was the growing sense of the unsustainability of the middle class consumption culture without a new source of savings. 

The birth of the housing ATM under Reagan in the 1980s had no doubt prepared the way for these developments, who infamously did away with the tax deductibility of credit card interest while increasing the same for home equity lines of credit. The effect was to get the children of the Baby Boom to think of their homes as mere commodities which could be exploited to extract value. The liquidity unleashed by the Clinton legislation ten years later hit the economy like a tidal wave, driving prices higher and higher into the now infamous housing bubble as homes were churned by flippers and families alike. It took just ten years of that to drive the economy into the worst panic it had experienced since the Great Depression.

Reversing these horrible developments would require a civilizational transformation of values which in the past only Protestant Christianity seems to have been able to provide. Feminist ideology, like all ideology, has done nothing but take away. The revaluation of values necessary in our situation would have to begin with women insisting on fidelity and marriage once again. Women are biologically predisposed to the self-sacrifice needed. To get the men to go along they will need a Lysistrata, but she's probably not Camille Paglia.

Communism works in only one place.  

The headline writer at The Hill gets it wrong, but the article author gets it right

People returning to labor force in droves — a key step for the economy, says the headline, but the article says no such thing.

The story author makes many astute points, which the headline writer obviously doesn't understand.

The labor force is growing, but gradually, as is the percentage of the population actually working. We ought to have north of 62% working as was true before the Great Recession instead of 60% now, but the direction is up, if gradual.

This means we are NOT at full employment. People who dropped out are dropping back in, looking for work, and finding it, gradually.

This is dispelling the myth that the decline in the labor force was structural, and permanent. It isn't.

This also explains why wages aren't rising dramatically. Employers still have bodies to choose from as people who formerly sat on the sidelines get back in the game. Employers still do not have to pay dramatically higher wages to keep the employees they have. They still have employees to choose from.

In a nutshell, it's not a boom, but it is overall a return to the right direction.

Slow wage growth remains a mystery to economist Noah Smith

Here.

And they call economics a science.

It's not a mystery if you question your presuppositions, for example that the economy is strong, and that the unemployment rate tells you something meaningful. But that might be too much to ask of an economist.

Strong growth is relative. Economic growth in the post-war began with a big bang and has been cooling off ever since. Compared to the beginning, we're half as robust today. So the economy is not strong, just operating in concert with inertia.

The unemployment rate is very low, but only because so many people have dropped out of the labor force at the same time that the slowest jobs recovery in the post-war has occurred. The low unemployment rate is an artifact of this concurrence.

Presently there are over 16 million people unemployed, underemployed, and not in the labor force who want to work. That's why wages aren't growing. We're still flush with labor, and business knows it.

You can be replaced.

Like unemployment generally, black unemployment is so low because near record numbers of them aren't in the labor force

And presto! Down comes the unemployment rate when you stop counting them.

It's a numbers racket for blacks no different than for everyone else.

Maybe dropouts from the labor force were a cause of the Great Recession rather than a result

The high rate of dropping out of the labor force we've become accustomed to since the Great Recession actually predates it by a decade, suggesting that dropping out may be a cause of the Great Recession rather than a result of it. Continued slow growth of GDP since the Great Recession can also be explained by the absence of these inputs.

Jeffrey Snider: Fix the suffering in the labor force or next time you might actually get socialism

Here:

The American labor force is suffering like it hasn’t since the 1930’s, but nobody seems willing to challenge Economists’ easily disproved claims.

Into that vacuum had swept Mr. Trump himself, but also Mr. Sanders. The mere election of the former didn’t immediately fix the problem; rather, things have gotten worse since the campaign ended (to be clear, it had nothing to do with Trump . . .). May Day is still only trending toward becoming an official holiday.

What labor shortage? We have 1 million more people 20 to 24 years old than we did in 1979, but 400,000 fewer counted in the labor force and 20,000 fewer actually working

What labor shortage? We have 800,000 more people 25 to 54 years old than we did 10 years ago, 830,000 fewer counted in the labor force, and 45,000 fewer actually working

What labor shortage? We have MORE teens in 2018 than in 1978, but 3.5 million fewer are counted in the labor force and 2.7 million fewer WORK

Laugh of the day: Trump's goal is reportedly 208,333 new jobs every month for 10 years

So says the story at The Daily Caller here.

Har har HAR........dee har har.

After 16 months (November 2016 inclusive through February 2018) the actual monthly rate of gain has been 182,500.

If you prefer from inauguration month instead of election month (January 2017 inclusive through February 2018), 14 months, the actual monthly rate has been 177,214.

February 2017 inclusive, first full month of presidency, through February 2018, 13 months, the rate has been 175,461.

From the post-recession low in February 2010 (not inclusive), exactly 8 years ago, through February 2018 the actual monthly rate of gain has been 192,197.

So by no measure of Trump's performance is he yet anywhere near the actual average performance post-recession of 2007, let alone near his own goal.

The best overall performance in living memory was under Bill Clinton when monthly gains averaged over 242,000 monthly over 8 years. But this coincided with the peaking of the Baby Boom in 1957 clocking in 20 years in the labor force by the end of the Clinton era, in 1999. The Baby Boom fueled the Clinton boom in every way, from jobs to housing to GDP, and also the stock market.

