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Katy Grimes

Government Manipulations Create Unemployment Purgatory

Nearly every news outlet in California has been gleefully reporting that the state economy is bouncing back. While recent news reports show unemployment has slightly dropped, the facts show otherwise — particularly telling is how the Legislature is so focused on increasing the minimum wage, rather than improving the business climate.

Unemployment in the state, and across the country, is worse than is being reported. And, it is far more complicated than a slight economic uptick, or slight “drop” in unemployment.

We’re creating jobs at a slower pace now than at the same time last year. And with the supposed drop in unemployment, the underemployed and those “no longer in the labor force” are issues rarely reported. There is no coincidence between dropping unemployment numbers, and the increase of underemployed and those “no longer in the labor force.”

Consider these facts, according to the U.S. Bureau of Labor Statistics:

  • ·         92 million Americans are not working — nearly one in four Americans are without work;
  • ·         37.2 percent of Americans have not participated in the labor force since December;
  • ·         7.3 million Americans are working part time because their hours have been cut back, or they are unable to find a full-time job;
  • ·         2.1 million Americans are “marginally attached to the labor force;”
  • ·         In the U.S. since the recession ended in 2009, we have added 12 million people to a category labeled by the BLS as “not in the labor force;”
  • ·         Nearly one in six Americans, 50 million people, are actively receiving food assistance. This is a 15 percent growth rate, while the overall population has increased only 4 percent during this same period;
  • ·         20 percent of American families do not have a single person that is working;
  • ·         1.5 million of the 38 million Californians are unemployed.

The BLS currently reports unemployment in the United States is about 6.3 percent. Economist John Williams says the government’s numbers are not even close to the real unemployment.

Williams calculates the rate of employment using the same methods used prior to 1994, when under the Clinton Administration, the Bureau Of Labor Statistics changed the methods it used to calculate the levels of unemployment in the U.S., by bureaucrats looking to pad the numbers, according to Williams.

While the changes appeared to be minor at the time, the impact today is likely far greater than originally imagined, according to Williams.

According to Williams, unemployment throughout the country is really more than 23 percent, and says the government’s numbers are off by a whopping 265 percent.

As of the end of April, California’s reported unemployment rate was still very high at 7.8 percent, higher than the national average, according to the Bureau of Labor Statistics.

Yet, when examined more closely, the real unemployment rate is 16.7 percent, even according to the Bureau of Labor Statistics’ broader measure of unemployment called the U-6, which takes into account all of the unemployment variables. However, while the U-6 is a more complete picture of unemployment in the U.S., it does not count those that are considered “No longer In Labor Force.”

The U-3 is the unemployment number most frequently cited in news reports. The BLS defines the U-3 as “total unemployed, as a percent of the civilian labor force,” but this is not the entire story. The U-3 defines being “employed” as working one hour per week for pay. This problematic definition skews total unemployment figures, by including a great number of people who are really just barely working part-time. True unemployment is so much higher.

Many consider U-6 to be “the Real Unemployment Rate,” which includes:

  • U-1 – persons unemployed 15 weeks or longer
  • U-2 – job losers and persons who completed temporary jobs;
  • U-3 total unemployed;
  • U-4 total unemployed plus discouraged workers;
  • U-5 total unemployed, plus discouraged workers, plus all other marginally attached workers; and
  • U-6 total unemployed, plus all marginally attached workers, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all marginally attached workers.

Anywhere but California

“California is back,” Gov. Jerry Brown declared when he announced his May Budget Revise. If “California is back,” as Brown said, how can 1.5 million Californians be unemployed? And one-fifth of the state’s labor force is underemployed.

But even the official unemployment number does not fully reflect the state of the California economy, nor the dire conditions of the state’s residents.

Rather than creating policies to incentivize businesses, the state’s politicians are focused on increasing the minimum wage for low-paying jobs; this treats the symptoms instead of curing the disease.

How to create a healthy business environment once again in California is never in the governor’s speeches, nor does he discuss the high poverty rate in California, or the massive dependency on welfare and food stamps – the highest welfare and food stamp dependency in the nation.

Brown mocks people who bring attention to the exodus of businesses leaving California for healthier states, and even patronizes those who voluntarily move to Texas.

Toyota, the world’s largest automaker, recently announced it would move its headquarters to Texas, and take 3,000 jobs. Brown just said, “Change is inevitable.”

Yet the God-forsaken state of Texas has managed to attract Google, Cisco, Intel, IBM, Facebook, Apple, and Oracle, all of which are expanding operations — anywhere but in California.

Even electric car company Tesla, which receives state and federal subsidies, announced in March it would not be building a $5 billion lithium-ion battery factory in California. The battery factory is expected to employ 6,500 workers.

This was particularly embarrassing since California has been trying to set the world speed record leading the UN-led global warming and climate change jihad, and in legislating policies to lower the state’s carbon emissions.

“Anywhere but California,” is becoming the new state motto for many businesses – even for a supposed “green” company.

In response, Senate President Darrell Steinberg, D-Sacramento, and Senator Ted Gaines, R-Granite Bay, introduced a bill to create special incentives to entice Tesla to choose a location in California for the battery factory.

Why won’t politicians just use those same incentives and enticements for all California businesses? If they are good enough for Tesla, wouldn’t they be of tremendous assistance to all businesses?

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