It's been all downhill from there.

Since peak total nonfarm employment in February 2001, just before the recession of that year through February 2018, the economy has added only 75,500 jobs a month. 

Good luck to Mr. Trump, but the demographic odds are not in his favor, on top of the headwinds from his own immigration policy.

In this context Trump's stated goals do not reflect knowledge of reality or self-knowledge, only hubris.

We have met the enemy and it's corporate America, for supporting amnesty

Farcebook, IBM you bm we all bm, Microsoft, Marriott and NAM, the National Association of Manufacturers.

Gee, US manufacturers want the cheap foreign labor just as much as the hotels. What was that again about bringing the manufacturing jobs back to America, Mr. President?

Corporate America ADMITS they hire illegals instead of you, here:

Ending protected status for DACA recipients would push them out of the legal workforce – costing companies as much as $1.8 million a day in restaffing, according to the think tank New American Economy. America's corporate titans have cited the potential damage to the nation's labor force in urging Congress to find a solution for those workers before the program officially winds down March 5.

There's something you don't see everyday: Grossly UNDERESTIMATING "not in the labor force"

It's actually 94.6 million in July 2017, not 50 million.

Among all those millions, just 5.4 million "want a job now". The rest are old and retired, young and in school, unable to work because of disability, homemakers, etc.

You people out there just don't get it.

If employers could fire 30 million of your asses in 2009 and get along just fine without you, they still can.

On Hannity with Mark Simone, Stephen Moore just said we still have 94 million Americans "of working age" still out of work

There's a statement which is utterly false, and should end Steve Moore's credibility as an economist forever, but it won't.

The metric measures everyone aged 16 and older who is not in the labor force, the vast majority of which are not in the labor force for very good reasons.

For one example, young people in high school, college and graduate school are included in this number. In 2017 they number about 37 million people.

For another, in March 2017 another 45.7 million were over 65 and getting Social Security. In other words, retired.

Together that's nearly 88% of the current 94.4 million "not working".

That leaves 11.7 million "not working", some of whom are disabled receiving Social Security but some disabled are still working, trying to lead productive lives despite their handicaps.

Typically the rest are homemakers, who are trying to make sure their kids aren't rotten like yours.

George Mason University should take away Steve Moore's MA in economics, if you ask me.

And even if you don't.

Drudge as Trump propagandist: Switches to "total employed" from "95 million not in labor force"

Drudge is excited about 5.6 million extra jobs . . . after 10 years

Trump ... goooooooood.

Obama ... baaaaaaaaaad.

Steve Liesman tries to be charitable to Trump on 96 million wanting a job, but comes up short 5.9m

From the story here:

Trump said that there "are 96 million wanting a job and they can't get (one). You know that story. The real number. That's the real number."

It is unfortunately very far from the real number. There are in fact 96 million Americans age 16 and older who are not in the labor force. Of this, just 5.4 million, or 91 million fewer than the number cited by Trump, say they want a job. The rest are retired, sick, disabled, running their households or going to school. (This number is 256,000 fewer than last year and 1.7 million fewer than the all-time high for the series in 2013.)

... A more charitable explanation for Trump would expand the number to include those people who are working part time because they can't find full-time work, all the unemployed and those marginally attached to the workforce. This broader measure of slack in the economy, known as the U6, is about 14.7 million. It's the lowest since May 2008, and has come down by nearly 12 million since the worst of the job market effects of the financial crisis in 2010. And remember, many of these folks have work, though it's part time.

This isn't charitable enough because Liesman never adds the 5.4 million to the 14.7 million. He must know you can't do this because that would involve double counting. The monthly Employment Situation Summary always includes the "marginally attached" in the expanded figures, people who are not in the labor force, but they are a subset of the 5.4 million.

But this can easily be remedied, and one wonders why the BLS doesn't do this.

Here's the data, with links.

Not in the labor force, not seasonally adjusted, is 95.8 million.

Not in the labor force, want a job now, not seasonally adjusted, is 5.45 million (peak was 7.2 million in May 2013).

The unemployed represent another 7.5 million from the monthly Employment Situation Summary. Those who work part-time but would rather have full-time represent 5.6 million more in the same report. But both of those groups are in the labor force, a total of 13.1 million.

To those 13.1 million simply add the 5.4 million from not in the labor force above and you get 18.5 million unemployed.

To get that expressed as a percentage you have to add the 5.4 million in to the civilian labor force because they want a job now, here, because the unemployment rate is the unemployed as a percentage of the labor force, which by the addition is now larger, 164.4 million.

So that yields a real unemployment rate of 11.3%. The U6RATE comes up quite short of this, at 9.2%. Meanwhile most people think everything's great because the headline rate is only 4.7% (7.5 million unemployed as a percentage of 159.6 million in the labor force).

There are not 96 million unemployed as Trump laughably says, but neither are there the 12.6 million Liesman ends up with, either.

18.5 million are unemployed in December 2016, at a rate of 11.3%.